Special schemes of e-commerce and services

Implementation of the special scheme for the taxation of e-commerce and services will make it easier for an economic operator to comply with VAT obligations arising in another Member State. An economic operator who has chosen to apply the special scheme can declare supply generated in another Member State and pay VAT to the Estonian Tax and Customs Board. In order to use the special scheme, an application must be submitted to the Tax and Customs Board in the e-service environment e-MTA.

The instructions are being updated.


NB!

Due to a technical error, a notification regarding the OSS VAT declarations for the first or second quarter of 2021 was mistakenly sent on November 24. Please ignore the notification. We confirm that no one has the obligation to submit an OSS VAT declaration for the first and second quarters. We apologise for the inconvenience caused.

Special schemes OSS and IOSS for imposing VAT on e-commerce and services

Thorough reforms will be carried out in the European Union (EU) in the area of value added tax (VAT) obligations concerning cross-border services provided to a person who is not registered as a taxable person or taxable person with limited liability (hereinafter end user), distance selling of goods and e-commerce. The correspondent amendments in the EU VAT Directive 2006/112/EC are already introduced and enter into force on 1 July 2021, all EU Member States must change their domestic VAT acts for the same time. Necessary amendments in the Estonian Value Added Tax Act were passed by Parliament in 10 February 2021 and were published in the Estonian State Gazette on 23 February 2021. The purpose of the changes is to reduce VAT fraud and to guarantee the equal competition conditions for EU businesses in comparison with the businesses of so-called third countries (i.e. non-EU countries or non-Community countries).

According to the EU VAT package for e-commerce which enters into force on 01.07.2021:

  1. special scheme for imposing VAT on telecommunications, broadcasting and electronic services (hereinafter digital services) which is in force today (mini One Stop Shop, MOSS) is extended also to other services where the place of supply is in the other EU Member State, as well as to intra-Community distance selling of goods and in certain cases also to the transfer of goods through the electronic interface (hereinafter e-shop). The extended special scheme is called OSS (One Stop Shop).
  2. new special scheme called IOSS (Import One Stop Shop) is imposed on distance selling of goods imported from third country.

Distance selling of goods (both intra-Community distance selling and distance selling of goods imported from third country) is cross-border transfer of goods to the end user. Intra-Community distance selling is the transfer of such kind of goods, located in EU, which are transported in the course of transfer to the end user from the Member State of location to any other EU Member State. Distance selling of goods imported from third country is the transfer of such kind of goods, located in a third country, which are transported in the course of transfer to the end user from third country to EU Member State.

The implementation of the special schemes (both the OSS special scheme and the IOSS special scheme) is voluntary, not mandatory. If the seller of the goods does not wish to apply the special scheme, such person must register for VAT liability in all Member States where the end users are located (if he/she does not use the OSS special scheme) and must complete regular customs formalities for imported goods (if he/she does not use the IOSS special scheme).

The special schemes make possible to declare VAT for cross-border B2C (business to consumer) sales to all Member States in one single return and pay the whole VAT for these transactions in his/her own Member State without the obligation to register for VAT liability in the Member States where the end users are located.

The taxpayers can commence to submit applications for implementation of both special schemes three months before the special scheme enters into force, i.e. from 1 April 2021. The business will be registered as the user of the special scheme as of 1 July 2021.

The taxpayer shall submit the return concerning special scheme and shall pay VAT according to the return by the end of the calendar month directly following the declared taxable period. The taxable period of the OSS special scheme is a quarter and the taxable period of the IOSS special scheme is a calendar month.

The principles of amendments in the VAT returns concerning new special schemes are different from the principles of amendments in the MOSS VAT return which the taxpayers submit today. If the business who apply the OSS or IOSS special scheme has to amend the information in any previous OSS or IOSS VAT return, he/she must do it in the next submitted return – he/she does not amend the return which was submitted for the taxable period when the correspondent supply was created.

Since 1 July 2021 current "Mini One Stop Shop" (MOSS), applicable until this date only for the taxation of digital services provided to the end users of other Member States, is extended. It is changed to "One Stop Shop" (OSS), applicable also for intra-Community distance selling of goods and for other services (in addition to digital services) provided to the end users of other Member States where the place of supply is in the Member State of the end user.

Hence the OSS special scheme is applicable if the taxpayer provides to the end users in the Member State of their place of residence, for example, services connected with an immovable (construction, valuation); cultural, artistic, sporting, educational or entertainment services (performances, concerts, exhibitions); rental services of means of transport, etc. – you can find the longer list of such services in subsection 10 (4) of the Value Added Tax Act.

A business of a third country whose registered office is outside EU and who has no permanent establishment in any EU Member State can also apply this special scheme – upon the transfer of the goods located in Estonia to the end user through e-shop.

The implementation of the special scheme simplifies the performance of VAT obligations which arise for a business in the other EU Member State. A business who has chosen the implementation of the special scheme, declares the supply created in the other Member State (a person who owns e-shop in certain cases also the supply created in Estonia) and pays VAT to the Estonian tax authority.

Thresholds for distance selling, valid in the EU Member States today, are abolished. The all-in threshold 10 000 euros is introduced for gross supply of intra-Community distance selling of goods (to all Member States together) and digital services provided to the end users of other Member States. If this threshold is not exceeded, the VAT rate of the country of the seller can be applied upon the taxation of these supplies. When the threshold has exceeded and the OSS special scheme has chosen, VAT rates of the Member States of the end users shall be applied for intra-Community distance selling of goods and digital services provided to the end users, but the correspondent VAT is paid through the Estonian tax authority.

