Special order OSS and IOSS frequently asked questions

If intra-Community distance sales are carried out in 2021 before July 1 and the currently valid limit of the buyer’s Member State is reached, do you still have to register as a VAT payer in the Member State of the goods’ destination despite the fact that on July 1, 2021, the OSS special order comes into force? If the distance sales limit was not reached before the end of 2020, will the calculation of the limit start from zero again on January 1, 2021?

Yes, the old rules will still apply until June 30, 2021 – among other things, the principle that if by the end of the calendar year the limit for distance sales has not been exceeded in the Member State of the goods’ destination, the calculation of the limit will start again from zero on January 1 of the following year.

When is the last date to apply to join the OSS or IOSS special scheme from 1 July 2021?

In order to join the OSS special procedure from July 1, August 10 is the last day to submit an application, if you can indicate the start of the special procedure as 1.07 ( § 43 (9 ) of the VAT Act ), the “Date of the first transaction” field must be filled in on the application and 1.07 should be indicated there.

In accordance with § 43 ¹ subsection 10 of the Act, the right to apply the IOSS special procedure starts from the day when the person applying the special procedure or the intermediary has been given the number of registration as a taxable person specified in subsection 9 of the same section. On the day of submitting an application to join the IOSS special order, you will generally receive a special order implementation number immediately.

Do the turnovers declared on the basis of the OSS special procedure also have to be reported on the KMD form and can the user of the OSS special procedure still deduct the input sales tax when purchasing goods in Estonia in the normal way?

OSS special order turnovers are declared only on a special OSS declaration, but when purchasing goods, input sales tax can still be deducted on the KMD form in the normal way.

If the company is currently using the MOSS special order, will it be automatically replaced by the new OSS special order?

Yes. The user of the MOSS special order does not need to submit an application to join the OSS special order. If the company wants to start using the IOSS special order, users of the MOSS special order must also submit a new application to join this special order.

By applying the OSS special procedure, can intra-Community distance sales of goods be declared in Estonia, in which the goods are not located in Estonia at the time of dispatch – for example, the goods are in a warehouse in Germany and are sold from there to a private person in France, a company registered in Estonia sells goods from Latvia to other member states to non-taxable persons, or an Estonian company buys goods from an Italian factory and on his order, the Italian factory sends the goods directly to, for example, a German private person in Germany?

Yes – since a taxpayer from a member state of the European Union can register as a user of the OSS special procedure only in the member state of their location (Estonian taxable person in Estonia), distance sales of goods where the goods are sent to the buyer from another member state can also be declared using the OSS special procedure.

Does an Estonian company have to be registered as a VAT payer in Estonia to use the OSS special arrangement?

Yes. You cannot use the OSS special procedure without being registered as a VAT payer, and a company registered in Estonia cannot register as a user of the OSS special procedure in any other member state where it has a VAT number.

What to do if, when filling out the OSS Union special order application, the applicant does not know the addresses of all the countries of origin of the goods?

In the address field, you can add that the address is currently unknown. If the user of the special order has received the address information, the application can be changed on an ongoing basis and the address information can be added.

If an Estonian company sells its goods to an Austrian private person from a warehouse in Austria, for example, or an Italian factory sends the goods directly to an Italian private person on the order of an Estonian company – can such a sale also be declared through the OSS special procedure in Estonia, and can the input VAT paid when purchasing the goods in Austria or Italy be deducted in Estonia?

No, because this is not an intra-Community distance sale, but an Austrian or Italian domestic turnover that is not covered by the special OSS regime and must be declared and taxed according to the local Austrian or Italian VAT rules.

The local VAT paid when purchasing goods in another member state cannot be deducted as input tax in Estonia – it can be deducted in the normal VAT return submitted in the respective member state (if the Estonian company also has a VAT number in that member state) or if the Estonian company does not have a VAT number in the respective member state, request a refund of this VAT in the EU cross-border through the VAT Refund system .

If a non-VAT person buys goods in Estonia and declares that his main residence is in a country outside the European Union (for example, London in the United Kingdom, Oslo in Norway), but he asks to send the ordered goods to an address in Stockholm, Sweden, how to prepare an invoice? Can VAT be calculated at the correct national tax rate after the goods are sold/unloaded? How to determine the location of the buyer, is it enough to determine the destination of delivery?

If the goods are sent to Sweden – regardless of the fact that the buyer lives in a country outside the European Union, it is intra-Community distance selling from Estonia to Sweden.

