One-Stop-Shop for VAT

What the One-Stop-Shop means

The One-Stop-Shop is a reporting procedure for VAT on cross border sales to private customers inside the European Union. Before it existed, a retailer had to register in every country it shipped to as soon as it crossed that country's threshold. With the One-Stop-Shop a single registration in the country of establishment is enough, and all deliveries are reported through it. The tax is still paid to the countries where the customers sit, but the administration runs through one place.

The rate follows the customer's country, not the retailer's. A German shop charges an Austrian customer the Austrian rate and pays it to Austria.

Who has to take part and who may

For sales to private customers inside the EU the central threshold is 10,000 euros per year across all cross border turnover. Above it the destination country principle applies and the retailer has to pay the tax where the customer lives. Below it, the rules of the home country may still be used.

Joining is voluntary, but the alternative is registering in every single country. Anyone selling substantially into countries where the home rules do not apply has practically no choice. Sales to businesses do not belong in the One-Stop-Shop. They run through the normal invoice with the customer's VAT identification number, in most cases as an exempt intra-community supply.

What the switch requires

• Maintain the rates: every delivery address needs the right rate. Without that rule in the shop, every foreign order carries an error.
• Separate the records: sales under the procedure have to be reportable apart from the rest, otherwise the return becomes manual work.
• Know the deadlines: reporting is quarterly and the return follows the end of the quarter.
• Involve the accountant: the procedure changes the bookkeeping, not just the invoice.

Frequent questions

• Does the threshold apply per country or in total? In total, across all EU countries together.
• What about digital products? They fall under the procedure too, and there the threshold does not apply. The customer's country rate is due from the first order.
• Can I leave it again? Yes, effective at the end of a quarter. Returning is possible no earlier than the quarter after next.