Abovementioned 10 000 euros threshold is not applied for other services (besides digital services) where the place of supply is the country of the place of residence of the end user. Additionally, it’s important to consider that even for distance selling of goods and provision of digital services to the end users of other Member States this 10 000 euros threshold is applied on certain conditions: the seller can’t use this 10 000 euros threhold if he/she has a seat or place of business also in any other Member State.

The data incorporated in current MOSS VAT return is followed up and the unified VAT return for EU cross-border transactions (so-called OSS VAT return) is validated. Taxpayers who transfer goods and provide services from their own Member State to the end users of other Member States can use the OSS special scheme to state such transactions and can declare and pay VAT according to the return which they submit quarterly. The transactions are stated in the OSS VAT returns by Member States, the amount of VAT payable and the VAT rate of correspondent country shall be denoted for each Member State.

The taxable period of the OSS special scheme is a quarter. As a rule, the special scheme shall be applied from the first day of the quarter following the quarter when the taxpayer submitted the application to the tax authority for the implementation of the special scheme. If the goods covered with the special scheme are transferred or the services covered by the special scheme are provided earlier, it is possible to apply the special scheme before the first day of the following quarter on condition that the application for the implementation of the special scheme is submitted by the 10th day of the month following the month when the goods were transferred or the services were provided.

The taxpayer whose business has a seat or permanent establishment in Estonia does not apply the special scheme upon the provision of the service where the place of supply is Estonia or the Member State where he/she has a permanent establishment. The services provided to the end users in the Member State where the person is registered for VAT liability shall be declared in the regular VAT return submitted in this Member State. Such services shall be not declared according to the special scheme.

Registration as a user of the OSS special scheme

The implementation of the special scheme is voluntary. The alternative solution is to register a business for VAT liability in every EU Member State where the business has the VAT obligations related to sales to the end users.

An Estonian legal person (taxable person) can submit the application for registration in the e-services environment e-MTA by choosing there "Registers and inquiries" – "Registration" – "Registering as a user of special schemes for e-commerce and services (OSS/IOSS)". In order to submit an application, the person with the right to represent a legal person must grant the representative the necessary access permissions. 

See more: "Access permissions and packages of access permissions for using the e-service of special schemes OSS/IOSS"

A third country person who wishes to use the OSS special scheme in Estonia shall follow "Guidelines for registration to non-EU businesses" upon the registration as a user of the OSS special scheme.

It is possible to submit applications for implementation of the special scheme from 1 April 2021 but the business will be registered as the user of the special scheme as of 1 July 2021.

When a taxpayer begins to add the application, the selection with two possible types of application shall be open:

  1. Union scheme (OSS, goods and services);
  2. non-Union scheme (OSS, services, EU number).

The users of the MOSS special scheme, registered in Estonia, who wish to continue to apply the dilated special scheme (OSS), have no obligation to submit new application for registration. Their valid applications are automatically carried over. A person who becomes a deemed supplier from 1 July 2021 (e-shop, electronic interface or other electronic trading place) shall fill in the field "Electronic interface" in the application (shall make a checkmark in this field). By default, in the application this field is not filled in.

As a rule, the special scheme shall be applied from the first day of the quarter following the quarter when the taxpayer submitted the application to the tax authority for the implementation of the special scheme. For example, if the application was submitted on 5 July, the special scheme shall be applied automatically from 1 October.

If the goods covered with the special scheme are transferred or the services covered by the special scheme are provided earlier (already in the so-called "running" period, i.e. in the period when the application was submitted), it is possible to apply the special scheme before the first day of the following quarter on condition that the application for the implementation of the special scheme is submitted by the 10th day of the month following the month when the goods were transferred or the services were provided. In such case, "date of first transaction" shall always be filled in in the application and the person is registered as the user of the special scheme from the date of first transaction. For example, if the application was submitted on 10 July but the taxpayer wishes to apply the special scheme from 1 July, the field "date of first transaction" shall be filled in with the date of the so-called "running" period.

The OSS special scheme is divided to two parts:
  1. Union scheme – a person established in the EU Member State (in Estonia) can register as a user of the Union scheme with the VAT ID number (KMKR number) which he/she has received in the country of his/her place of residence. Intra-Community distance selling of goods and the provision of services both are declared according to the Union scheme. Prerequisite for the implementation of the Union scheme is that a taxpayer already has the VAT ID number and this VAT ID number also becomes his/her special scheme registration number.

  2. non-Union scheme – a third country business whose company has a registered office in a third country and who has no permanent place of business in the EU can register as a user of the non-Union scheme. The user receives the special non-Union scheme registration number (VOES, with the letter combination "EU") upon the registration. The user of the non-Union scheme can declare only the provision of services. If such person (i.e. the user of the non-Union scheme) also has goods in the EU and he/she creates intra-Community distance selling of goods – such person shall register for VAT liability in the Member State where his/her goods are located and can declare the distance selling of the goods according to the Union scheme (OSS). The user of the non-Union scheme (i.e. the person who has the EU number) cannot use his/her KMKR number, received for the distance selling of goods, when declares the provision of services to the end users whose place of residence is in the EU – because of this he/she shall submit two declarations, implementing the non-Union scheme for the services and the Union scheme for the distance selling of goods.


The termination of the implementation of the OSS special scheme and notification about changes

If a taxpayer no longer provides the services covered with the special scheme and no longer creates the distance selling of goods, or if his/her business acitvity and/or registration data has amended (the place of registered office or the permanent place of business has changed, the KMKR number is no longer valid, etc.), the taxpayer shall notify about it by the 10th day of the month following the month when the changes took place.

