What VAT obligations do Amazon and Etsy sellers have under the OSS scheme?

Before OSS, the rules were far more complicated. Let’s say you were based in Spain and sold products to customers in France, Germany, Italy, and the Netherlands. Once your sales in each country passed that country’s individual threshold, you’d have to register for VAT there, learn the local rules, and file separate VAT returns — often in another language and with different formats. The process could quickly become overwhelming, especially for small businesses or solo entrepreneurs.

OSS changes that by creating a single EU-wide system. Instead of registering in every country where you sell, you can manage almost all your VAT reporting in one place — the EU country you choose as your Member State of identification. The idea is to make selling across the EU feel much more like selling domestically, at least from a VAT reporting perspective.

The €10,000 threshold and voluntary registration

Since 1 July 2021, the EU introduced a single distance sales threshold of €10,000 per calendar year for all cross-border B2C sales within the EU. This figure is calculated net of VAT and also includes certain TBE services, not only goods. It’s calculated on your total EU-wide sales, not per country — a major shift from the old system, where each country had its own, often much higher, threshold.

If your total cross-border sales in a year stay below €10,000, you can simply apply your domestic VAT rules, meaning you charge your local VAT rate and declare it in your standard VAT return. This is simpler for smaller sellers, but it’s not always the best option for everyone.

Once you exceed €10,000 — even by a small amount — OSS rules apply from that point forward. But here’s the part many sellers don’t realise: you can register for OSS voluntarily before reaching the threshold. However, in some countries, once you make this choice, you are bound to it for at least two calendar years — meaning you cannot switch back mid-year without consequences. For fast-growing businesses or those expecting seasonal spikes in sales (for example, around the holidays), early registration can prevent a mid-year administrative scramble. It also means you apply the correct VAT rate for each customer’s country right from the start, helping to avoid refunds or corrections later.

Key benefits and responsibilities

The biggest selling point of OSS is simplicity. You register once in one EU country — your Member State of identification — and from then on, for eligible cross-border B2C transactions, you charge the VAT rate applicable in the customer’s country. The applicable VAT rate is determined by the place of supply under VAT rules, which, for OSS, is based on the customer’s location at the time the supply is completed, not necessarily when the order is placed. At the end of each quarter, you file a single VAT return that covers all your eligible OSS sales, and you make one consolidated payment to your local tax authority. They then distribute the VAT to the other EU countries for you.

However, OSS doesn’t remove your VAT responsibilities. It does not apply to B2B sales, nor does it replace local VAT registrations when you store goods in other Member States — local sales in those countries still require domestic VAT reporting. You also must ensure you’re charging the correct VAT rate at checkout and keep detailed electronic records for every OSS transaction for a full ten years, regardless of whether you remain registered for OSS. These records must be electronically accessible on request by the tax authority of any Member State and must include details such as the customer’s country, VAT rate applied, invoice data, proof of payment, and proof of where the goods were shipped from and delivered to.

If you’re selling on platforms like Amazon or Etsy, there are additional platform-specific obligations. For example, with Amazon’s Pan-European FBA, OSS will not cover domestic sales in the country where stock is stored — you still need local VAT registration there. For some transactions involving non-EU sellers, the marketplace may even be deemed the supplier for VAT purposes, changing the reporting process entirely.

OSS as your VAT control tower

Think of OSS as your VAT control tower for EU sales. It doesn’t run your business, set your prices, or ship your goods, but it gives you a single point of coordination for your cross-border B2C VAT obligations. Without it, you’d be juggling up to 27 different VAT systems, each with its own rules, deadlines, and filing requirements. With it, you have one set of OSS procedures, one OSS filing deadline per quarter, and a lot less administrative stress — though you may still have local VAT returns if you have other obligations outside the OSS scope.

For online sellers — especially those in the early stages of expansion — understanding and using OSS effectively can mean the difference between smooth growth and an overwhelming administrative nightmare. The more you know about how it works, when it applies, and what it does not cover, the easier it will be to keep your business both compliant and competitive.