In the case of distance sales, the invoice presented to the buyer of the goods must always include the VAT added to the price of the goods, that is, the VAT of the destination member state (Sweden in this case) – but if the seller has joined the OSS special procedure, the sale can be declared through it. In fact, when ordering the goods, the seller must show and collect the VAT of the country to which the goods are transported on the invoice to the buyer.

In the case of services, turnover usually occurs in the country of their actual provision, regardless of which country the buyer is a non-taxable person.

The Estonian company already carries out intra-Community distance sales and is registered as a VAT payer in the member states where the goods are sent to private individuals. If the company wants to use the OSS special procedure in the future, should it give up the VAT registration number in the destination member states of the goods? The problem is that the company also carries out intra-Community distance sales through the Amazon platform, and Amazon requires VAT liability in the country of destination of the goods – does this mean that the Estonian company cannot use the OSS special arrangement?

Even if the Estonian company has a VAT number in the member state to which the goods are sent as intra-Community distance sales, such distance sales can be declared through the OSS special procedure, for which the Estonian company does not have to give up the VAT number in the destination member state.

Through the OSS special procedure, it is not possible to declare such a sale where the goods are delivered to the buyer from a warehouse located in the same Member State – such a sale must still be declared as domestic turnover of the buyer’s Member State in the normal VAT declaration submitted in that Member State.

As the only exception, an e-shop or other internet-based trading place can be declared through the OSS special procedure for a domestic sales transaction, if it is a so-called presumed supplier and through it an business from a country outside the European Union, who does not have a permanent place of business in the European Union, sells its goods located in a member state of the European Union to a non-taxable buyer in the same member state ( according to the new rules, in such a case, the e-shop is considered the purchaser of the goods and the distributor to the final consumer, but it can declare such domestic resale through a special OSS procedure).

If an Estonian company currently already has a VAT number due to distance sales in some member states of the European Union, can distance sales be declared to these member states directly (that is, in the local VAT return) and distance sales to other member states through the OSS special order? Do you definitely have to join the OSS special order or can you continue to declare in the buyer’s member states? How to declare remote sales made through an Amazon warehouse in Germany?

You must choose either the OSS special procedure and declare all intra-Community distance sales to all member states through it (the presence of a VAT number in the destination member state is not an obstacle to declaring distance sales through the OSS special procedure) or declare all distance sales in the general procedure in the destination member states of the goods – you cannot declare part of the distance sales based on the OSS special procedure and part of the distance sales on the basis of the general procedure .

The OSS special order is voluntary, you do not have to join it, you can continue to declare in the buyer’s Member State.

A company established in Estonia can join the OSS special procedure only in Estonia (an business can only join the OSS special procedure in the member state of his location), but he can also declare distance sales made from other member states on the OSS declaration submitted in Estonia.

What happens if the goods are sold via the online store from another member state to a private consumer in Estonia?

If the seller is an Estonian business who uses the OSS special procedure, he also declares such distance sales on the OSS declaration submitted in Estonia.

If the seller is a business from another member state, he must either register as a VAT payer in Estonia or declare such distance sales through the OSS special procedure in his own member state.

Is the sale of goods to private individuals in the UK now an export and not covered by the OSS special arrangement? If the goods are sold to a private person in Russia or Norway, can such a sale also be declared through the OSS special procedure?

If the seller sends the goods to a private person in a country outside the European Union, including the United Kingdom, it is an export taxed at 0% VAT and is not covered by the OSS special arrangement – except for the sale of goods to non-taxable persons in Northern Ireland, which is still an intra-Community distance sale.

When filling out the OSS declaration, do you have to indicate the VAT rate(s) of each country yourself, and therefore it is necessary to know the VAT rates of all the member states where the goods are sold or the service is provided, in order to present correct invoices to the buyers? Is there somewhere a common database of VAT rates in the member states? Or are the VAT rates for each country already stated in the OSS declaration?

The tax rates of the member states are specified on the OSS declaration, but if necessary, the user of the special order can change them when filling out the declaration.

It must be taken into account that the seller of the goods or the service provider must already know the tax rate of the country of consumption (the member state of the turnover) at the time of sale and tax the transaction with this VAT rate.

The VAT rates of the European Union member states can be checked on the website of the European Commission , and there is a corresponding link on the website of the Tax and Customs Board.

Does the transport cost in the case of intra-Community long-distance sales of goods belong under the taxable value, and in the long-distance sale of goods imported from a non-Community country does it belong to the actual value of the goods?