If a taxpayer continually transfers the goods covered with the special scheme or provides the services covered with the special scheme, but wishes to terminate the implementation of the special scheme, he/she must notify about it at least 15 days before the end of the quarter when he/she is about to terminate the implementation of the special scheme.

All changes and notifications the user of the special scheme can make in the e-services environment e-MTA through the addition or alteration of the data in his/her application. Also a taxpayer can apply for the termination of the special scheme in his/her application – when he/she presses "Apply for termination" in the application, the selection of grounds for the termination is open and the taxpayer shall choose the proper ground.The termination of the implementation of the OSS special scheme by the tax authority

The tax authority has the right to terminate the implementation of the special scheme with regard to the taxpayer if:

  1. the person has notified that the person no longer supplies goods and services covered with the special scheme;
  2. the person has not provided services covered with the special scheme and has not transferred goods covered with the special scheme during two (2) years;
  3. the person no longer fulfils the requirements for the implementation of the special scheme;
  4. the person has repeatedly failed to comply with the requirements for the implementation of the special scheme.

Failure to comply with the requirements for implementation of the special scheme is repeated if at least one of following circumstances takes place:

  1. the tax authority has issued the reminders of the obligation to submit tax returns for three quarters but these returns have not been submitted;
  2. the tax authority has issued the reminders of value added tax arrears but the person has not settled the value added tax debt (except for in the case when the outstanding amount is less than 100 euros per each quarter);
  3. after the request of the tax authority and one month after the tax authority has sent the reminder, the person implementing the special scheme has not made the data provided for in subsection 43 (15) of the Estonian Value Added Tax Act electronically available (the information which shall be preserved).
     

The decision on termination of the implementation of the OSS special scheme

Upon the termination of the implementation of the special scheme, the person receives electronically the correspondent decision which shall enter into force on the first day of the quarter following the quarter of sending the decision.

If the termination of the implementation of the special scheme is related to the change of the registered office or permanent place of business of the taxpayer, the decision shall enter into force on the date of this change.

If the termination of the implementation of the special scheme is related to repeated failure to comply with the requirements established for the implementation of the special scheme, the decision shall enter into force on the day following the day when the decision was sent electronically to the person. In such case the person shall have no right to implement the special scheme during two years since the quarter following the quarter when the decision entered into force.

1. Representation

Non-EU resident company (hereinafter Company) may authorize a licensed tax representative to represent it for the performance of the obligations arising in Estonia, from an Act concerning a tax.

All the rights and obligations of a Company extend to the tax representative. The tax representative is required to ensure that the principal's monetary and non-monetary obligations arising from or an Act concerning a tax are performed within the set term and in full.

Company may also authorize unlicenced persons to represent it

or

Company may be represented by its legal representative in person.

2. Registration of a Company in the Estonian Register of Taxable Persons

Submit a free-form application for registration of a Company in the Estonian Register of Taxable Persons in order to use the MOSS special scheme.

The following shall be appended to an application:

  • a copy of the articles of association of the legal person or another legal act regulating the activities of the legal person;
  • a document certifying the authorization of the responsible person.

Please send the application with the attached documents to the e-mail address emta@emta.ee. A registry code will be issued to the Company.

3. Granting access for using the e-services environment e-MTA

Access to the e-MTA environment on behalf of the company is granted to a natural person. For this purpose, an Estonian e-resident's digital identity card should be applied for. Information on the Estonian e-residency and applying for the e-resident's digital ID-card can be found on the website of e-residency and webpage "E-Resident’s digital ID". 

E-residency is not required if you give access permissions to representatives on behalf of your company (you authorize another person who already has personal access to the e-services environment e-MTA).

4. Submission of the electronic OSS registration application in the e-MTA

Applications can be submitted in the e-MTA by clicking on Registers and inquiries - Registration - Registering as a user of special schemes for e-commerce and services (OSS/IOSS).

Submitting a VAT return

A taxable person who makes use of the OSS special scheme is required to submit the OSS special scheme VAT return (‘the OSS VAT return’) electronically for each tax period. The OSS VAT return cannot be submitted on a paper form. The tax period of the OSS special scheme is quarterly and the OSS VAT return is submitted by the last day of the month following the quarter.

Deadlines for the submission of the OSS VAT return:

Quarter 1 (1 January to 31 March) – 30 April
Quarter 2 (1 April to 30 June) – 31 July
Quarter 3 (1 July to 30 September) – 31 October
Quarter 4 (1 October to 31 December) – 31 January of the following year

The tax returns of special schemes can be submitted only if a valid application for the use of the special scheme has been submitted to a tax authority. Each tax return is related to a specific application. To submit a tax return, go to the online services environment e-MTA and select: Taxes – VAT returns of special schemes for e-commerce and services (OSS/IOSS) The types of tax returns for which an application for special scheme has been submitted will appear in the selection. The system will pre-fill the type of tax return if the user has applied for only one special scheme.

The OSS special scheme user can select only the ‘OSS VAT return’ as the type of tax return.

Each VAT return is assigned a unique reference number that can be used for the payment of the tax, in which case the claim will be paid immediately after the receipt of the money into the prepayment account. You can also use the reference number of the prepayment account, and then the payment will be made automatically after the payment deadline has expired.

Information to be included in the OSS VAT return

The list of data to be included in the OSS VAT returns is set out in Annex III to Commission Implementing Regulation (EU) 2020/194.

