The OSS scheme explained: the €10,000 threshold, registration and an example

The €10,000 threshold: when OSS becomes relevant

If you sell goods, or telecommunications, broadcasting and electronic services, to consumers in other EU countries, an EU-wide threshold of €10,000 net applies. It is calculated jointly across all affected countries and both types of sales, not per country or product. Both the previous year and the current year count (§ 3c(4) sentence 1 UStG, § 3a(5) sentence 3 UStG, both German). Up to this threshold, German VAT continues to apply if you are established in only one EU member state. The very sale that takes you over the threshold is taxed at the destination country's rate (section 3a.9a(1) no. 1 UStAE, German, and for goods correspondingly under section 3c.1(1)). If you sell digital services such as SaaS or software subscriptions, the threshold affects you in the same way; more on that under e-invoicing for SaaS.

The threshold is reached quickly: around €830 of relevant EU cross-border sales per month is enough. You can waive the threshold voluntarily, and that declaration binds you for at least two calendar years (§ 3c(4) sentences 2 and 3 UStG, German). In the view of the tax authorities, it applies from the start of the calendar year for which you make it (section 3a.9a(1) no. 1 sentence 4 UStAE, German). Rechnungskit stores the effective date and the end of the binding period and monitors the threshold using the immutable invoice lines; see OSS return with Rechnungskit.

Registration: how to sign up for the OSS scheme

You notify the BZSt electronically (§ 18j(1) sentence 2 UStG, German), in practice through the BOP portal (Mein BOP) with your tax number or VAT ID. As a rule, participation only applies from the quarter after the notification (§ 18j(1) sentence 3 UStG, German). There is an exception the first time: if you cross the threshold for the first time, the scheme applies from the day of that sale, provided you notify your participation by the 10th of the following month (section 18j.1(1) sentence 7 UStAE, German). If you miss that deadline, you have to declare the sales up to the start of the OSS quarter separately in each EU country. So register before you cross the threshold, or by the 10th of the following month at the latest.

Deadlines and separate records

Legally, the tax period under OSS is the calendar quarter, for distance sales and electronic services to consumers alike (§ 16(1d) UStG, German). The return is due within one month after the end of the quarter, and the tax is due on the last day of that month (§ 18j(4) UStG, German). You must keep the underlying records for ten years (§ 22(1) sentence 4 UStG, German).

Rechnungskit separates the sources by the stored VAT matrix case: W6 distance sales of goods are summarized by country and VAT rate in the quarterly report, and S4 services (electronic services to consumers) appear in a report of their own. That keeps goods and electronic services from showing up twice. In your quarterly return, both belong together. One point for the documents themselves: OSS distance sales are excluded from the small-amount invoice rules (§ 33 sentence 3 UStDV, German). If you issue an invoice, it needs the recipient's full address whatever the amount.

Example: what an OSS return looks like

A German online coffee shop sells €6,200 net to Austria and €3,100 net to the Netherlands in the third quarter. For the example we assume the reduced food rates of 10 percent (Austria) and 9 percent (Netherlands); check the current rate per country and product in the EU database TEDB. The W6 quarterly report contains two lines: Austria, €6,200, €620 tax; Netherlands, €3,100, €279 tax. The OSS return splits sales by member state and applies each state's rate (section 18j.1(2) UStAE, German). Rechnungskit lists the same business's S4 electronic services in a separate report; they still belong in the quarterly return.

How B2C is distinguished from B2B is explained on the page on e-invoicing for B2C.