Until July 1, 2021 rules for declaring and fulfilling turnover tax obligations under the special MOSS (MiniOneStopShop) procedure were in effect for enterprises providing e-commerce and telecommunications services.
This meant that when providing digital services between different countries, it was possible to follow the rules of the country where the company is registered.
Digital services include any services provided electronically, for example:
- Telecommunication services
- Broadcasting services
- Website development and hosting
- Software development and update
- Distance learning
- Creation of images, texts and data, the possibility of using digital databases
- Creation of music, movies and games, including online gambling
It should be noted that the following services are not digital:
- Radio and television broadcasting services
- Printed materials, such as books, newsletters, newspapers and magazines
- Professional services, such as lawyers and financial advisors advising clients online
- Training services in which course materials are provided by the teacher via the Internet
- Offline data storage services
- Advertising services (for example, in newspapers, on posters or on television)
- Phone helpline/assistance
From July 1, 2021, the MOSS system can be used not only in the case of electronic services, but also in the case of all other services:
- Which an Estonian company (liable for turnover tax) will provide to persons who are not registered liable for turnover tax from other EU countries
- The place of origin of turnover, which is the country of the recipient of the service
All the marginal rates applicable in the member States of the Community for remote sales have been cancelled and, at the moment, a single marginal rate of 10,000 euros is applied.
Since the special procedure for taxation of turnover has expanded, its name has also changed. The new extended special order is now called OSS (OSS special order, English OneStopShop).
To ensure unhindered delivery of goods from third countries to the recipient or customer of the goods to simplify declaration and payment A special procedure has been introduced for the turnover tax on the import of such goods (IOSS, English Import OneStopShop).
Remote Sale and special OSS procedure
Based on the Turnover Tax Law, remote sale is the alienation of goods by an enterprise of one EU state to another EU state to an unregistered person liable for turnover tax.
The application of a special OSS procedure is voluntary for enterprises
It is important to remember that the new procedure can only be applied if the following conditions and requirements are met:
- The seller of the goods or service provider has a location or permanent place of business in only one EU state.
- The product is sold, or the service is provided to a person who has a place of residence or residence in another EU state, which is not registered as a turnover tax obligator or a person with a limited turnover tax obligation in any EU state.
- The total turnover of remote sales within the Community and electronic communication services, as well as services provided electronically, does not exceed 10,000 euros per calendar year.
If the company still does not want to apply a special procedure, then still may be registered as a turnover tax obligated person in each EU State where a turnover tax obligation arises from the sale of goods or services to the final consumer.
Import of goods and special IOSS procedure
A special IOSS procedure was introduced primarily for the convenience of the end user. If the entrepreneur uses a special procedure, the recipient of the goods does not have to submit a customs declaration for goods ordered from third countries himself. The seller collects turnover tax when paying for the order and declares it monthly in the IOSS declaration.
Special order IOSS simplifies the fulfilment of tax obligations for entrepreneur: entrepreneur, joined special order can register the user to special order one state and to declare and pay the VAT when importing goods, covered by special order only in that state (the state in which was registered by the user) instead of paying tax turnover of import of goods in each country where the product imported.
Similar to the OSS special order, the application of the IOSS special order it is voluntary for enterprises.
In order to join the OSS/IOSS special procedure, an entrepreneur must submit an application to the Estonian Tax and Customs Department. After submitting the application, the company is issued a registration number, which is used only for the application of a special OSS/IOSS procedure.
When submitting an application, the taxpayer must take into account that the special IOSS procedure can only be used for remote sale goods imported from non-European Union states, the cost of which does not exceed 150 euros per order, and which are not excise goods.
Additionally, it should be taken into account: in order to consider the sale of imported goods as a remote sale, the goods must be physically delivered from outside the European Union directly to the final buyer.
If goods delivered from outside the European Union are sent to a customs warehouse in a member State of the European Union, from where they are subsequently delivered to a customer who is not registered as liable for turnover tax, then such transactions are not subject to declaration on the basis of a special IOSS procedure, since at the time of sending the goods to the customer were already in the territory of the European Union.
Execution of tax obligations
The obligation to submit the OSS declaration is quarterly, and the IOSS declaration is monthly. Declarations must be submitted by the end of the month following the tax period. The use of a special procedure is not an obligation, but an opportunity to make it easier to declare your turnover tax.
MOSS special order companies registered in Estonia that If they wish to apply the Extended Special Procedure (OSS) in the future, they should not submit a new application.
If the company no longer carries out remote sales inside the European Union or does not provide services covered by a special procedure, it may terminate the OSS/IOSS special procedure by notifying no later than the tenth day of the month following the month of change.
For detailed advice on the declaration of OSS/IOSS in Estonia, we recommend contacting an accountant or tax consultant of LKS Consult OÜ and get answers to your questions. Also LKS Consult OÜ provides professional accounting services for Estonian companies.