The OSS VAT returns must include, inter alia, the following information, which will be transmitted by the Member State of identification to all Member States of consumption indicated in the return:

  1. identification of the taxable person implementing the special scheme;
  2. Member States in which the goods covered by the special scheme were sold or the services covered by the special scheme were provided;
  3. tax rates per Member States;
  4. the taxable value of goods transferred from Estonia to another Member State in the context of intra-Community distance sales and the amount of VAT due on those goods in euro per Member State;
  5. the taxable value of goods transferred from another Member State in the context of intra-Community distance sales and the amount of VAT due on those goods in euro per Member State;
  6. the taxable value of goods of a person of a third country sold through an online marketplace (if the delivery of goods to a purchaser begins and ends in the same Member State (subsection 4 (13) of the VAT Act)) and the amount of VAT payable in euro per Member State;
  7. the taxable value of the services provided and the amount of VAT due on those services in euro per Member State;
  8. the taxable value of goods and services and the total amount of VAT due on them in euro per Member State;
  9. total amount of VAT due in euro.

The specific transactions that a taxable person who implements the OSS scheme must include in the OSS VAT return depend on whether the person makes use of the Union scheme or the non-Union scheme. As a general principle, the OSS VAT return contains data about intra-Community distance sales covered by the OSS special scheme and about services supplied to non-taxable persons in other Member States, the place of supply of which is not the Member State in which the supplier has established its business or has a fixed establishment. The OSS VAT return lists services provided from the country where the user of special scheme is established (Member State of identification) separately from services provided from fixed establishments located in other Member States. Also, the intra-Community distance sales from the Member State of identification is declared separately from the intra-Community distance sales from other Member States from which dispatch and transport of goods start.

Transactions taken place in a tax period are recorded in the OSS VAT return. If no goods or services have been transferred to a Member State in a given tax period, that Member State will not be indicated in the VAT return as the Member State of consumption (i.e. the so-called zero supply for that period is not declared in the row of the Member State in question) even if sales were declared to that Member State during the previous period. A nil VAT return must be submitted only if no transactions covered by the OSS scheme were carried out during the tax period and no corrections must be made to previous returns.

The OSS VAT return provides the information to be declared (taxable value, tax rate, VAT) by Member State of consumption, and supply that is exempt from tax is not included in the return. On the basis of the chosen Member State of consumption, the electronic system provides the user with possible types of VAT rates (standard, reduced) and VAT rates (%), but the user can also enter a different VAT rate. The amount of VAT is calculated automatically on the basis of taxable supply. VAT rates of other EU Member States

It is important to note that distance sales of goods from a Member State other than the Member State of identification can be declared only if the relevant data (fixed establishment, VAT ID in the other Member State, Member State of dispatch of the goods) have been previously indicated in the application for the special scheme. In contrast to the declaration of services, the Member State of identification can also be indicated as the Member State of consumption, provided that the transport of the goods starts outside the Member State of identification. For example, if an Estonian taxable person has stocks of goods in Latvia and the goods are transported from there to a non-taxable buyer in Estonia, this transaction must be declared in the OSS VAT return as well.

If the Member State of identification is Estonia, the goods sold and services provided to an Estonian non-taxable person in Estonia must be declared in the national VAT return (form KMD). These transactions are not declared in the OSS VAT return.
 

Union scheme and non-Union scheme

The Union scheme is for:

  1. declaring intra-Community distance sales of goods and services covered by the special scheme provided to non-taxable persons in the European Union by economic operators in the European Union;
     
  2. declaring intra-Community distance sales of goods by persons from third countries.

NEW!  If the table "Valid VAT ID numbers in other EU Member States" in the application for the Union scheme is filled in, the Member States listed there must also be indicated in the table "Goods sold through a permanent establishment outside the Member State of identification and/or a country of dispatch" in the case of cross-border dispatch of goods from those countries. It is important to choose the country type "Country of dispatch" and fill in the remaining fields.

If the user of the Union scheme dispatches goods from Member States where he does not have a valid VAT ID number, those Member States must also be included in the table "Goods sold through a permanent establishment outside the Member State of identification and/or a country of dispatch".

If the countries of dispatch are not indicated in the application, transactions from those countries cannot be declared in the Union scheme VAT return.

The non-Union scheme is intended for declaring services supplied by persons who do not have a place of business/fixed establishment in the Community to non-taxable persons in the Member States of the EU (intra-Community distance sales of goods cannot be declared under the non-Union scheme).
 

Union scheme

Declaration of services

Under the Union scheme, services supplied to non-taxable persons (B2C) the place of supply of which is in a Member State where the supplier has neither a place of business nor a fixed establishment shall be declared.

The user of the Union scheme must not declare in the OSS VAT return the services supplied to the final consumer either in the Member State of establishment or in the Member State of the fixed establishment, but must declare them in the national VAT return submitted in that Member State. The Member State of the fixed establishment cannot be the Member State of consumption for the supply of services.

However, if the taxable person supplying the services covered by the special scheme also has fixed establishments in other Member States and has supplied services from those Member States with a place of supply in a Member State other than that of the fixed establishment, those services must be declared in the OSS VAT return. When services are supplied in a Member State where the taxable person does not have a fixed establishment but is identified for VAT purposes, those services must also be declared in the OSS VAT return.

