Frequently asked questions concerning the OSS and IOSS special schemes

Question 1

If a business is engaged in intra-Community distance selling in 2021 also before 1 July and the threshold which is today still in force in the Member State of the purchaser is exceeded before 1 July – is it mandatory to register for VAT liability in the Member State of destination, although the OSS special scheme will be in force from 1 July? If the threshold was not exceeded at the end of 2020, does it mean that the calculation of the threshold begins in 1 January 2021 from zero again?

Answer

Yes, until 30 June 2021 the existing rules are still in force – including the principle that if the threshold for distance selling in particular Member State was not exceeded at the end of a calendar year, the calculation of the threshold begins in 1 January of the next year from zero again.

Question 2

What date is the last possible date to submit the petition for the implementation of the OSS or IOSS special scheme from 1 July 2021?

Answer

To be registered as a user of the OSS special scheme from 1 July, a business shall submit the petition for the implementation of the OSS special scheme not later than in 10 August (according to subsection 43 (9) of the Estonian VAT Act). In such case, the field "date of first transaction" shall be filled in in the petition with 1.07.

According to subsection 431 (10) of the VAT Act, a business has the right to implement the IOSS special scheme as of the day when the person implementing special scheme or the intermediary has been given the registration number specified in subsection (9) of the same section. As a rule, a business receives the registration number immediately from the date when the petition for the implementation of the IOSS special scheme was submitted.

Question 3

Is it mandatory to declare the supplies, taxable according to the OSS special scheme, also in the regular VAT return? Whether the user of the OSS special scheme still has the right to deduct input VAT of the goods, purchased in Estonia, according to the ordinary rules?

Answer

The supplies, taxable according to the OSS special scheme, shall be declared only in the special OSS VAT return. The input VAT of the purchased goods is still deductible according to the ordinary rules.

Question 4

If a business is today the user of the MOSS special scheme, whether the MOSS special scheme gives place to the OSS special scheme automatically?

Answer

Yes – the user of the MOSS special scheme must not submit the petition for the implementation of the OSS special scheme. But if a business wishes to implement the IOSS special scheme, the user of the MOSS special scheme must submit the petition for the implementation of the IOSS special scheme like all other businesses.

Question 5

Is it possible for the user of the OSS special scheme to declare in Estonia also such kind of intra-Community distance sales where the goods are not located in Estonia at the moment of dispatch – for example, the goods are in a storehouse located in Germany and are dispatched from this storehouse to France to a private person, a business registered in Estonia sells goods from Latvia to other Member States to non-taxable persons or the Estonian business purchases goods from an Italian factory and this Italian factory, according to order received from the Estonian business, dispatches the goods from Italy directly to Germany to a private person?

Answer

Yes – inasmuch as the VAT payer of the EU Member State can register as the user of the OSS special scheme only in the Member State where its business has a seat (the Estonian VAT payer – in Estonia), it’s possible to declare according to the OSS special scheme also such kind of intra-Community distance sales where the goods are dispatched to the purchaser from any other Member State.

Question 6

Whether a business established in Estonia must register in Estonia for VAT liability for the implementation of the OSS special scheme?

Answer

Yes – only a person registered for VAT liability can implement the OSS special scheme and a business established in Estonia can’t register as the user of the OSS special scheme in any other Member State where this business also has the VAT ID number.

Question 7

If an Estonian business, for example, sells goods from a storehouse located in Austria to an Austrian private person or an Italian factory, according to order received from the Estonian business, dispatches the goods directly to an Italian private person – whether the business can declare such sales transaction also according to the OSS special scheme? Is it possible to deduct in Estonia the local input VAT, paid in Austria or Italy upon the acquisition of goods?

Answer

No, because it’s not the intra-Community distance selling but the Austrian or Italian domestic supply which is not covered by the OSS special scheme and is taxable and shall be declared according to the Austrian or Italian local VAT rules.

Local VAT, paid in the other Member State upon the acquisition of goods, is not deductible in the Estonian regular VAT return as input VAT – such VAT is deductible in a regular VAT return submitted in this particular Member State (if the Estonian business has the VAT ID number also in this Member State) or, if the Estonian business has no VAT ID number in the correspondent Member State, the business can apply for cross-border EU VAT refund.