Understanding the OSS scheme

What is the OSS scheme?

The One-Stop Shop (OSS) is an EU VAT system introduced on 1 July 2021 with the goal of making cross-border selling less of a tax headache. Before OSS, the rules were much more fragmented. If you sold to customers in multiple EU countries, you had to track each country’s VAT registration threshold, and once you exceeded it, you were required to register for VAT there, file returns in that country’s format, and pay VAT directly to that country’s tax authority. This could mean managing several sets of VAT obligations simultaneously, each with its own rules, languages, and deadlines.

OSS removes much of that complexity by allowing you to report and pay VAT on most intra-EU cross-border B2C sales (known as distance sales of goods within the EU or WSTO) and certain B2C services (such as telecommunications, broadcasting, and electronic [TBE] services) through a single registration in one EU country. This single point of contact is called your Member State of identification, and your tax authority there handles distributing VAT to other countries for you.

OSS is not just for EU-established companies. There are actually two versions:

• Union OSS – for EU-based businesses making WSTO or certain B2C services to consumers in other EU Member States, and for non-EU sellers who have a fixed establishment or stock in the EU.
• Non-Union OSS – for non-EU businesses supplying certain services (including TBE) to EU consumers without an EU establishment.

If a non-EU seller is shipping goods into the EU in consignments worth €150 or less, those sales generally fall under the Import One Stop Shop (IOSS), not OSS.

When does OSS apply?

OSS applies when your total EU-wide cross-border B2C sales exceed €10,000 in a calendar year. This threshold is calculated net of VAT and includes both WSTO (goods) and certain TBE services supplied to EU consumers. It is a combined limit for all Member States, not a per-country threshold.

If you exceed €10,000 — even by a single transaction — the new VAT place-of-supply rule applies from that transaction onward in the same calendar year. That means you must start charging the VAT rate of the customer’s country immediately.

Here’s a practical example: if you’re based in Italy and sell €4,000 worth of goods to France, €3,000 to Germany, and €4,000 to Spain in a single year, you’ve already hit €11,000 in cross-border sales. From the sale that pushed you over €10,000, you must apply the VAT rate of the customer’s country and report the sale through OSS.

You can also opt in before hitting the threshold. Voluntary registration makes sense if you expect sales to grow quickly, want consistent VAT processes all year, or want to avoid having to change VAT rates mid-year. But be aware — once you opt in, you are generally bound to that choice for a set period (often two years, depending on national rules).

How OSS works in practice

Once you register for OSS in your Member State of identification, that country becomes your central hub for VAT reporting. Whenever you sell to a customer in another EU country, you must charge VAT at the rate applicable in that customer’s country — which can vary significantly. For example, Germany’s standard VAT rate is 19%, while Hungary’s is 27%.

At the end of each quarter, you submit one OSS VAT return listing all your eligible cross-border B2C supplies (WSTO and certain services). Alongside the return, you make one consolidated payment to your own tax authority, which then distributes the correct amounts to each EU country where your customers are based. This OSS return only covers transactions within its scope — other supplies, such as domestic sales in your Member State of identification or in any country where you store goods, still require local VAT returns.

Recordkeeping requirements

OSS comes with strict recordkeeping rules. You must keep detailed electronic records for each OSS transaction for at least ten years, even if you later deregister from the scheme. These records must be made electronically accessible on request by the tax authority of any EU Member State.

Your records should include:

• The customer’s Member State of consumption.
• The VAT rate applied.
• The net value and VAT amount, in the currency used.
• The date of supply.
• Invoice details.
• Proof of payment, including date and amount received.
• Proof of where the goods were shipped from and delivered to, or for services, where they were received.
• Information used to determine the customer’s location (e.g., IP address, billing address, delivery address).

Tax authorities can request this information years after the sale, so your system for storing and retrieving transaction data must be reliable. Losing records or failing to provide them can lead to penalties or even removal from OSS.