Example 1

An economic operator using the special scheme in Estonia has a fixed establishment in Finland, i.e. the services supplied to non-taxable persons established in Finland are declared in and VAT is paid according to the standard VAT return submitted in Finland. If the fixed establishment in Finland supplies services covered by the special scheme to a non-taxable person in Sweden, those services are declared in the OSS VAT return in Estonia.

Example 2

An economic operator established in Estonia has fixed establishments in Finland and Latvia and is also identified in Sweden for VAT purposes. The economic operator supplies services covered by the special scheme to private individuals in Finland, Germany and Sweden. The economic operator also supplies services covered by the special scheme from a fixed establishment located in Latvia to private individuals in Finland and Germany.
The Estonian economic operator declares its supply of services from Estonia and Latvia to customers in Germany and Sweden through the OSS scheme, but the services supplied to customers located in Finland are declared in the Finnish national VAT return.

Declaration of sales of goods (intra-Community distance sales)

Intra-Community distance sales, i.e. the transfer and delivery of goods (other than a new means of transport or goods to be installed or assembled, but including excise goods) by or on behalf of a transferor to a non-taxable person in another Member State, is declared under the Union scheme.

Under the Union scheme, any taxable person, irrespective of whether the person is from a Member State or a third country, can declare intra-Community distance sales. The goods sold to the persons of the Member State of identification and the Member State of fixed establishment must be declared in the national VAT return of that Member State.

Example 3

An Estonian economic operator has a fixed establishment in Lithuania. The economic operator is identified as a user of the Union scheme in Estonia. The economic operator supplies goods located in Estonia to non-taxable persons in Latvia and Estonia. The economic operator also supplies goods located in Lithuania to non-taxable persons in Estonia and Lithuania.

Information to be included in the OSS VAT return:

  • supplies of goods from Estonia to Latvia,
  • supplies of goods from Lithuania to Estonia.

Domestic supplies of goods from Estonia and Lithuania must be declared in the respective national VAT returns of Estonia and Lithuania, as they do not constitute intra-Community distance sales of goods.


Deemed supplier

A taxable person who is not the actual seller of the goods, but who facilitates a transaction concluded between the original seller and the customer via an electronic interface (e.g. a market place, platform, portal) is considered to be the deemed supplier. The deemed supplier is liable for the declaration and payment of VAT.

Under the Union scheme, a taxable person established within or outside the European Union becomes the deemed supplier if the following conditions apply to the sales transaction:

  1. the supply of goods is facilitated via an electronic interface,
  2. the supply of goods is carried out within the European Union (i.e. intra-Community distance sales of goods and domestic supplies of goods),
  3. supply of goods is made to a non-taxable person,
  4. the original seller is established outside the European Union.

Thus, a platform, e-shop, etc. will become a deemed supplier if it allows a person from a third country to sell goods located in the European Union to the final consumer via its electronic interface.

As an exception from the general principles, a taxable person must also declare in the OSS VAT return those domestic supplies of goods for which the taxable person is the deemed supplier.

Example 4

A company established in China sells a tablet (goods) to a non-taxable person in Belgium via an electronic interface. The electronic interface facilitates the supply of goods and becomes the deemed supplier for the supply in question. The tablet is located in Belgium and is dispatched to a customer in Belgium (domestic delivery, transport starts and ends in Belgium). Normally, such a domestic supply must be declared in the national VAT return – but the deemed supplier using the Union scheme must declare such a supply in the OSS VAT return, provided that the platform is identified in the EU as a user of the OSS scheme.

The deemed supplier can declare all sales within a Member State (i.e. the transport of goods begins and ends in the same Member State) irrespective of whether his place of business is in that Member State. This means that if the deemed supplier is identified in Estonia, the deemed supplier can include not only sales from Estonia to Estonia, but also sales from Germany to Germany, Poland to Poland, etc. in the OSS VAT return. If the deemed supplier is not identified for VAT purposes in the Member State from which the goods are dispatched or transported, he must indicate the country code of that Member State instead of the VAT identification number in the VAT return. The Member State from which transport of goods began must be indicated in the application first.

The deemed supplier can also use the special scheme to declare his own goods and services. If the deemed supplier is registered as a user of the special scheme, the deemed supplier declares in its VAT return of special scheme both its own transactions and those for which it is the deemed supplier. The deemed supplier does not register as a user of the same special scheme twice.

The deemed supplier does not declare the transactions of taxable persons with a place of business in the European Union, i.e. a person does not become a deemed supplier if the original seller is a person of the European Union. Taxable persons in EU Member States declare their own transactions covered by the special scheme, either by opting for the use of the special scheme or by registering for VAT purposes in the Member State of consumption.
 

Non-Union scheme

The non-Union special scheme is used by economic operators from third countries who do not have a fixed establishment in the European Union. Users of the non-Union scheme declare in the OSS VAT return only the services covered by the special scheme provided to non-taxable persons in the European Union, including the services provided in the Member State of identification.

Example 5

An economic operator established in the United States identifies in Estonia as a user of the non-Union scheme.
It provides electronic services to non-taxable persons in Finland, Sweden and Estonia.
It declares all services supplied to non-taxable persons (B2C) in the Estonian OSS (non-Union special scheme) VAT return, including services supplied to Estonia.

Sales of goods cannot be declared under the non-Union scheme. If the user of non-Union scheme also engages in distance sales of goods located in the European Union, the user must register as a user of the Union scheme in order to declare the distance sales of goods. It must be kept in mind that services cannot be declared under the Union scheme by that person, that is to say, in such a case, the person must submit two OSS VAT returns, the VAT return of the non-Union scheme for the declaration of services and the VAT return of the Union scheme for goods.
 

