The EU VAT One-Stop Shop (OSS) is an online system that lets a business declare and pay VAT on many cross-border consumer sales through a single return in one EU country. Without it, a seller of digital products or goods to consumers across the EU could need a VAT registration in every country where it has customers.
Since 1 July 2021, most business-to-consumer (B2C) sales of digital services and cross-border distance sales of goods inside the EU are taxed where the customer is. That makes VAT rates in 27 countries relevant even to a one-person business. OSS does not change who owes the tax or the rate; it changes where and how you report and pay it.
This guide explains the three OSS schemes, the EUR 10,000 threshold, registration, deadlines and record keeping, plus the customs and ViDA changes that apply from 2026 onward. Figures are as of October 2026.
Key takeaways
- OSS is optional, but it replaces many separate VAT registrations with one quarterly return.
- There are three schemes: Union, non-Union and Import (IOSS), each for a different type of seller or sale.
- The EUR 10,000 threshold only helps businesses established in a single EU country; non-EU sellers charge customer-country VAT from the first sale.
- OSS returns are due by the end of the month after each quarter, and records must be kept for 10 years.
- Low-value imports now face a temporary EUR 3 customs duty per item, and ViDA expands OSS from 1 July 2028.
How EU VAT works for cross-border consumer sales
For B2C sales of telecommunications, broadcasting and electronically supplied services (often called TBE services) and for distance sales of goods moved between EU countries, VAT is generally due in the customer's country at that country's rate. Electronically supplied services include things such as software subscriptions, downloads, streaming and automated online content.
Business-to-business (B2B) sales work differently. When a seller supplies services to a VAT-registered business customer in another EU country, the customer usually accounts for the VAT under the reverse charge. OSS covers consumer sales, not these B2B transactions. Telling the two apart, usually by checking the customer's VAT number, is one of the main compliance tasks for online sellers.
The three OSS schemes compared
| Scheme | Who can use it | What it covers | Return |
|---|---|---|---|
| Union scheme | Businesses established in the EU, and non-EU businesses for certain goods sales | Intra-EU distance sales of goods, B2C services supplied in EU countries where the seller is not established, some platform sales | Quarterly |
| Non-Union scheme | Businesses with no EU establishment | B2C services supplied to consumers in the EU | Quarterly |
| Import scheme (IOSS) | EU and non-EU sellers and marketplaces; non-EU sellers usually need an EU intermediary | Distance sales of imported goods in consignments of EUR 150 or less | Monthly |
According to the European Commission's OSS portal, businesses not established in the EU can potentially use all three schemes, while EU-established businesses use the Union and Import schemes.
The EUR 10,000 threshold
The EU set an annual EUR 10,000 threshold, excluding VAT, for the combined total of cross-border B2C TBE services and intra-EU distance sales of goods. Below it, a small seller can keep charging the VAT of its home country. The total must stay at or under EUR 10,000 in both the current and the previous calendar year.
The threshold has a key condition: the seller must be established in only one EU country. The Commission's portal states that a business established in more than one member state cannot use it, and neither can a non-EU business that has a fixed establishment in the EU. A business with no EU establishment at all is not established in any member state, so it charges the customer's VAT from the first sale.
That last point surprises many non-EU founders. A software company in the US, the UAE or Asia that sells subscriptions to consumers in Germany, France and Spain owes VAT in each of those countries from the first euro. The non-Union OSS is the usual way to handle it.
Registering for OSS
You register in one EU country, called the member state of identification.
- Union scheme: generally the country where the business is established. A non-EU business with fixed establishments in several EU countries chooses one and must keep that choice for the current year and the two following years.
- Non-Union scheme: a business with no EU establishment can choose any member state. That country issues a special EU-format VAT number.
Registration normally takes effect on the first day of the next calendar quarter. If you start making qualifying sales earlier, you can use OSS from the date of the first sale, as long as you notify the member state of identification by the 10th day of the following month. Miss that date and you may need to register directly in each customer country for the earlier sales, according to the OSS registration guidance.
