EU VAT Guide

OSS for Digital Services: When Consumer VAT Gets Complicated

If you sell digital services to consumers in other EU countries, you need to understand OSS. This guide explains when it applies and how it simplifies (relatively) EU consumer VAT.

What is OSS?

OSS (One Stop Shop) is an EU VAT scheme that simplifies how you handle VAT when selling to consumers in other EU countries. Instead of registering for VAT in every country where you have customers, you report and pay through a single registration in your home country.

The key concept: for certain B2C sales (particularly digital services), you charge VAT at the customer's country rate, not yours. OSS lets you do this without the nightmare of registering in 27 countries.

Note: While OSS is primarily used for cross-border sales, Union OSS also covers certain domestic supplies made by deemed suppliers (online marketplaces and platforms) under VAT Directive Art 14a—for example, where a platform facilitates a sale and is treated as the supplier for VAT purposes.

The problem OSS solves

Without OSS

• Charge destination country VAT
• Register for VAT in each country
• File returns in each country
• Pay VAT to each country

With OSS

• Charge destination country VAT
• Register for OSS in home country only
• File one quarterly OSS return
• Pay all VAT to home country

What counts as "digital services"?

"Digital services" (officially "electronically supplied services") have a specific EU definition. They must be:

Delivered over the internet or electronic network
Essentially automated (minimal human intervention)
Impossible to deliver without technology

Digital services (OSS applies)

✓ SaaS subscriptions
✓ Downloadable software
✓ Ebooks, music, video downloads
✓ Online courses (automated)
✓ Streaming services
✓ Web hosting
✓ Cloud storage
✓ App purchases

NOT digital services

✗ Consulting (even via video call)
✗ Coaching sessions
✗ Custom development work
✗ Design services
✗ Live webinars with Q&A
✗ Professional advice
✗ Physical goods
✗ Services with human delivery

The key distinction

If a human needs to actively deliver the service, it's probably not "digital" for VAT purposes—even if you deliver it online. A Zoom consulting call is not a digital service. A self-paced video course is.

When does OSS apply?

OSS for digital services applies when you meet these conditions:

B2C sale

You're selling to a consumer, not a business. If your customer has a VAT number, B2B rules apply instead.

Digital service

You're selling an electronically supplied service as defined above.

Customer in another EU country

Your customer is in a different EU country than where you're established.

Above the threshold (or opted in)

You're above the €10,000 threshold for cross-border EU digital sales, or you've chosen to opt in.

How OSS works in practice

1. Charge the customer's VAT rate

When a French consumer buys your SaaS subscription, you charge French VAT (20%), not your home country's rate. When a German consumer buys, you charge German VAT (19%). And so on.

Example: Dutch company selling to EU consumers

• Sale to French consumer → charge 20% (French VAT)

• Sale to German consumer → charge 19% (German VAT)

• Sale to Spanish consumer → charge 21% (Spanish VAT)

• Sale to Dutch consumer → charge 21% (Dutch VAT, domestic)

2. Report through OSS

Each quarter, you submit an OSS return showing sales broken down by country and VAT rate (Arts 369f–369g VAT Directive for EU-established suppliers using Union OSS). This single return replaces what would otherwise be separate filings in each country.

3. Pay to your home tax authority

You pay the total VAT to your home country's tax authority. They then distribute the VAT to each relevant country.

How Invoxo helps with OSS

Invoxo can apply the correct destination country VAT rate automatically for OSS-eligible sales. At quarter-end, you can export your OSS data for reporting.

Learn about OSS in Invoxo →

Thresholds and registration

The €10,000 threshold for cross-border B2C sales of TBE (telecoms, broadcasting, electronic) services and intra-Community distance sales of goods

If your total cross-border B2C sales of TBE services and intra-Community distance sales of goods to other EU countries are under €10,000 per year, you can choose to charge your home country's VAT rate instead. Once you exceed €10,000, you must charge destination rates.

Note: This is a combined threshold for all your EU cross-border B2C sales of TBE services and distance sales of goods—not per country.