Correcting a VAT return

While MOSS VAT returns (tax periods until 30 June 2021) can be corrected by amending the return already submitted, the OSS VAT returns (tax periods from 1 July 2021 onwards) can only be corrected by submitting a VAT return for the current period.

It is important to note that once the OSS VAT return has been confirmed, it cannot be amended/corrected until the OSS VAT return for the next period is submitted. It is possible to amend/correct the return form before confirmation. It is therefore necessary to verify the accuracy of the data before the VAT return is confirmed. It is recommended to keep the VAT return saved until then.

OSS VAT returns that are submitted from 1 July 2021 can be corrected within three years from the date on which the initial VAT return was due. The corrections must include the tax period, the Member State of consumption concerned and the amount of VAT resulting from the corrections. No distinction is made between standard or reduced VAT rates and goods and services in the corrections.

If a Member State of consumption allows, in accordance with its national rules, corrections even after the end of the three-year period, such corrections will no longer be made through the OSS application, but the taxable person must communicate directly with the Member State of consumption.

Corrections to previous periods must be made in a separate section named “Adding corrections to VAT amounts for previous taxable periods”.

The VAT due for transactions declared for the Member State of consumption and any corrections to previous VAT return(s) made for the same Member State of consumption will be set off. If the country-specific balance is zero, the taxable person will not be required to pay VAT for that Member State of consumption in respect of the VAT return. If the country-specific balance is positive (i.e. VAT is due), the amount due is the balance of VAT due for transactions and corrections to previous tax periods. Where the country-specific balance is negative, i.e. the taxable person has paid more VAT than necessary, the Member State of consumption must refund the overpaid amount to the taxable person. The negative country-specific total amount is not taken into account in the calculation of the amount of VAT due. This means that in the event of a negative balance (advance payment) in the case of one Member State, the advance payment for that Member State does not reduce the VAT due in other Member States. The amount indicated in the VAT return under ‘VAT due’ must be paid.

Example 6

A taxable person uses the non-Union scheme in Germany (Member State of identification).

In the first quarter of 2023 (on-going quarter), the person declares 200 euros in Poland (Member State of consumption). The person also makes a negative correction in the amount of 50 euros regarding Poland and the fourth quarter of 2022. The VAT balance for the on-going quarter, taking into account the correction made to the previous quarter, amounts to 200 euros – 50 euros = 150 euros. In Poland, the taxable person must pay 150 euros.

The VAT return for the first quarter of 2023:

  • supplies to the Member State of consumption, Poland, 200 euros
  • corrections for Poland, the Member State of consumption (Q4 2022) –50 euros
  • balance of VAT due in Poland, the Member State of consumption, is 150 euros

Example 7

A taxable person uses the non-Union scheme in Germany (Member State of identification).

In the first quarter of 2023 (on-going quarter), the person declares 100 euros in Poland (Member State of consumption). The person also makes a negative correction in the amount of 150 euros regarding Poland and the fourth quarter of 2022. The VAT balance for the on-going quarter, taking into account the correction made to the previous quarter, amounts to 100 euros – 150 euros = –50 euros. In Poland, the taxable person does not have to pay anything. Poland must repay the amount of 50 euros directly to the taxable person.

The VAT return for the first quarter of 2023:

  • supplies to the Member State of consumption, Poland, 100 euros
  • corrections for Poland, the Member State of consumption (Q4 2022) –150 euros
  • balance of VAT due in Poland, the Member State of consumption, is 0 euros
  • Poland repays 50 euros

Example 8

A taxable person uses the non-Union scheme in Germany (Member State of identification).

In the first quarter of 2023 (on-going quarter), the person declares 100 euros in Poland (Member State of consumption). The person also makes a negative correction in the amount of 100 euros regarding Poland and the fourth quarter of 2022. The VAT balance for the on-going quarter, taking into account the correction made to the previous quarter, amounts to 100 euros – 100 euros = 0 euros. In Poland, the taxable person does not have to pay anything.

The VAT return for the first quarter of 2023:

  • supplies to the Member State of consumption, Poland, 100 euros
  • corrections for Poland, the Member State of consumption (Q4 2022) –100 euros
  • balance of VAT due in Poland, the Member State of consumption, is 0 euros

Example 9

A taxable person uses the non-Union scheme in Germany (Member State of identification).

In the first quarter of 2023 (on-going quarter), the person declares 200 euros to Lithuania (Member State of consumption) and 100 euros to Poland (another Member State of consumption). The person also makes a negative correction in the amount of 150 euros regarding Poland and the fourth quarter of 2022. The balance of VAT due in Poland for the on-going quarter, taking into account the correction made to the previous quarter, amounts to 100 euros – 150 euros = –50 euros. In Poland, the taxable person does not have to pay anything. Poland must repay the amount of 50 euros directly to the taxable person.

The VAT return for the first quarter of 2023:

  • supplies to the Member State of consumption, Poland, 100 euros
  • corrections for Poland, the Member State of consumption (Q4 2022) –150 euros
  • balance of VAT due in Poland, the Member State of consumption, is 0 euros
  • Poland repays 50 euros
  • supplies to the Member State of consumption, Lithuania, 200 euros
  • the total amount to be paid 200 euros (to Lithuania)

Since 1 July 2021, the exemption from VAT on the import of consignments with a value of up to 22 euros is abolished and a customs declaration has to be submitted. To simplify the declaration of import VAT for consignments with a small value, the special scheme for imposing VAT on distance selling of goods imported from third country (the IOSS special scheme) is introduced.

