EU One Stop Shop (OSS)

The non-Union scheme: for sellers outside the EU

The non-Union scheme is the one most US software and digital businesses use. The Commission defines its user as a business that “has not established its business (place of business) in the EU, nor has a fixed establishment there,” and it covers supplies of services to consumers anywhere in the EU, including in the member state of identification itself. The Commission’s own example is a US trader registered in Ireland who sells electronic services to consumers in Finland, Sweden and Ireland and declares all three on the Irish non-Union return.

A non-EU business “can choose any Member State to be the Member State of identification.” Being VAT registered somewhere in the EU for other reasons doesn’t disqualify you. Stripe’s EU guide adds that you don’t need to appoint a tax representative to use the non-Union scheme, and that Stripe Tax offers automated filing of non-Union OSS returns in Ireland for eligible businesses.

Timing catches people. Registration normally takes effect “from the first day of the calendar quarter following” the quarter in which you tell the member state of identification you want to use the scheme. The exception is when your first eligible sale comes before that date: you can use the scheme from the date of that first sale, provided you notify the member state of identification by the tenth day of the following month. Miss that window and the sales in between need another route.

The Union scheme, and the 10,000 EUR threshold

The Union scheme is for businesses established in the EU. The member state of identification isn’t a choice: it is “the Member State in which the taxable person has established his business.” The scheme covers services to consumers in member states where the seller isn’t established, and intra-EU distance sales of goods.

It has one restriction that surprises sellers with offices in several countries. A member state where you have a business or fixed establishment can never be a country of consumption on your Union return for services. Consumer services supplied in that country go on that country’s domestic VAT return instead.

Small EU sellers may not need OSS at all. For telecommunications, broadcasting and electronic services and for intra-EU distance sales of goods, there is an annual 10,000 EUR threshold. A seller established in only one member state whose combined cross-border sales of that kind stay at or below 10,000 EUR, excluding VAT, in both the current and the previous calendar year charges its home country’s VAT instead. Once the threshold is exceeded, the destination country’s VAT applies “without exception.” A seller below it can opt into destination taxation early, but is then bound for two calendar years. The threshold isn’t available to a business established outside the EU that has fixed establishments inside it, because the rule requires establishment in a single member state.

Filing the return: deadlines, nil returns, corrections and payment

The non-Union and Union returns cover a calendar quarter and are due by the end of the following month. The Commission says the deadline doesn’t change when it falls on a weekend or public holiday, and you can’t file before the quarter ends. A return is required “whether or not services or goods were supplied during this period,” so a quarter with no sales anywhere in the EU still needs a nil return. Within a return, though, a country with no sales that quarter is simply left out.

For each country of consumption the return lists the taxable amount and the VAT at the standard and reduced rates. Supplies that are exempt or zero rated in the country of consumption don’t go on the return at all. Mistakes in a filed return are corrected in a later return, within three years of the original due date, and a credit note issued in a later quarter is handled as a correction to the period where the original sale was declared.

Payment goes to the member state of identification as one amount for all countries, quoting the unique reference number the portal assigns to the return. It is due with the return, and at the latest by the return’s deadline. A negative balance for one country is never set off against VAT due to another: that country refunds you directly. If you miss a return or a payment, the member state of identification sends a reminder on the tenth day after the due date. Three consecutive quarters of reminders left unanswered for 10 days get a seller excluded from the scheme (for payments, unless the amount unpaid for each period is less than 100 EUR).

One thing the return can’t do is reduce what you owe for VAT you paid. The Commission is explicit that VAT on business expenses in a country of consumption “cannot be offset against supplies declared in the One Stop Shop VAT return.” It has to be reclaimed through the EU VAT refund procedure, the 13th Directive procedure for non-EU businesses, or a domestic return where you are registered.

The currency rule: the ECB rate on the last day of the quarter

An OSS return is made out in one currency, normally euro, although a member state of identification outside the eurozone can require its own currency. For sales made in any other currency, the Commission says the seller “shall, for the purposes of completing the VAT return, use the exchange rate as published by the European Central Bank on the last date of the tax period.” That is one rate per currency for the whole quarter.

Stripe Tax converts differently. Its reporting guide says that when the transaction currency differs from the filing currency, “Stripe Tax converts amounts using available exchange rates at the time of the transaction.” The filing columns in a Stripe export are therefore a sum of many daily rates, not the single quarter-end rate the return asks for.

For a seller pricing in USD, the fix is mechanical. Take the USD tax amounts for each country from the export, add them up per country and per rate, and convert each total once at the ECB reference rate for the last day of the quarter. As an illustration, 12,400 USD of German VAT converted at a quarter-end rate of 1.0800 USD per EUR comes to 11,481.48 EUR. If the same sales had been converted line by line at rates that drifted between 1.0600 and 1.1000 during the quarter, the export’s EUR column would show a different figure, and the return should use the 11,481.48 EUR. Our entry on the Stripe Tax filing currency covers what those columns are for and where they stop being usable.

Where Stripe helps, and what QuickBooks will and won’t show

Stripe models the schemes as registration types. Its registration guide lists oss_union, oss_non_union and ioss, and its EU page says “If you use different OSS schemes, you need to submit a separate return for each scheme.” Stripe’s EU guide says that once you register, you can collect VAT on your sales to customers across the EU without registering in every country.

For the return itself, Stripe’s reporting guide points OSS registrants to the itemized export of EU transactions, with one warning: itemized exports include non-taxable transactions and domestic transactions, “which you don’t need to report in an OSS return.” Filter those out first. Reverse-charged sales to businesses also stay off the return, since OSS covers consumer sales only.

In QuickBooks, VAT collected through Stripe usually lands in a single liability account, often alongside US sales tax and other countries’ VAT. The OSS payment then clears one combined amount for every EU country in one transfer to one tax authority. Keep a per-country, per-quarter breakdown of that payment with the return’s reference number, so the liability account can be tied back to what each country received. A refund from a country with a negative balance arrives separately, from that country, and should be matched to the correction that produced it.

How OSS differs from IOSS

The names are close and the schemes are not. OSS (the Union and non-Union schemes) is quarterly and covers services, plus intra-EU distance sales of goods under the Union scheme. IOSS, the import scheme, is monthly and covers goods imported into the EU “in consignments of an intrinsic value not exceeding EUR 150,” excluding goods subject to excise duties.

The registration rules differ too. A business outside the EU can register for non-Union OSS directly, but the Commission says a business established outside the EU “is required to appoint an intermediary to use the import scheme.” A seller of both digital subscriptions and low-value physical goods into the EU can end up with two registrations, two calendars and two returns, which matches Stripe’s note that each scheme needs its own return. Our guide to IOSS on Stripe walks through the import side.