As a general rule, the transport cost is part of both the taxable value of the goods transferred by intra-Community distance sales and the actual value of such goods in the case of distance sales of goods imported from outside the Community.

In the case of intra-Community distance sales, the taxable value of the goods is determined in accordance with § 12 paragraph 1 of the VAT Act – this means that the transport cost is included in the taxable value of the goods, unless a separate invoice is submitted for the transport service .

If the transport and insurance costs of goods imported from a non-Community country are included in the price of the goods and the buyer is not invoiced for them separately, the transport and insurance costs are also a part of the actual value of the goods imported from a non-Community country. Only if the transport service and insurance costs are invoiced separately, the actual value of the goods imported from a non-Community country does not include transport and insurance costs.

If an accounting service is provided from Estonia to a Finnish non-taxable person or an electronic service to a Latvian non-taxable legal entity (for example, a service related to the use of an app), does it fall under the special rules of OSS?

As a general rule, accounting services are not provided to ordinary private individuals who are not businesss. Since both the accounting service and the electronically provided service belong to the non-material services listed in § 10 subsection 5 of the VAT Act, a person from another member state engaged in business who receives such a service incurs the obligation to calculate and pay VAT on the service in his own member state (Finland or Latvia) even if, at the time of receiving the service, he is not yet registered as a VAT payer in its member state, and the Estonian company declares the service as turnover with a 0% rate on the normal VAT return, not on the OSS declaration.

If, however, the accounting service is provided to a person from another member state who is not engaged in business – then, unlike an electronic service, the turnover of the accounting service occurs in Estonia in such a case and the Estonian VAT rate of 22% is added, and the service is not declared through the OSS special procedure.

Does the design service to another member state fall under the OSS special regime?

Yes, if it is directed to a non-taxable person of another member state and a real estate is designed, which will be located in another member state, not in Estonia.

The goods are transported on the route Estonia-Sweden-Finland-Estonia. On the way, goods are picked up from every country. Does domestic transport to a non-obligatory person in Finland fall under the special rules of OSS in this transport cycle?

Yes – freight transport in Finland on the order of a Finnish private person can be placed under the OSS special procedure.

Does the OSS special rule also apply to Bolt, Wolt, Uber services?

The OSS special procedure can be applied to the passenger transport or goods transport service provided to a non-taxable person, if the turnover occurs in a Member State where the user of the special procedure does not have a permanent place of business.

The person subject to VAT resells used goods by applying the special procedure provided for in § 41 of the VAT Act . At the same time, part of the resold goods are imported from outside the European Union. Even after 01.07.2021, can the seller still apply the special margin-based VAT calculation procedure and declare VAT in Estonia based on it, or will the IOSS special procedure situation arise if the buyer is a non-taxable person?

In all cases where it is possible to apply the special procedure provided in § 41 of the VAT Act , after July 1, 2021, the resale of goods will be taxed according to this special procedure, and the OSS or IOSS special procedure will not be applied.

Where can I see the register of registration numbers with the EU mark?

The taxpayer does not see it, it is not public information. To obtain a registration number for the use of the seller’s special order, the buyer must contact the seller himself.

If goods originating from the European Union as well as imported goods are sold to private individuals through the online store, which special procedure must be applied? Or implement both?

If the company engages in both intra-Community distance sales and distance sales of goods imported from non-Community countries through the e-store and wishes to implement a special procedure (and the conditions for the implementation of both special procedures are met), then if desired, you can register as an implementer of both the OSS and IOSS special procedures (the application of both special procedures is optional).

If the company is subject to VAT and acquires goods from other European Union member states, is there a need to join a special regime?

A person subject to VAT does not need to join the special regime when purchasing goods from other member states. The acquisition of goods from a VAT subject of another Member State together with its delivery from another Member State to Estonia is still an intra-Community acquisition of goods subject to reverse taxation in Estonia and intra-Community turnover for the seller with a 0% VAT rate in his Member State, and the seller does not have to add the VAT of his country to the sales price.

Are IOSS declarations automatically generated from customs declarations?

No, they must be submitted separately.

If the IOSS special procedure is applied, is the import declaration no longer needed and the VAT is calculated only on the sales price?

The customs declaration must still be submitted, but if the IOSS registration number is entered on the customs declaration, VAT does not have to be paid at the customs upon import, and the VAT is really calculated only on the sales price.

What happens if the goods are located in a country outside the European Union and the owner of the goods sells the goods from there directly to a private consumer located in the European Union?

