ViDA: extension of OSS and introduction of single VAT registration
The VAT in the Digital Age (ViDA) proposal promises to modernise the VAT system across the European Union, aiming to increase EU tax revenue, digitalise reporting, defend against tax fraud more effectively, and move towards a definitive VAT system. What changes will the extension of the One-Stop-Shop scheme and the introduction of single VAT registration bring?
OSS scheme extension
According to the draft directive, the One-Stop-Shop (OSS) scheme is planned to be extended as early as 2025.
The OSS extension is intended to include:
- supplies of goods with subsequent installation for end customers,
- supplies of electricity, heat and cold,
- supplies of goods on board of aircraft to end customers.
The extension could also apply to the domestic supply of goods to end consumers via various electronic platforms (web interfaces) and to special VAT regimes, e.g., the scheme for second-hand goods and investment gold. In significantly more cases, companies would therefore be able to settle their tax liabilities through a single VAT registration, i.e., a single tax administrator they will be registered with.
New scheme for transfers of own goods
As a result of the abolition of the call-off stock scheme, a completely new scheme will be introduced for transfers of own goods to another EU member state. Transfers of goods will be subject to a mandatory reverse charge in the state of receipt. Such transfers will be reported via the OSS scheme in the state of dispatch, i.e., not as part of the EC Sales List as before. The draft directive also foresees that if goods are not declared through the OSS, they will not qualify for VAT exemption.
Other changes
The registration limit for the OSS remains the same, i.e., 10 thousand euros. The limit is calculated together for all supplies across the EU including electronic services. Until this limit is reached, VAT could be paid in the country of the supplier.
Furthermore, ViDA proposes an extension of reverse-charge for B2B supplies of goods by non-established suppliers. Such a legal provision is already in force in the Czech environment, so it will not be new for Czech companies.
Electronic platforms from third (non-EU) countries supplying goods to final consumers (B2C) in the EU will have to register for the IOSS scheme (import OSS). Large traders from third countries will settle their tax liabilities monthly directly in the destination countries of the shipments. This scheme also applies to the sale of goods with a value of less than EUR 150 outside the EU. To avoid passing on the tax liability to the end customer, an IOSS-registered entity must have an established representative in the EU territory. A taxable person may be exempted from the scheme for breaching the rules.
Deemed suppliers (a new concept introduced within the platform economy, which we informed you about in the last issue of the Tax and Legal Update) cannot be exempted from the IOSS regime. However, they may be subject to other penalties for non-compliance.