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As cross-border e-commerce expands across the EU, businesses encounter increasingly complex VAT reporting duties. To simplify compliance, the European Union introduced the One Stop Shop (OSS) Scheme, enabling companies to report and pay VAT in a single EU member state, even if they sell to customers in multiple EU countries.
This article explains how the OSS scheme works, who it applies to, and how Cyprus-based businesses can benefit from its streamlined structure.
Understanding the OSS: A VAT compliance mechanism
The OSS is a digital VAT portal designed to ease the administrative burden for businesses engaging in B2C (business-to-consumer) sales of goods and certain services within the EU. Launched on 1 July 2021, the OSS forms part of the EU's broader VAT reform efforts to support fair competition and boost tax collection in the digital economy.
It enables eligible businesses to register for VAT in one EU member state and report all qualifying cross-border sales to EU consumers via a single quarterly return.
Who can use the OSS scheme?
The OSS Scheme applies to the following categories:
1. EU-Based Businesses (Union OSS)
Cyprus-based businesses selling goods or services to consumers in other EU member states may register for the Union OSS. This includes:
- Distance sales of goods within the EU
- Certain domestic supplies of goods through electronic interfaces
- Services provided to non-taxable persons in other EU countries
2. Non-EU Businesses (Non-Union OSS)
For non-EU companies offering B2C services to EU customers (such as digital services, telecoms, broadcasting), the Non-Union OSS simplifies VAT requirements.
3. Import One Stop Shop (IOSS)
Intended for distance sales of low-value goods (≤ €150) imported from outside the EU and delivered to EU consumers.
What are the benefits of OSS for Cyprus-based businesses?
Cyprus-based companies can gain several advantages by registering under the OSS:
- Single VAT registration: You don't need to register for VAT in every EU country where you conduct B2C sales.
- Simplified Reporting: Submit one quarterly VAT return for all qualifying EU transactions.
- Enhanced Cash Flow Planning: Centralised VAT payments minimise delays and administrative burdens.
- Improves compliance: Minimises the risk of penalties caused by inconsistent reporting across different jurisdictions.
- Enhanced Competitiveness: Facilitates easier expansion throughout the EU market.
Important considerations for businesses
- Businesses may also opt into the OSS scheme voluntarily, even if they remain below the €10,000 threshold, to apply destination-based VAT consistently across the EU.
- Separate from Domestic VAT: OSS returns do not replace your regular Cyprus VAT obligations for domestic sales.
- Currency Reporting: VAT returns under OSS must be submitted in Euros, even if sales are in other currencies.
How we support your OSS compliance
At Michael Chambers & Co. LLC, our accounting and tax team provides end-to-end support for businesses navigating OSS registration and compliance. Our services include:
- Assessment of your eligibility for OSS or IOSS
- Registration support with the Cyprus Tax Authorities
- Preparation and submission of quarterly OSS returns
- VAT rate mapping
- Ongoing compliance monitoring and deadline reminders
Final thoughts on One Stop Shop scheme
The OSS scheme represents a significant simplification for Cyprus-based companies operating across EU borders. However, it also introduces new responsibilities and reporting standards that require careful management.
Businesses engaged in cross-border digital commerce, including those offering online platforms or subscription-based services, can benefit from targeted compliance strategies that precisely and efficiently meet OSS requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