There are three different options:

• the seller, a business from a country outside the European Union, registers as a user of the IOSS special order through an intermediary (if the conditions for implementing the IOSS special order are met), the buyer pays VAT to the seller at the time of making the purchase and no VAT paid on import;
• the person who submits the goods to customs as an indirect intermediary on behalf of the buyer (courier company, postal operator, customs agent) applies the special procedure provided for in § 43 ² of the VAT Act – the buyer pays the VAT to the person who declared the goods and does not have to deal with customs clearance himself;
• the buyer himself pays the VAT for the goods at customs and completes the customs declaration

If goods with a value of less than 150 euros are imported into Estonia and sent from the Estonian customs warehouse to another country in the European Union to the final consumer. Will VAT be added to the price of each shipment when joining the IOSS special procedure, so that the buyer does not have to pay it at the customs of his country and the company declares the distance sale of goods imported from a third country through the IOSS special procedure? In which country should it be declared, if it is a Swedish taxpayer?

It must be taken into account that if the goods are placed in a customs warehouse before being sold to the customer, the IOSS special order cannot be used. In order to apply the IOSS special order, the goods must reach the private consumer directly from a country outside the European Union.

If the goods are taken out of the customs warehouse, import VAT must be paid in the Member State where the customs warehouse is located.

If the goods are already in free circulation, the OSS special procedure can be used, which a Swedish company can join only in its country of residence in Sweden.

Can the OSS or IOSS declaration always be corrected with the declaration of the current period? Both when an error is discovered in the same year (for example, an error made in the September IOSS declaration is discovered in December) and when the year changes? For example, a mistake made in the November declaration is revealed in January.

Yes.

Can correction of OSS or IOSS result in tax debt with interest?

In Estonia, the electronic application does not calculate interest, but it can be collected by the tax authority of the country of consumption (the member state of the turnover) according to the tax rules of that member state.

If the Tax and Customs Board terminates the use of the special procedure, can the business, when performing a transaction covered by the special procedure, submit an application for registration as a user of the special procedure immediately from the following month, or is there a period during which re-registration is not possible?

The tax authority generally terminates the use of the special procedure if the person has repeatedly violated the requirements for the use of the special procedure (based on § 43 subsection 21 and § 43 ¹ subsection 24 of the VAT Act ). In this case, the person does not have the right to apply the special procedure within two years from the month following the entry into force of the decision to delete from the register.

Does the owner of the goods always have a 0% rate of turnover when he sells the goods to the end consumer through the online store?

In Estonia, the owner of the goods can have a 0% rate of turnover only if he is a business from a country outside the European Union, who sells his goods located in Estonia to a non-taxable end consumer located in Estonia through an online store, and the online store becomes a so-called presumed supplier.

How does the OSS or IOSS account for the time of the turnover of the goods or services of the special order user?

The user of the IOSS special order considers the turnover of the goods imported from a non-Community country to have occurred (an online store using the IOSS special order, which is the so-called expected supplier, as well as the purchase of the goods imported from a non-Community country) when paying for the goods or receiving a confirmation of payment obligation or payment authorization notice.

The user of the OSS special order takes into account the generation of turnover according to the normal rules.

How is VAT charged if the online store does not become the expected supplier and the customer is sold goods from the European Union or from a non-EU country where the  value of the goods exceeds 150 euros?

If the online store is not the expected supplier for the reasons stated in the question, then the sellers of the goods must declare their turnovers themselves and, in order to apply the correct tax rate, get information from the online store about the buyers and the member states where the goods were sold. In this case, the online store taxes and declares only the services it provides to the sellers of the goods.

It should also be taken into account that if the value of goods imported from a non-EU country exceeds 150 euros, the import of such goods is not exempt from VAT, i.e. VAT must be paid on such goods upon entering the European Union in the Member State where the goods are imported.

An Estonian company is not liable for VAT and carries out intra-Community distance sales for less than 10,000 euros per year. Does the company not have to register as a VAT liable business and does it not have to add VAT to the sales price of goods for distance sales?

If the Estonian company fulfills the conditions set out in § 10 ¹ subsection 7 of the VAT Act (among other things, it does not have a seat or a permanent place of business in any other member state than Estonia) and it does not wish to join the OSS special regime – then if the total of its digital services provided to non-taxable persons of other member states and intra-Community distance sales carried out from Estonia total turnover to all member states does not exceed the limit of 10,000 euros in a calendar year, the company does not have to register as a VAT payer either in Estonia or in any member state of destination, and does not have to add VAT to the price of the goods for distance sales either in Estonia or in the destination member state.