Question 8

If a non-taxable person purchases goods from Estonia and notifies that his/her main place of residence is located in a third country (for example – in the UK, in London; in Norway, in Oslo) but asks to deliver the subscribed goods to Sweden to address located in Stockholm – how to draw up the invoice? Is it possible to calculate VAT with the tax rate of the correct Member State after the transfer/unloading of the goods? How to determine the place of residence of the purchaser, is it sufficient to determine the place of destination?

Answer

If the goods are dispatched to Sweden – although the purchaser is living in a third country, the transaction shall be treated as the intra-Community distance selling from Estonia to Sweden.

Upon the intra-Community distance selling, the seller always must set out the VAT with the tax rate of the place of supply, i.e. with the tax rate of the Member State of destination (which is Sweden in present case) in an invoice – but if the seller is the user of the OSS special scheme, the sales transaction can be declared according to this special scheme. Actually, the seller must set out in the invoice, issued to the purchaser, and must ask from the purchaser VAT with the tax rate of the country of destination already when subscribes the goods.

The place of supply of services is usually the country where the services are actually provided – irrespective of the country where the non-taxable person who receives the services has the place of residence.

Question 9

An Estonian business is engaged in intra-Community distance selling already today and is registered for VAT liability in all Member States whither the goods are delivered to private persons. If the business wishes to implement the OSS special scheme in future, is it necessary to delete this business from the register of VAT payers in Member States of destination? The problem is that the business is engaged in distance selling also through the Amazon platform and Amazon presupposes that the business must register for VAT liability in the Member States of destination – does it mean that such Estonian business can’t implement the OSS special scheme?

Answer

If an Estonian business has the VAT ID number in the Member State whither the goods are delivered as intra-Community distance selling – such distance selling is also possible to declare according to the OSS special scheme, the business has no obligation to be deleted from the register of VAT payers in the Member State of destination.

It’s not possible to declare according to the OSS special scheme the sales transaction where the goods are delivered to the purchaser from a storehouse located in the same Member State – such sales transaction shall be still declared in a regular VAT return submitted in this Member State.

The only exception – an e-shop or other similar online marketplace who is so-called deemed supplier can declare according to the OSS special scheme such kind of domestic sales transaction where a business of a third country who has no permanent establishment in any EU Member State sells the goods located in an EU Member State to a non-taxable purchaser in the same Member State through that online marketplace (according to new rules, in such case the e-shop shall be deemed to have acquired and resold these goods by itself but can declare such domestic resale according to the OSS special scheme).

Question 10

If an Estonian business today already has the VAT ID number in some EU Member States due to distance selling – is it possible to declare intra-Community distance sales to these Member States directly in a local regular VAT return and distance sales to all other Member States according to the OSS special scheme? Is it mandatory to implement the OSS special scheme or the business can continue to declare distance sales directly in the Member States of destination? How an Estonian business shall declare distance sales performed through an Amazon storehouse located in Germany?

Answer

The business must chose – to declare all intra-Community distance sales to all Member States according to the OSS special scheme (the VAT ID number received in the Member State of destination does not close out the possibility to implement the OSS special scheme) or to declare all distance sales directly in Member States of destination according to regular rules. It’s not allowed to declare some distance sales according to the OSS special scheme and some distance sales according to regular rules.

The OSS special scheme is voluntary, it’s not mandatory to implement this special scheme, a business can continue to declare the distance sales in Member States of destination.

A business established in Estonia can implement the OSS special scheme only in Estonia (a business can register as the user of the OSS special scheme only in the Member State where its business has a seat), but can declare in the OSS VAT return submitted in Estonia also distance sales performed from other Member States.

Question 11

What happens if the goods are sold through an e-shop from any other Member State to Estonia to a private consumer?

Answer

If the seller is an Estonian business who implements the OSS special scheme – the business declares such distance selling also in the OSS VAT return submitted in Estonia.

