Articles on: OSS & Dropshipping
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How do OSS and digital downloads work?

If your services do not require your intervention, which means that they are automated, these rules apply:

If your customer is a European B2B (a company) with a valid VAT number, you do not add VAT (0%). Instead, you add a clause to your invoice like this: "The purchase is liable to Intra-Community supply 0%, Reverse charge."

If your client is European B2B or B2C (individual or company) and does not have a VAT number, you add the VAT of your country of origin to the invoice, If it’s a Spanish customer, that would be 21%.

If your client is outside Europe, you do not add VAT or VAT(0%).

What are exactly OSS products or services?

When your product is sold to individuals and they download it automatically, without human intervention, it falls under the category of "digital downloads". Examples include:

Your business offers digital services such as online courses, webinars, or consulting services to customers in multiple EU countries.
Your business sells software as a service (SaaS) or subscription-based digital products like cloud storage, project management tools, or customer relationship management (CRM) software to customers across the EU.
Your business operates a streaming platform for movies, TV shows, music, or podcasts and provides access to users located in different EU member states.
Your business distributes e-Books, digital newspapers, magazines, or other publications to customers throughout the EU.
Your business offers digital gaming services, including in-game purchases, subscriptions, or downloadable content, to users across Europe.
Your business operates an online marketplace that connects buyers and sellers of digital goods or services from different EU countries.
Your business provides access to online training courses, educational materials, or certification programs to learners across the EU.
Your business offers digital event ticketing services for conferences, seminars, workshops, or virtual events attended by participants across Europe.
Your business sells digital art, photography, graphics, or design assets to customers worldwide, including those in the EU.
Your business provides access to digital fitness classes, workout programs, or wellness resources to users in multiple EU countries.

What should you do if your business offers OSS services or products?

As it would be unfeasible to pay the VAT collected to the countries of each of your clients, a scheme called OSS was created. Thanks to this scheme, you only declare the VAT charged to all your European customers to the Estonian authorities.

Then, once a quarter, the Estonian government asks you to pay the total amount of VAT collected during that quarter, which is distributed to each European country. In this way, companies save time and money.

Therefore, if you offer digital downloads, we need to register you with the OSS (One Stop Shop) scheme, specifying which of your products fall into that category, and make quarterly VAT or VAT declarations.

How to apply?

If you are a Companio customer, you have to inform us either by contacting us directly or applying from the dashboard. To apply from Companio's dashboard, head up to the "Settings > Profile" section, then locate the OSS section and click on the "Edit" button to add your OSS products.

In the application, specify the following elements:

Your products or services that fall under the OSS category
If your business has a VAT number in other EU countries (you may have obtained them if you sell products with the Amazon FBA model or dropshipping in other countries)
If your business has permanent establishments in other EU countries (if you're not sure what to answer here, you probably shouldn't put anything)
An IBAN and BIC of a bank account belonging to the company in the EU.

Keep in mind that if your sales do not exceed 10,000 euros per year, you are exempt from being part of the OSS. Therefore, our recommendation is that until you exceed €10,000 per year in any country, do not register with the OSS and charge your customers Estonian VAT (22%).

You can find the link to the European regulations here.

Updated on: 02/04/2024

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