Registration for VAT purposes in case of distance selling of goods

In the past, these deliveries were known as “distance selling”. From 1.7.2021, this term is replaced by "distance sales of goods" in the VAT Act.  In connection with this change, there is a change in the registration of persons registered pursuant to § 6 as well as a change in the rules in the execution of those supplies. This change will mainly affect e-shops that deliver goods abroad.

Until 30.6.2021, persons supplying goods to non-taxable persons (so-called B2C deliveries) were obliged to monitor the value of the delivered goods by country. After exceeding the statutory value of supplies, the company supplying the goods abroad was obliged to register pursuant to § 6 and to apply the VAT rate applicable in the country where the dispatch or transport of the goods ends.

The EU directive unifies and simplifies the procedure for distance sales of goods. From 1.7.2021, the same limit for registration applies in all countries, namely EUR 10,000 for all B2C deliveries abroad. Newly, the supplier is obliged to monitor the exceedance of the statutory value of supplies for all EU countries together when selling goods at a distance. After crossing the statutory value, the company has a choice of two ways of registering.

1. Process – Registration as a payer in each country of delivery

This procedure means that after exceeding the limit of EUR 10 000, the supplier is obliged to registered in all countries where he carries out deliveries and to start fulfilling the obligations of the taxpayer in each country separately. In practical terms, this means filing tax returns, control statements and paying tax liability to the tax administrator in each country of registration separately.

Since such a procedure significantly burdens the supplier not only from the administrative but also financial point of view, there is the possibility to use the OSS (One Stop Shop) scheme from 1.7.2021.

2. Process – Special mode of OSS scheme

In order for the supplier to benefit from the special OSS scheme, he must be registered for VAT purposes in at least one EU country pursuant to § 4, § 7 or § 7a.

Consequently, the company has the possibility to register in the OSS scheme and fulfil all its tax obligations arising from the delivery to EU countries of non-taxable persons with one tax administrator. This means that the tax return, the audit statement and the payment of the tax liability will be carried out only by the tax administrator in the country of registration of the OSS. The subsequent allocation of the tax liability between countries is already in the hands of the tax administrator.

If the taxpayer chooses this process of registration, he is obliged to use the special scheme for a minimum of 2 years. This process is administrative and therefore financially, significantly easier, since the taxpayer communicates with only one tax administrator.

Taxpayers who wanted to apply the special scheme from 1.7.2021 should have notified the tax administrator between 1.4.2021 and 10.6.2021. In the event that they have missed this deadline, they will, for the time being, file returns as before in those member states where they are registered.

The tax period of the OSS special scheme is the calendar quarter and thus, for the first time, the return under this new scheme will be filed after the end of the third quarter of 2021, until 31 October. If the taxpayer has not been able to submit an application for registration to the OSS within that deadline, registration may also be requested retrospectively as of 1.7.2021.

For more information about the use of the special scheme, do not hesitate to contact us. We will be happy to advise you and, if you are interested, to help you register and meet your tax obligations.