Invoices, records and the edges of the scheme

A Munich seller lists her €35 phone cases on a large marketplace and ships them from her own stock in Germany to buyers in Austria and Belgium. She wonders whether the platform now owes the VAT. It does not: a marketplace becomes the deemed supplier only when the underlying seller is established outside the EU.

Invoices and records

The Union scheme lifts the obligation to invoice these sales. If the seller chooses to issue invoices anyway, the invoicing rules of its Member State of identification apply, not those of each customer's country.

That relief is tied to the scheme. A seller that does not use the Union scheme has to issue an invoice for its intra-Community distance sales of goods, as the Commission's table of invoicing rules points out.

Records follow the seller even after it leaves the scheme. They cover, among other things, the Member State of consumption, the type and date of each supply, the VAT payable, any payments on account and the information used to locate the customer.

The rules set a long retention period, counted from the end of the year of the transaction. The records must be made available electronically, without delay, when the Member State of identification or a Member State of consumption asks for them.

Failing to produce them after a reminder counts as a persistent failure to comply, and leads to exclusion from the scheme. The Commission offers a standard audit file, SAF-OSS, that every Member State accepts.

Correcting a return

Once a return has been submitted, a mistake in it is corrected in a later return rather than by amending the original. The correction names the tax period and the Member State of consumption it concerns, together with the VAT amount that results.

A credit note issued in a later quarter follows the same path: the seller corrects the return of the period in which the sale was declared. An unpaid invoice is handled the same way where the Member State of consumption grants bad debt relief, and that Member State may check the correction.

Supplies that are exempt in the Member State of consumption stay out of the OSS return altogether, and so do supplies taxed at a zero rate.

Marketplaces and the deemed supplier

A deemed supplier is a business that is not the actual seller but facilitates the sale through an electronic interface, such as a marketplace or a platform. For VAT purposes only, it is treated as the supplier of the goods.

In the Union scheme, that fiction covers sales of goods within the EU, to non-taxable persons, made through an interface, when the underlying supplier is established outside the EU. A seller established in the EU who sells through a marketplace therefore remains the supplier and keeps its own obligations.

Your Europe draws the practical consequence: an online seller, including one active on marketplaces and platforms, can register in one EU country to declare and pay the VAT on all its distance sales of goods to customers in the EU.

Goods that do not start in the EU

Distance sales of goods imported from outside the EU are a different operation. The goods must be shipped from a third country or a third territory; stock already held in a warehouse in the EU does not qualify, and the €10,000 threshold does not apply to these sales.

Low-value consignments of such goods can be declared through the import scheme, which has its own monthly return and its own identification number. Goods subject to excise duties cannot be declared in it, and a small business under the special scheme for small enterprises has to opt out of that scheme before joining.

One more trap concerns drop-shipping. When a seller buys goods from a supplier in a third Member State and has them sent straight to its customer without holding the stock, the Commission treats the seller's own sale as a supply without transport, which cannot be an intra-Community distance sale.

The country fiches take these edges further: the German import scheme and import VAT, and the French course on distance selling, which also covers the purchase side of an exempt business.