If the seller is a business of any other Member State – the business must register for VAT liability in Estonia or to declare such intra-Community distance selling according to the OSS special scheme in its own Member State.

Question 12

Whether the transfer of goods to the UK to private persons is now the export of goods and is not covered by the OSS special scheme? If the goods are transferred to a private person to Russia or Norway – is it possible to declare such sales transaction also according to the OSS special scheme?

Answer

If the seller transports the goods to a private person to a third country (including the UK after Brexit) – it is the export of goods taxable at 0% VAT rate and is not covered by the OSS special scheme (excluding the transfer of goods to Northern Ireland to a non-taxable person which is still intra-Community distance selling).

Question 13

When a person fills in an OSS VAT return – shall the person set out the VAT rate(s) of every country him/herself and therefore must know the VAT rates of all EU Member States whither he/she sells the goods or provides the services, to issue correct invoices to the purchasers? Does the common database concerning VAT rates of Member States exist? Or the VAT rates for every country are already set out in the OSS VAT return?

Answer

In the OSS VAT return the VAT rates of Member States are set out but the user of the OSS special scheme can change them, if necessary, when fills in the OSS VAT return.

The seller of the goods or the provider of the services must know the VAT rate of the country of consumption (the VAT rate of the Member State where is the place of supply) already at the moment of the sales transaction and must charge the VAT rate of that country.

The VAT rates of the EU Member States is possible to check over on the web page of the European Commission, there is also the correspondent link on the web page of the Estonian Tax and Customs Board.

Question 14

Whether the transport costs are included in the taxable value upon the intra-Community distance selling of goods and are not included in the intrinsic value upon the distance selling of goods imported from third country?

Answer

As a rule, the transport costs are included in the taxable value upon the intra-Community distance selling of goods and are also included in the intrinsic value upon the distance selling of goods imported from third country. 

Upon the intra-Community distance selling of goods, the taxable value is determined according to subsection 12 (1) of the Estonian VAT Act – it means, the transport costs are included in the taxable value of the goods, unless the separate invoice is issued for the transport service.

If the transport and insurance costs of the goods imported from third country are included in the price of the goods and the separate invoice is not issued to the purchaser about these costs – in such case the transport and insurance costs are a part of the intrinsic value of the imported goods. The transport and insurance costs of the goods imported from third country are not included in the intrinsic value of such goods only if the separate invoice is issued for these costs.

Question 15

If the accounting service is provided from Estonia to a Finnish non-taxable person or the electronically supplied service (for example, the service related to the use of an app) is provided to a Latvian non-taxable persion – is such service covered by the OSS special scheme?

Answer

As a rule, the accounting service is not provided to an ordinary natural person who is not a proprietor. The accounting services and the electronically supplied services both are immaterial services, listed in subsection 10 (5) of the Estonian VAT Act – it means, a person of the other Member State engaged in business who receives such service has the obligation to calculate and pay VAT from the service itself even the recipient of the service is not registered for VAT liability in its own Member State at the monent of the receipt of the service yet. The Estonian business declares the service in a regular VAT return as a supply taxable at 0% VAT rate – not in the OSS VAT return.

Although, if the accounting service is really provided to a person of other Member State not engaged in business – unlike the place of supply of the electronically supplied services, the place of supply of the accounting services in such case is Estonia and the Estonian 20% VAT rate shall be charged and the service shall not be declared according to the OSS special scheme.

Question 16

Whether the drawing up of plans for a building is covered by the OSS special scheme, if the service is provided to the other Member State?

Answer

Yes – if the service is provided to a non-taxable persion of the other Member State and is related to an immovable which will be located in any other Member State, not in Estonia.

Question 17

The route of the transport of the goods is Estonia-Sweden-Finland-Estonia. The goods are picked up in every country. Whether the Finnish domestic transport service to a non-taxable person during this route is covered by the OSS special scheme?

Answer

Yes – the transport service, ordered in Finland by a Finnish natural person can be declared according to the OSS special scheme.

Question 18

Whether the services of Bolt, Wolt, Uber are also covered by the OSS special scheme?