For more expeditious transport of consignments from a third country to the end user who subscribed the goods, the special scheme is introduced for the declaration and payment of VAT upon the import of such goods. The sellers of the goods get the possibility to implement the IOSS special scheme, collecting also the amount of VAT from the purchaser (when the purchaser pays for the goods) and declaring this VAT to the tax authority itself instead of the purchaser in the monthly IOSS VAT return.

The taxpayer can apply the IOSS special scheme for such consignments, imported for the end users whose place of residence is in the EU, which at the moment of the conclusion of the sale and purchase contract are located in a third country, intrinsic value of which does not exceed 150 euros and which are not taxable with the excise tax. Intrinsic value means the price of the goods themselves when sold for export to the customs territory of the EU, excluding transport and insurance costs (unless such costs are included in the price and not separately indicated on the invoice) and any other taxes and charges as ascertainable by the customs authorities from any relevant documents.

If the seller applies the IOSS special scheme, he/she can add the VAT payable upon the import to the sales price of the goods already at the moment when the sales transaction takes place. Because of this, as a rule, the purchaser has no additional tax obligations when he/she receives the goods.

The implementation of the IOSS special scheme simplifies the performance of VAT obligations of a business. The business who has chosen the implementation of the special scheme, registers for the special scheme and declares and pays VAT upon the import of the goods, covered by the special scheme, only in one Member State (in the Member State of registration) and has no obligation to pay VAT at the moment of the import of goods in every Member State where the import takes place.

The IOSS special scheme is targeted to the taxpayers who perform distance selling of goods, imported from third countries, to the end users whose place of residence is in the EU. If a third country business who has neither seat nor place of business in the EU wishes to apply the IOSS special scheme, he/she can apply this special scheme through the intermediary who must fulfill the obligations related to the special scheme on behalf and in the name of such third country business. As the exception, a third country person engaged in distance selling whose country of residence has contract with the EU about reciprocal aid concerning administrative cooperation, anti-fraud fight and collection of tax arrears in the area of value added tax must not appoint an intermediary. Today the EU has concluded such kind of contract only with Norway. In Estonia, a person who is able to pay, has unexceptionable reputation and has no tax arrears can act as the intermediary of the IOSS special scheme.

In conclusion, the declaration and payment of VAT upon the import of goods for the end users whose country of residence is in the EU by a third country person who applies the IOSS special scheme should take place as follows:

  1. a third country business (e-shop) chooses the intermediary in any EU country and this intermediary submits on behalf and in the name of the third country business the IOSS declarations where the supplies of goods transferred to all countries of consumption shall be declared;

  2. e-shop imparts the information concerning VAT paid by the purchasers at the moment of the transfer of goods;

  3. according to the data, received from the e-shop, the intermediary shall fulfill the VAT return of the distance selling of imported goods (the IOSS VAT return) by the end of the month following the month when the supplies were created, and shall pay VAT to the tax authority of his/her country of registration (the intermediary registered in Estonia – to the Estonian tax authority) by the date of the submission of the return.

The completion of customs formalities can take place in any EU country (not necessarily in the country where the IOSS VAT return was submitted), these acts are not linked. A third country e-shop has no obligation to register separately for VAT liability and has no obligation to deliver the EORI number. The import (release for free circulation) of goods is exempt from VAT on condition that the valid IOSS number (IM, the IOSS number of importer) is presented in the customs declaration.

The database of the IOSS numbers is not public, it is available only for customs authorities who authomatically check the validity of the number according to this database. If the number set out in the customs declaration is valid, customs releases the goods for free circulation without the payment of VAT. The person who declares goods in customs (postal operator, express company, customs agency etc.) cannot check the validity of the IOSS number itself.

Additional information

Registration as a user of the IOSS special scheme

The service of the submission of application for registration as a user of the IOSS special scheme was open on 1 April 2021.

The implementation of the IOSS special scheme is voluntary. The alternative solution is to use regular customs procedures.

An Estonian legal person (taxable person) can submit the application for registration in the e-services environment e-MTA by choosing there "Registers and inquiries" – "Registration" – "Registering as a user of special schemes for e-commerce and services (OSS/IOSS)". In order to submit an application, the person with the right to represent a legal person must grant the representative the necessary access permissions. 

See more: "Access permissions and packages of access permissions for using the e-service of special schemes OSS/IOSS"

When a taxpayer begins to add the application, the selection with three possible types of application shall be open:

  1. application for import scheme (IOSS, goods, IM number);
  2. application of an intermediary (IOSS, goods, IN number);
  3. application of a taxable person intermediated (IOSS, goods, IM number, the intemediary shall submit the application in the name of the person intermediated).

The taxable persons who are engaged in distance selling of goods, imported from third countries to end users whose place of residence is in the EU, can use the IOSS special scheme.

A third country business, who has neither seat nor place of business in the EU, can use the special scheme through the intermediary. The intermediary must fulfill the obligations, stipulated in the special scheme, in the name and on behalf of the person to be intermediated. As the exception, a third country person engaged in distance selling whose country of residence has contract with the EU about reciprocal aid concerning administrative cooperation, anti-fraud fight and collection of tax arrears in the area of value added tax must not appoint an intermediary. Today the EU has concluded such kind of contract only with Norway. In Estonia a person can act as the intermediary of the IOSS special scheme if he/she is registered in the Estonian Commercial Register, is registered in Estonia for VAT liability, is able to pay, has unexceptionable reputation and has no tax arrears. A user of the special scheme can choose only one intermediary.