Amazon sellers’ OSS obligations

Fulfillment-by-Merchant (FBM)

If you sell on Amazon using the Fulfillment-by-Merchant (FBM) model, you store and ship products from your own premises — whether that’s a warehouse, an office, or even your garage. Under this setup, Union OSS can cover all of your eligible cross-border B2C sales within the EU (known as WSTO), as long as the goods are shipped from the country where you are registered for OSS. If you also supply certain B2C services — such as telecommunications, broadcasting, or electronic (TBE) services — OSS can apply to those too, provided they meet the scheme’s scope.

In most cases, this means you only need to register for OSS in one EU country (your Member State of identification), file a single quarterly OSS return, and make one payment for all your EU cross-border sales. Your tax authority will then distribute the correct VAT amounts to the other EU countries where your customers are located.

The major advantage here is avoiding additional VAT registrations in other EU countries. However, this simplicity only holds if your stock remains in the same country. The moment you decide to store products in another EU Member State — perhaps to be closer to a big market or improve delivery speed — you trigger local VAT registration requirements there. In some cases, countries require you to register even before your goods physically arrive, especially when pre-registration is linked to warehouse contracts. Once registered locally, any domestic sales in that country must be reported there, while OSS will still handle your cross-border sales.

For example, if you’re an FBM seller based in Portugal and keep all stock there while shipping directly to customers in Spain, France, or Germany, OSS alone is enough for your cross-border VAT compliance. But if you start renting warehouse space in Spain, you’ll need a Spanish VAT registration and must file local returns for sales delivered within Spain.

Fulfillment-by-Amazon (FBA)

Things become more complex when you sell through Fulfillment-by-Amazon (FBA), particularly if you use the Pan-European FBA program. In this setup, Amazon stores your products in multiple warehouses across the EU to fulfil orders from the location closest to each customer. While this improves delivery times and can boost sales, it also triggers extra VAT obligations.

The key principle is this: if your goods are physically stored in a country, you must be VAT registered there. This requirement applies even if you never directly ship an order to a customer in that country. Simply holding inventory in a warehouse is enough to create a VAT presence.

Once you’re registered locally, you must file VAT returns in each storage country. These returns will cover:

• Domestic sales within that country.
• Stock movements between EU warehouses — recorded as intra-Community dispatches (WDT) in the country of departure and intra-Community acquisitions (WNT) in the country of arrival. These movements are not reported in OSS; they go into the local VAT returns of both the dispatching and receiving countries.

For example, if you are based in Poland and Amazon stores part of your inventory in Germany, France, and Italy, you’ll need VAT registrations in all three. Your German VAT return will report domestic German sales and stock received from other countries, your French VAT return will do the same for France, and so on. OSS will still be used for cross-border B2C sales from any of these warehouses, but local VAT returns remain necessary for sales within each storage country.

Registering for OSS via Amazon Seller Central

Amazon has made OSS registration more convenient by letting you initiate the process directly through Seller Central. Selecting the EU-Union OSS scheme here allows you to consolidate reporting of your eligible EU cross-border B2C sales into one OSS return, no matter which Amazon warehouse they were shipped from. This is a time-saver and helps reduce the risk of overlooking transactions.

However, this feature is simply a registration pathway. Your actual OSS registration is still with your own tax authority, and Amazon does not submit your OSS returns for you. You remain fully responsible for accurate and timely filing, as well as for meeting all local VAT obligations in the countries where your goods are stored.

Using Amazon’s VAT calculation service

To help ensure you’re charging the correct VAT rate, Amazon offers the VAT Calculation Service, which automatically applies the buyer’s country VAT rate at checkout. This helps you stay compliant and keeps your pricing transparent for customers. That said, you still need to configure your VAT settings correctly in Seller Central, verify that product categories are assigned the right standard or reduced rates, and make adjustments where needed — the system is not infallible, especially for products with special VAT rules.