Registering for OSS

OSS registration is done through your home country's tax authority. Once registered, you'll file quarterly OSS returns (even if you have no sales to report that quarter).

Important

Below the €10,000 threshold, you may charge your home-country VAT rate. Above it, charging destination-country VAT rates is mandatory. However, OSS itself is always optional — you can always choose to register individually in each destination Member State instead of using OSS. What becomes mandatory above the threshold is applying the correct destination rate, not using OSS as the reporting mechanism. Monitor your cross-border sales to know when you will cross the threshold.

What's NOT covered by OSS rules

Many service businesses don't need to worry about OSS at all:

B2B services

If you're selling to businesses (with VAT numbers), OSS doesn't apply. B2B cross-border services typically use reverse charge instead.

Non-digital services

Consulting, coaching, custom development, and other human-delivered services are not digital services. For general B2C services, standard place-of-supply rules apply (generally your home country's VAT). However, since July 2021 the Union OSS scheme can also be used for non-digital cross-border B2C services where the place of supply is in another Member State (e.g. services connected to immovable property, admission to events, or other services taxed at destination under special place-of-supply rules).

Same-country sales

Selling to consumers in your own country is domestic, not cross-border. Standard domestic VAT rules apply.

Non-EU customers

Sales to customers outside the EU are generally outside EU VAT scope. B2B services are outside scope under Art 44 (place of supply at the customer's establishment). B2C electronically supplied services to non-EU customers are outside scope under Art 58. Exports of goods are exempt under Arts 146–147. OSS is only for intra-EU sales.

Summary: Does OSS apply to you?

✓

Selling digital services? SaaS, downloads, streaming, automated courses = yes

✓

To consumers? No VAT number = consumer (B2C)

✓

In other EU countries? Cross-border within EU

✓

Above €10k/year? Destination rates mandatory. OSS simplifies compliance but individual registration is also an option

If you answered yes to all four, OSS applies. If any are no, different rules likely apply.

Related guides

EU VAT Basics

The complete guide to EU VAT for service businesses.

Reverse Charge Explained

When reverse charge applies for B2B services.

VIES Validation Guide

How to validate EU VAT numbers.

ViDA: VAT in the Digital Age

New

The 2030 e-invoicing mandate and how it expands OSS.

Try our free tools

VAT Decision Tool → VIES Checker →

Common questions

Do I need to register for VAT in every EU country? ⌄

Not if you use OSS. The whole point of OSS is to let you charge destination VAT rates while only registering in your home country.

What VAT rate do I charge for OSS sales? ⌄

The VAT rate of the customer's country. Each EU country has its own standard rate (ranging from 17% to 27%). You need to apply the correct rate for each sale.

How do I know which country my customer is in? ⌄

You need two pieces of non-contradictory evidence: billing address, IP address, bank country, or other indicators. This is your responsibility to determine. Exception: suppliers with TBE services not exceeding €100,000 (current + preceding calendar year) may rely on a single piece of evidence to identify the customer's location, provided that evidence is supplied by a person involved in the supply other than the supplier or the customer (per Art 24b of the VAT Implementing Regulation).

Is marketplace/platform selling different? ⌄

Yes. Under Implementing Regulation 282/2011 Art 9a, platforms facilitating electronic services may be deemed the supplier for VAT purposes. For goods, VAT Directive Art 14a makes platforms the deemed supplier in certain cases. In both situations the platform typically handles VAT collection and reporting, including via OSS. Check whether your platform handles these obligations.

What if I sell both digital and non-digital services? ⌄

Different rules apply to each. Digital services follow OSS rules (if B2C cross-border). Non-digital services follow standard B2B/B2C rules based on place of supply.

Disclaimer: This guide covers common scenarios. VAT rules vary by country and situation—confirm with your accountant.

Simplify OSS compliance

Invoxo can apply destination VAT rates automatically for eligible digital services. Export your data for quarterly OSS reporting.

See pricing

14-day free trial. No charges until trial ends.