Filing, paying and record keeping
The Commission's guidance on declaring and paying sets out these rules:
| Item | Rule |
|---|---|
| Union and non-Union returns | Quarterly, due by the end of the following month: 30 April, 31 July, 31 October and 31 January |
| IOSS returns | Monthly, due by the end of the following month |
| Payment | With the return, and at the latest by the end of the month after the period |
| Currency | Generally euro; some non-euro countries may require their own currency |
| No sales in a period | A nil return is still required |
| Corrections | Made in a later return, within three years of the original due date |
| Records | Kept for 10 years from the end of the year of the transaction |
Records must include the customer's member state, the type and date of supply, the VAT due and the evidence used to locate the customer, such as billing address, IP address or bank details. The member state of identification passes your return and payment on to each customer country.
A worked example
Imagine a non-EU company selling a EUR 100 monthly software subscription, priced before VAT, to three consumers: one in Germany, one in France and one in Spain. The standard VAT rates are 19% in Germany, 20% in France and 21% in Spain, according to PwC's 2026 country summaries.
| Customer country | Net price | VAT rate | VAT due |
|---|---|---|---|
| Germany | EUR 100 | 19% | EUR 19 |
| France | EUR 100 | 20% | EUR 20 |
| Spain | EUR 100 | 21% | EUR 21 |
Through the non-Union OSS, the company files one quarterly return in its chosen member state showing EUR 60 of VAT a month across the three countries, and pays it in one transfer. Without OSS, it would need three separate VAT registrations. Many sellers price VAT-inclusive instead, which means the net revenue differs by country.
Low-value imports and the IOSS
For goods shipped from outside the EU, the old VAT exemption for consignments worth EUR 22 or less ended in July 2021, so all imported goods now bear VAT. IOSS lets sellers and marketplaces charge VAT at checkout on consignments of EUR 150 or less, so the parcel clears customs without the customer paying VAT on delivery.
Customs duty is changing too. According to the European Commission's customs reform page, the EU has applied a temporary EUR 3 customs duty per item on low-value consignments since 1 July 2026, ending the old duty exemption for parcels up to EUR 150. The Commission says the temporary duty runs until 1 July 2028 and that a EUR 2 Union handling fee on small parcels applies from 1 November 2026.
What changes next: VAT in the Digital Age
The EU adopted its VAT in the Digital Age (ViDA) package on 11 March 2025. The Commission's ViDA page lists the main dates:
- 1 January 2027: smaller clarifications to OSS and IOSS apply. The Commission published revised OSS guidelines in July 2026.
- 1 July 2028: OSS is extended under the single VAT registration plan, so more types of supply can be reported through it.
- 1 July 2028: platforms for short-term accommodation rental and passenger road transport become deemed suppliers, though member states may delay this until 1 January 2030.
- 1 July 2030: digital reporting starts for cross-border B2B transactions.
Common OSS mistakes
- Charging home-country VAT after crossing the EUR 10,000 threshold, or as a non-EU seller with no threshold at all.
- Treating a consumer as a business without a valid VAT number.
- Not keeping enough evidence of where each customer is.
- Forgetting nil returns in quarters with no EU sales.
- Assuming a merchant of record covers sales it does not actually process.
A merchant of record is one alternative, since it sells in its own name and handles VAT. Our guide to the payment stack for online entrepreneurs compares that route with a plain processor, and where to base an online business explains why VAT follows customers rather than company location.
Frequently asked questions
Do non-EU businesses have to charge EU VAT on digital products?
Yes, when they sell electronically supplied services to consumers in the EU, VAT is generally due in the customer's country from the first sale. The non-Union OSS lets them report it through one EU country instead of registering in each.
Is OSS mandatory?
No. The schemes are optional. A business that chooses not to use OSS generally needs a VAT registration in each member state where it owes VAT on these sales.
Does OSS cover sales to businesses?
No. OSS covers consumer sales. Cross-border B2B services are usually handled through the reverse charge, where the business customer accounts for the VAT.
How long must OSS records be kept?
Ten years from the end of the year in which the transaction took place, even if the business has stopped using the scheme.
Does using a US LLC or another non-EU company avoid EU VAT?
No. VAT on these sales follows the customer's location, whatever the seller's legal form or home country. Our guide to US LLCs for non-US founders covers the US side of that structure. For the wider tax picture, see countries with no corporate tax, which explains why a zero corporate rate does not remove consumption taxes.
Important: This article is general information, not tax, legal or financial advice. Rules change often and depend on your personal circumstances. Speak with a qualified professional in each relevant country before you act.