How we successfully implemented the OSS scheme for a US Client's EU operation
The client's problem
One of our US clients mainly sells sports memorabilia to private individuals through their Dutch BV company. For that purpose, the BV company has opened a physical store, but also a website. Private customers from all over the EU are reached via the website.
Sales to Dutch customers, whether it will be a business customer or a private customer, must be invoiced with Dutch VAT (21%). Sales to consumers living in EU-countries, other than the Netherlands are deemed to be so-called "distance sales". Those sales are in principle taxable in the country of the consumer. This means that the B.V. must be registered in each country of distribution.
Naturally, TGS lime tree can take care of the VAT registration of the Dutch company in the various countries of the EU with the help of its TGS network.
Nevertheless, we pointed out the following to the client. Nowadays, EU VAT compliance is simplified by offering the possibility to use the so-called OSS scheme ("One Stop Shopping" scheme). When opting for the OSS scheme Dutch businesses no longer have to register for VAT and file VAT returns in multiple member countries.
One combined VAT declaration can be filed and paid in the Netherlands and the Dutch tax authorities take care of the distribution of the VAT turnovers. So, the declaration must contain a VAT statement per country.
What did we do?
We first assisted the client to obtain e-recognition (in Dutch "e-herkenning"). E-recognition is required to gain access to the online portal of the Dutch tax authorities. Only in this portal an election can be made for the application of the OSS-scheme.
Once the election was made for the OSS scheme, we were able to draft the clients quarterly OSS return. The OSS return and the EU VAT due had to be received by the Dutch tax authorities within one month after the quarter ended.
Because of good business, the client had to pay a large amount of EU VAT on its OSS return. The client has nevertheless saved a lot of time and a lot of extra compliance costs. All in all, the client was very pleased with filing under the OSS scheme.
Note: due to the privacy of our clients, this case study provided by TGS lime tree does not include any names, numbers and other sensitive information of our clients, partners and other parties involved.