If an Estonian company does not have a permanent place of business in another member state, but has a warehouse through which it sells goods either only to private individuals of the same member state or in addition to intra-Community distance sales to other member states, and it does not wish to join the special OSS regime – even then there is no obligation to register as a VAT subject in Estonia, but Goods sold to non-taxable persons from a warehouse located in another Member State must be taxed with VAT in the Member State of the buyer’s location.

If the conditions for applying the 10,000 euro threshold are not met (for example, there is also a permanent place of business in another member state) and the company does not want to join the OSS special regime – then it must register itself as a VAT payer in the destination member state, tax all distance sales at the destination member state’s tax rate and pay VAT on them directly to the destination member state .

However, if the company wants to join the OSS special regime, it must first register as a VAT payer in Estonia.

If the company joins the special scheme from July 1, 2021, but the limit of 10,000 euros will not be reached until August 2021, should Estonian VAT at the rate of 22% be added to the price until the limit of 10,000 euros is reached?

If desired, intra-community distance sales and digital services provided to non-taxable persons of other member states can be taxed in Estonia at a 22% VAT rate until the 10,000 euro limit is reached, and the VAT rates of the destination member states can be applied from the day the 10,000 euro limit is exceeded. However, this assumes that the company will not join the new OSS special order until the threshold of 10,000 euros is met – because if the company has joined the OSS special regime since July 1, all distance sales and digital services provided to non-taxable persons must be taxed at the destination member state’s VAT rate and declared under the OSS special regime as of July 1. regardless of the fact that the limit of 10,000 euros has not yet been exceeded.

If the company has joined the OSS special procedure, can distance sales be taxed with Estonian VAT (22%) every new calendar year until the limit of 10,000 euros is reached, and when the limit of 10,000 euros is reached, do you still have to start submitting OSS declarations?

No – if the company has already joined the OSS special procedure, from the day of joining the special procedure, all intra-Community distance sales must be taxed at the VAT rate of the destination member state and declared through the OSS special procedure, regardless of whether the limit of 10,000 euros has already been exceeded as of the beginning of the year in a given year or not.

In 2021, will the 10,000 euro limit be calculated from July 1?

There have been different views on this matter – but by now the Ministry of Finance and the tax authority have come to a common understanding that since both the European Union VAT Directive and the Estonian VAT Act do not have a transitional provision to this effect, the fulfillment of the 10,000 euro threshold must always be considered from the beginning of the year (from January 1 ) and that too in 2021, not in 2021 with the exception of July 1.

If I understand correctly, the limit of 10,000 euros applies in Estonia. If the limit in the country where the service is provided is lower than in Estonia, how does the calculation work?

The limit of 10,000 euros applies in the same way in all member states, it is stipulated by the European Union directive.

If a non-taxable person who carries out intra-community distance sales reaches the limit of 10,000 euros, does he have to register as a VAT payer in Estonia?

He must register as a VAT payer in Estonia if he wants to join the OSS special scheme, because only a VAT payer can join the special scheme. The OSS special order is voluntary, you can also not join it, not register yourself as a VAT payer in Estonia and pay VAT directly in the member states of the goods’ destination.

Does the special procedure declaration have to be submitted even if no transactions took place during the tax period?

If the user of the special procedure does not make any transactions covered by the special procedure during the tax period and does not need to make corrections to the declarations of previous periods, then a zero-sum declaration is submitted. (Article 59a of Implementing Regulation 2019/2026 ).

If the declaration has been submitted (confirmed), but the deadline for its submission and payment has not yet arrived and it appears that there was a mistake in entering the transaction amount/sales tax, is it possible to correct this declaration and when?

It is not possible to correct an already approved declaration even if the deadline for submitting the declaration has not yet arrived. Corrections can be made in the corrections block of the next period’s declaration. It is important to keep in mind that the obligation reflected in the declaration must also be paid according to the declared amount. Therefore, it is necessary to make sure of the correctness of the data before confirming the declaration.

How can I postpone the tax debt arising from the VAT return for e-commerce and services (OSS/IOSS)?

If the tax debt is owed to the Estonian state, it can be postponed as usual by making a request to the Estonian tax authority. If the tax debt is owed to another member state, the application for postponement must be addressed directly to the respective member state.

Before submitting a request for termination in the business register, the declaration for the last taxation period must be submitted in the e-services environment of the Tax and Customs Board e-MTA. Then OSS/IOSS special order registration must be completed.