Answer

The passenger transport service or the transport service of goods, if provided to a non-taxable person, is covered by the OSS special scheme, if the place of supply is the Member State where the provider of the service has no permanent establishment.

Question 19

A taxable person resells second-hand goods and implements the special arrangements for imposing VAT according to Article 41 of the Estonian VAT Act. A part of goods to be resold are imported from third countries. Whether the reseller can after 01.07.2021 still implement the margin-based special arrangements for imposing VAT and can declare VAT in Estonia according to these special arrangements – or, if the purchaser is a non-taxable person, it is the situation where the IOSS special scheme should be implemented?

Answer

In all cases where it’s possible to implement the special arrangements according to Article 41 of the VAT Act, VAT shall be imposed according to these special arrangements also after 01.07.2021 and the OSS or IOSS special scheme shall not be implemented.

Question 20

Where a taxable person can see the register of VAT ID numbers with EU designation?

Answer

Taxable persons can’t see it, it’s not the public information. In order to get the purchaser's VAT ID number for using the special scheme, the buyer needs to contact the purchaser.

Question 21

If a taxable person sells to natural persons through an e-shop both Union goods and imported goods – is it necessary to implement the OSS special scheme or the IOSS special scheme or both?

Answer

If a business is engaged, through the e-shop, in intra-Community distance selling of goods as well as in distance selling of goods imported from third countries (and the requirements for the implementation of both special schemes are met) – the taxable person, if wishes, can register as a user of the OSS special scheme as well as a user of the IOSS special scheme (the implementation of both schemes is voluntary).

Question 22

If a company is a taxable person and acquires the goods from other EU Member States – is it also necessary to register as a user of any special scheme?

Answer

A taxable person has no need for any special scheme when acquires goods from other Member States. The acquisition of goods from a taxable person of another Member State together with the transportation of these goods from the other Member State to Estonia is still intra-Community acquisition of goods, subject to reverse charge. For the seller it’s still intra-Community supply taxable at 0% VAT rate, the seller has no obligation to add VAT with the regular VAT rate of its Member State to the sales price.

Question 23

Whether the IOSS VAT returns are automatically created from the customs declarations?

Answer

No, the IOSS VAT returns shall be submitted separately.

Question 24

If a business implements the IOSS special scheme – in such case it’s not necessary to submit the import customs declaration any more and VAT shall be calculated from the sales price?

Answer

The customs declaration shall still be submitted, but if the IOSS registration number is set out in the customs declaration, VAT is not payable upon the import in customs but is really calculated only from the sales price.

Question 25

What happens, if the goods are located in a third country and the holder of the goods sells the goods from this third country directly to a private person whose place of residence is in the EU?

Answer

In such case there are three different opportunities:

1) the seller, a third country business, registers through an intermediary as a user of the IOSS special scheme (if the requirements for the implementation of the IOSS special schemes are met), the purchaser pays VAT to the seller at the moment of the purchase and VAT is not payable upon the import of goods;

2) the person who presents goods in customs as an indirect representative on behalf of the purchaser of the goods (the express company, the provider of the postal service, the customs agency) implements the special scheme stipulated in Article 432 of the Estonian VAT Act – the purchaser pays VAT to the person who presents goods in customs and has no obligation to complete customs formalities him/herself;

3) the purchaser pays VAT for goods in customs and completes all customs formalities him/herself.

Question 26

If the goods with intrinsic value below 150 euros are imported to Estonia and after that are transported from a customs warehouse located in Estonia to any other EU Member State to the end user – if the importer registers as a user of the IOSS special scheme, does it mean that VAT shall be added to the price of every consignment, the purchaser must not pay VAT in customs of his/her Member State and the importer declares distance selling of goods imported from third country? In what country the importer must do it, if the importer is a Swedish taxable person?

Answer

If the goods are placed in a customs warehouse before they are sold to the customer, the IOSS special scheme is not applicable. To implement the IOSS special scheme, the goods shall be transported from a third country directly to the EU private consumer.

If the goods are taken out of the customs warehouse, VAT shall be paid upon the import of goods in the country where the customs warehouse is located.