Etsy sellers’ OSS obligations

EU-based Etsy sellers

If you’re an Etsy seller based in the EU, how you handle VAT depends on the total value of your EU-wide cross-border B2C sales in a calendar year. As long as your combined distance sales to consumers in other EU countries remain below the €10,000 threshold (calculated net of VAT and including certain telecommunications, broadcasting, and electronic [TBE] services), you can stick with your domestic VAT rules. That means you charge your local VAT rate for every sale and report it all on your standard VAT return.

Once you exceed €10,000 — or if you choose to opt in earlier — you must apply the VAT rate of the customer’s country from the sale that crosses the threshold onward. At that point, you can register for the Union OSS scheme in one EU country (your Member State of identification) and use your VAT ID from that country for OSS filings.

A common misunderstanding is that linking your VAT/OSS details to Etsy means Etsy will collect and remit VAT on your intra-EU sales of goods. For most EU-based sellers making intra-EU B2C sales of physical goods, you remain responsible for charging the correct VAT rate and reporting those sales yourself, typically via Union OSS. Etsy may display the correct VAT-inclusive prices to customers based on your VAT settings, but the collection and remittance of VAT on these sales is still your responsibility.

Etsy does collect VAT in other contexts — for example, on imports into the EU worth €150 or less via IOSS, or on certain fees you pay Etsy as a seller — but these are separate from your own VAT obligations on intra-EU B2C sales.

Record-keeping obligations apply just as strictly to Etsy sellers as they do to Amazon sellers. You must keep detailed electronic records for every OSS transaction for at least ten years, including the customer’s location, VAT rate applied, proof of sale, and evidence of delivery. These records must be electronically available on request to any Member State’s tax authority, even after you deregister from OSS.

Non-EU sellers with EU-based fulfilment

If you’re based outside the EU but store and ship products from within the EU — for example, using a fulfilment warehouse in Germany — your VAT rules differ from those for low-value imports. Because the goods are already in the EU, IOSS does not apply (there’s no import taking place).

Instead, for certain intra-EU B2C sales made by non-EU sellers through a marketplace like Etsy, the marketplace can be treated as the deemed supplier. In those cases, Etsy becomes responsible for charging and remitting VAT on the sale — often using OSS — while you are responsible for reporting your underlying supply to Etsy under the deemed-supplier rules. You may still need local VAT registrations in the countries where your stock is physically stored to handle domestic sales and stock movements.

For example, if you’re a seller based in Canada with stock stored in Germany and you sell to customers in France or Spain via Etsy, Etsy may be required to collect and remit VAT on those cross-border sales via OSS. However, if you also ship products directly from Canada to EU customers in consignments worth €150 or less, those shipments would fall under IOSS instead.

Understanding the difference between OSS, IOSS, and deemed-supplier rules is crucial to staying compliant and avoiding both double taxation and missed filings. If you’re unsure how these apply to your setup, it’s worth speaking with a VAT compliance specialist who understands both EU VAT schemes and marketplace-specific processes.

Record-keeping & compliance essentials

What you need to record

If you’re using the OSS scheme, keeping accurate and detailed records is not just good practice — it’s a legal requirement under EU VAT law. For every sale that falls under OSS, you must record the Member State of consumption. For goods, this is the country where transport to the customer ends. For digital or other covered services (such as TBE services), it’s determined by the customer’s permanent address or usual residence. This information determines the VAT rate that should have been applied.

Alongside this, you must record the VAT rate charged, the net value of the sale, and the VAT amount, all in the currency of the transaction. Your records should also allow for conversion into the currency of your OSS VAT return (often your Member State’s currency), using the official European Central Bank (ECB) exchange rate unless your tax authority specifies otherwise.

The date of supply — the day the goods or services were actually provided — must be included, along with any related invoice information. Payment records must show exactly when the payment was made, how much was received, and the method used. For goods, you also need proof of supply location, meaning where the transport started and where it ended. Tax authorities often require two pieces of non-contradictory evidence, such as shipping documents, the customer’s billing address, or for services, IP logs and payment records.

Refunds, returns, and corrections are part of the same compliance picture. These adjustments must be reflected in the OSS return for the period in which they occur, not in the period of the original sale. That means if you issue a refund three months after the sale, it should appear in the OSS filing for that later quarter.

For example, if you sold a handmade leather wallet from Italy to a customer in France, your record should clearly show: France as the Member State of consumption, the French VAT rate, the net sale price, the VAT amount in euros, the invoice number, the date and method of payment, and confirmation that the wallet was shipped from Italy and delivered in France, backed up by shipping and payment records.

How long you need to keep them

EU VAT law requires that OSS-related records are kept for ten years from the end of the year in which the transaction took place. This applies even if you deregister from OSS or stop trading altogether — the obligation to retain those records remains.

The long retention period exists because VAT audits can happen years after the original sale, and tax authorities in different EU countries may request the same data at different times. If you sell a product in 2025, you might still need to provide those records as late as 2035.

A reliable, secure digital storage system is essential. Cloud-based accounting tools, VAT-compliance platforms, or encrypted, well-organised spreadsheets with backups can all work — but the key is that the data must be complete, accessible, and tamper-proof.

What happens if you don’t comply

Failing to keep complete and accessible records can have serious consequences. At best, you might face financial penalties for incomplete or late records. In more severe cases, you could be removed from the OSS scheme and, in some Member States, be barred from re-registering for a set period. For cross-border sellers, losing OSS status means reverting to the far more complex system of registering and filing VAT in every EU country where you sell.

Poor record-keeping also puts you at greater risk during a VAT audit. If you can’t produce proof of where a sale took place, which VAT rate was applied, or when payment was received, tax authorities may assume you owe more VAT than you declared. That could lead to backdated VAT bills, interest, and additional penalties.

In short, your OSS records are your VAT safety net. They protect you during audits, keep you compliant across all EU countries, and allow you to focus on growing your business instead of firefighting tax issues years down the line. Treat them as one of your business’s most valuable assets — because they are.

Practical tips for sellers

Deciding when to register voluntarily for OSS

You’re not required to register for OSS until your total EU-wide cross-border B2C sales exceed €10,000 (net of VAT) in a calendar year. This figure includes both WSTO (intra-EU distance sales of goods to consumers) and TBE services (telecommunications, broadcasting, and electronic services) to EU consumers.

Conclusion

Why OSS knowledge matters

Understanding your OSS obligations isn’t just a matter of ticking a compliance box to keep tax authorities happy — it’s a core part of running a profitable and scalable e-commerce business in the EU. The reality is that VAT mistakes can cost you far more than the tax itself. They can lead to unexpected VAT bills, late-payment penalties, and even damage your brand’s reputation if customers are suddenly charged extra because you weren’t applying the correct rates.

Whether you’re selling on Amazon, Etsy, or both, knowing exactly when and how OSS applies to your business ensures you can plan ahead with confidence. You’ll avoid the stress of duplicate VAT registrations in multiple countries, and you won’t have to waste hours trying to untangle complex tax scenarios after the fact. For many small business owners, that peace of mind is as valuable as the money saved.

Staying compliant for long-lerm success

OSS is more than a shortcut for VAT filing — it’s a tool for streamlining your operations as your business grows. By consolidating your cross-border VAT obligations into one return and one payment process, you create a predictable routine that works across the EU. This frees up your time and mental energy to focus on the things that drive your business forward: finding new customers, improving your products, and building your brand.

Compliance also builds trust. Customers buying from another country want to feel confident that the price they see is the price they’ll pay, with no hidden charges at delivery. OSS helps ensure that VAT is applied correctly and transparently at checkout, which can directly improve customer satisfaction and repeat purchases.

On the flip side, ignoring OSS rules or cutting corners can slow your growth dramatically. Non-compliance can lead to more than just financial penalties — it can also result in losing access to OSS altogether, forcing you back into the old, cumbersome system of registering in every country where you sell. That’s the kind of operational drag that small businesses can’t afford.

Where to learn more

If you’re ready to take the next step in mastering OSS, start with our articles! You could check out the one about VAT-OSS in general or get official EU OSS guidance available on the European Commission’s website. It’s the most authoritative source for understanding the legal framework and keeping up with updates.