If the goods are already released for free circulation, the OSS special scheme is applicable. The Swedish business can register as a user of the OSS special scheme only in Sweden.

Question 27

Whether the OSS VAT return or IOSS VAT return shall be always amended by the return of the running period – irrespective when the mistake was detected, during the same year (for example, the taxable person found out in December the mistake which was made in the IOSS VAT return submitted for September) or when the new year has already begun (for example, the taxable person found out in January the mistake which was made in the IOSS VAT return submitted for November of the previous year)?

Answer

Yes.

Question 28

If a taxable person amends the OSS VAT return or IOSS VAT return, does it bring about the tax arrear with the interest?

Answer

In Estonia the electronic implementation does not calculate the interest, but the tax authority of the country of consumption (country where is the place of supply) can collect it according to the tax rules of this Member State.

Question 29

If the Estonian Tax and Customs Board terminates the implementation of the special scheme itself – can the business submit the application for registration as a user of the special scheme again already from the next month (if the business makes the transaction covered by the special scheme) or there is certain period when is not allowed to register as a user of the special scheme again?

Answer

As a rule, the tax authority terminates the implementation of the special scheme if the person implementing the special scheme has repeatedly failed to comply with the requirements established for the implementation of the special scheme (according to subsections 43 (21) and 431 (24) of the Estonian VAT Act). In such case, the person shall not have the right to implement the special scheme within two years as of the month following the month in which the decision to terminate implementation of the special scheme enter into force.

Question 30

Does the holder of the goods always have supply with 0% VAT rate, if the holder sells goods to the end user through an e-shop?

Answer

In Estonia the holder of the goods has supply with 0% VAT rate only if the holder is a third country business who sells through an e-shop its goods, located in Estonia, to a non-taxable person who is also located in Estonia and the e-shop is treated as deemed supplier.

Question 31

How a user of the OSS or IOSS special scheme determines the time of supply of the goods or services?

Answer

The day on which the person implementing the IOSS special scheme has received confirmation of payment for the goods or payment obligation or notice of payment authorization shall be treated as the time of supply of distance selling of the goods imported from a third country (and for an e-shop who is treated as deemed supplier and applies the IOSS special scheme, also as the time of the acquisition of the goods imported from a third country).

A user of the OSS special scheme determines the time of supply according to regular rules.

Question 32

How is the VAT treatment if an e-shop is not treated as deemed supplier – the Union goods are sold to the consumer or intrinsic value of the goods imported from a third country exceeds 150 euros?

Answer

If an e-shop is not treated as deemed supplier for abovementioned reasons – the sellers of the goods must declare their supplies themselves. To charge VAT with the correct rate, the sellers must recieve from the e-shop the information about purchasers and Member States whither the goods were sold. The e-shop in such case taxes with VAT and declares only the services provided to the sellers of the goods.

If the intrinsic value of the goods imported from a third country exceeds 150 euros, the import of the goods is not exempt from VAT. It means that the VAT is payable upon the entry of the goods into the EU in the Member State where such goods are imported.

Question 33

If an Estonian business is not registered for VAT liability yet and the taxable value of its intra-Community distance selling is less than 10 000 euros per year – whether such business has no obligation to register for VAT liability and must not add VAT to the sales price of its intra-Community distance sales?

Answer

If an Estonian business meets the conditions of subsection 101 (7) of the Estonian VAT Act (inter alia, the business does not have a seat or permanent business establishment in a Member State other than Estonia) and the business does not wish to implement the OSS special scheme – if its gross supply of digital services provided to non-taxable persons of other Member States and intra-Community distance selling of goods created from Estonia to all Member States together does not exceed 10 000 euros in total during the calendar year, the business has no obligation to register for VAT liability in Estonia and also has no obligation to register for VAT liability in any Member State of destination and must not add the Estonian VAT and also must not add VAT of the Member State of destination to the sales price of its intra-Community distance sales.