For platform-specific rules, Amazon sellers should explore the VAT help pages in Seller Central, where you’ll find detailed guides on OSS registration, using the VAT Calculation Service, and managing multiple VAT numbers if you store inventory in different countries. We’ve also got some information about VAT Compliance regarding Amazon – read it for more information! Etsy sellers should review the VAT collection and remittance guidance in the Etsy Help Center, which explains exactly how the platform handles VAT under both OSS and IOSS.

Combining these resources with your own sales data will give you a complete picture of how OSS fits into your business model. You’ll know which sales fall under OSS, when you need to switch rates, and how to keep your records in order. From there, staying compliant becomes a habit — not a headache — and you can sell across the EU with confidence, clarity, and far less admin stress. If you feel like you don’t have the time, energy or the right mindset for it – just give us a call. We’ll help you out!

Many sellers choose to register voluntarily before hitting that point to keep their VAT process consistent from day one. Switching mid-year can mean changing VAT rates, adjusting prices, reconfiguring accounting software, and updating marketplace settings — all while still managing orders and growth. Early registration avoids that disruption.

However, be aware that in some Member States, opting into OSS early can be binding for a minimum period (often two calendar years). That means you cannot simply revert to domestic-only VAT rules the following year if your sales remain low. For sellers planning rapid expansion — or seasonal peaks, like holiday sales — early registration still makes sense, but it’s worth knowing the long-term commitment.

Coordinating OSS and domestic VAT obligations

A common mistake is assuming OSS replaces all VAT filings. It doesn’t. OSS only covers the cross-border B2C sales (and certain services) it’s designed for. Your domestic VAT obligations in your home country still apply, so you’ll be filing at least two separate VAT returns: your regular domestic VAT return and your OSS return.

Domestic VAT obligations may also exist in other Member States if you store goods there or make local sales — these are not covered by OSS. Each return has its own deadlines and reporting requirements, and mixing domestic transactions into your OSS return is a common audit trigger.

Think of OSS and domestic VAT as separate but connected systems. They must both reconcile with your sales data but be reported independently to stay compliant.

Leveraging platform tools

Both Amazon and Etsy offer tools to help with VAT compliance. Amazon’s VAT Calculation Service automatically applies the correct VAT rate based on the buyer’s location at checkout, but it’s only as accurate as your product category mapping. Reduced or zero rates may not be assigned automatically, so manual checks are essential to avoid overcharging or undercharging.

Etsy can display VAT-inclusive prices based on your settings, but for EU-based sellers making intra-EU B2C sales of goods, it is generally not the deemed supplier and will not remit VAT on your behalf. You remain responsible for collecting the correct rate and reporting it via OSS. Etsy does collect VAT in other contexts, such as certain cross-border sales by non-EU sellers or low-value imports through IOSS, but these are different from your own OSS obligations.

Using these tools reduces manual work, minimises pricing errors, and improves customer transparency — but they are aids, not replacements for your own compliance duties.

Working with VAT compliance specialists

Even with OSS, VAT compliance can get complex — especially if you use multiple sales channels, store inventory in several countries, or manage both OSS and IOSS at the same time. A VAT compliance specialist can help you avoid costly mistakes, prepare accurate returns, and meet all filing deadlines.

Specialists can also monitor regulatory changes for you — including VAT rate updates, procedural adjustments to OSS/IOSS, or new marketplace liability rules — so you can adjust pricing and compliance processes proactively.

For example, if you’re a UK-based seller using Amazon FBA to store goods in Germany and Poland, while also selling on Etsy to France and Spain, you could be juggling four or more VAT obligations at once. A specialist can consolidate filings where possible, ensure nothing is missed, and alert you when new rules could impact your business model.

In short, expert support can turn VAT compliance from a stressful, last-minute task into a predictable, well-managed part of your operations. That’s exactly where we come in. Contact us and get sorted with all your VAT compliance needs.