If an Estonian business has no permanent business establishment in the other Member State but has a storehouse in that Member State and the business sells the goods from this storehouse only to private persons of the same Member State or, additionally, also creates intra-Community distance selling from that storehouse to other Member States and does not wish to implement the OSS special scheme – the business has no obligation to register for VAT liability in Estonia also in such case but the goods sold from the storehouse, located in the other Member State, to non-taxable persons are taxable with VAT in the Member State of the place of residence of the purchaser.

If the conditions for implementation of 10 000 euros threshold are not met (for example, a business has permanent business establishment also in any other Member State) and the business does not wish to implement the OSS special scheme – the business shall register for VAT liability in the Member State of destination, shall charge VAT with the VAT rate of the Member State of destination and shall pay VAT for intra-Community distance selling directly in the Member State of destination.

If a business wishes to implement the OSS special scheme, such business shall register in Estonia for VAT liability at first.

Question 34

If a business registers as a user of the OSS special scheme from 1 July 2021, but the 10 000 euros threshold is exceeded only in August 2021 – until the threshold is not exceeded, should the business add VAT with the Estonian 20% VAT rate to the sales price?

Answer

Until the 10 000 euros threshold is not exceeded, a business, if wishes, can add VAT with the Estonian 20% VAT rate to the sales price of intra-Community distance sales and digital services provided to non-taxable persons of other Member States and can apply VAT rates of the Member States of destination only from the day when the 10 000 euros threshold is exceeded. But it presupposes that until the 10 000 euros threshold is not exceeded, a business does not implement the OSS special scheme. If a business has registered as a user of the OSS special scheme from 1 July 2021, the VAT rate of the Member State of destination shall be applied for intra-Community distance sales and digital services provided to non-taxable persons of other Member States and such supplies shall be declared in the OSS VAT return also right away from 1 July, although the 10 000 euros threshold is not exceeded yet.

Question 35

If a business has registered as a user of the OSS special scheme – is it possible in every new calendar year to charge VAT with the Estonian 20% VAT rate upon the intra-Community distance selling until the 10 000 euros in this particular year is not exceeded and to submit the OSS VAT returns only when the threshold is exceeded?

Answer

No. If a business has already registered as a user of the OSS special scheme – from the day when the business was registered as a user of the special scheme, always the VAT rate of the Member State of destination shall be applied for all intra-Community distance sales and such supplies shall be always declared according to the OSS special scheme, irrespective the 10 000 euros threshold in the particular calendar year is already exceeded or not.

Question 36

Whether in 2021 the calculation of the 10 000 euros threshold begins from 1 July?

Answer

There were different viewpoints concerning this topic – but today the Estonian Ministry of Finance and the Estonian tax authority have the common understanding that, in consideration of the absence of the correspondent transitional provision in the EU VAT Directive and in the Estonian VAT Act, the calculation of the 10 000 euros threshold also in reference to intra-Community distance selling always begins from 1 January, including 2021 – not as the exception from 1 July in 2021.

Question 37

If I understand correctly, the 10 000 euros threshold is applicable in Estonia. If the threshold in the country where the service was provided is less than in Estonia, how the business must calculate the threshold?

Answer

The 10 000 euros threshold is the same in all Member States, it is stipulated in the EU VAT Directive.

Question 38

If a business who is engaged in intra-Community distance selling is not registered for VAT liability yet and exceeds the 10 000 euros threshold, is it necessary to register in Estonia for VAT liability?

Answer

Such business must register for VAT liability only if the business wishes to implement the OSS special scheme – because only a business who is registered for VAT liability can be registered as a user of the OSS special scheme. The OSS special scheme is voluntary, the business can not implement this special scheme, can not register in Estonia for VAT liability and can pay VAT directly in the Member State of destination of goods.

Question 39

If there were no transactions during a taxable period - is it necessary to submit the return concerning special scheme for this taxable period also in such case?

Answer

If a user of the special scheme doesn't create any transaction, covered by the special scheme, during the taxable period and has no corrections to make in respect of any previous return - in such case the user of the special scheme shall submit a nil-VAT return. (Article 59a of the Council Implementing Regulation 2019/2026.)

 

26.08.2021