For the implementation of the special scheme a business submits the application (chooses "Application for import scheme" as the type of application) and he/she receives the registration number (number of the IOSS importer, with the letter combination "IM") which can be used only for the implementation of the IOSS special scheme.

The special scheme shall be applied from the day when the user of the special scheme receives the registration number for the IOSS special scheme.

If a person wishes to act as the intermediary for the purposes of the IOSS special scheme, he/she must fulfill the application of an intermediary as the type of application at first and receives the number of the IOSS intermediary upon the registration (with the letter combination "IN" which originates from the word intermediary). After that the intermediary can submit the applications to add the persons intermediated. The intermediary receives the abovementioned number of IOSS importer (with the letter combination "IM") for each person intermediated – this number will be also set out in the customs declaration. If the intermediary also creates his/her own supplies which shall be declared according to the special scheme – for the presentation of these transactions, the intermediary shall submit the application for registration as a user of the IOSS special scheme in his/her own name and receives the IM registration number.

The country of registration forwards the registration number of the business to the tax authorities of all EU Member States and this number is valid all over the EU.

The database of the IOSS registration numbers is not public, it is available only for customs authorities who authomatically check the validity of the number according to this database. If the registration number set out in the customs declaration is valid, customs releases the goods for free circulation without demand for payment of VAT. The person who declares goods in customs (postal operator, express company, customs agency etc.) cannot check the validity of the IOSS registration number itself.

The termination of the implementation of the IOSS special scheme and notification about changes

The user of the IOSS special scheme or the intermediary shall inform the Estonian Tax and Customs Board if:

  1. he/she is no longer engaged in business covered with the special scheme;
  2. his/her business activity has amended in such a manner that he/she no longer fulfils the requirements for the implementation of the special scheme, for example, the Member State of registration has amended because the permanent place of business has changed (subsections 431 (1) and (2) of the Estonian Value Added Tax Act (hereinafter VATA));
  3. he/she amends the data submitted in the application for registration.

The taxpayer shall notify about the amendment of the data and about the termination of the business activity covered with the special scheme by the 10th day of the month following the month when the changes took place.

If a taxpayer continues the business activity covered with the special scheme but wishes to terminate the implementation of the special scheme – he/she must notify about it at least 15 days before the end of the month when he/she is about to terminate the implementation of the special scheme.

All notifications about the changes the user of the special scheme can make in the e-MTA through the addition or alteration of the data in his/her IOSS application.

Also a taxpayer can apply for the termination of the special scheme in the same application – when he/she presses "Apply for the termination" in the application, the selection of grounds for the termination is open and the taxpayer shall choose the proper ground.
 

The termination of the implementation of the IOSS special scheme by the tax authority


The cases when the Estonian Tax and Customs Board deletes the user of the special scheme from the register are stipulated in subsection 431 (18) of VATA.

  • The user of the special scheme shall be deleted from the register if at least one of following circumstances takes place:
  1. the person has notified the tax authority that the person is no longer engaged in distance selling of goods imported from third countries;
  2. the person has not created distance selling of goods imported from third countries during two years;
  3. the person no longer fulfils the requirements for the implementation of the special scheme (subsections 431 (1) and (2) of VATA);
  4. the person has repeatedly failed to comply with the requirements for the implementation of the special scheme. When failure to comply with the requirements for implementation of the special scheme is repeated, is stipulated in subsection 431 (24) of VATA.
     
  • The intermediary and the person, represented by him/her (the person intermediated), shall be deleted from the register if at least one of following circumstances takes place:

  1. the intermediary has not acted as intermediary during two consecutive quarters;
  2. the intermediary no longer fulfils the requirements imposed on intermediary (subsections 431 (1) and (2) of VATA);
  3. the intermediary has repeatedly failed to comply with the requirements imposed on intermediary.

If the intermediary is deleted from the register, the taxable persons represented (intermediated) by this intermediary have no right to use the special scheme longer.

  • The person intermediated shall be deleted from the register, if at least one of following circumstances takes place:
  1. the intermediary has notified the tax authority that the person represented by him/her is no longer engaged in distance selling of goods imported from third countries;
  2. the person has not created distance selling of goods imported from third countries according to the special scheme during two years;
  3. the person no longer fulfils the requirements for the implementation of the special scheme (subsections 431 (1) and (2) of VATA);
  4. the person has repeatedly failed to comply with the requirements for the implementation of the special scheme;
  5. the intermediary has notified the tax authority that he/she no longer represents the correspondent person.
     

The decision on termination of the implementation of the IOSS special scheme

Upon the termination of the implementation of the special scheme, the intermediary and the user of the special scheme both receive the correspondent decision electronically.

  • The decision shall enter into force on the first day of the month following the month of sending the decision.
  • If the termination of the implementation of the special scheme is related to the change of the registered office or permanent place of business of the user of the special scheme or the intermediary, the decision shall enter into force on the date of this change.
  • If the termination of the implementation of the special scheme is related to repeated failure to comply with the requirements established for the implementation of the special scheme, the decision shall enter into force on the day following the day when the decision was sent electronically to the person.

If the termination of the implementation of the special scheme is related to repeated failure to comply with the requirements established for the implementation of the special scheme, the person shall have no right to implement the IOSS special scheme and also the OSS special scheme, stipulated in Article 43 of VATA, in any EU Member State during two years since the month following the month when the decision on termination of the implementation of the special scheme entered into force. The same principle shall apply to the intermediary and in such case the person has no right to act as intermediary during two years since the month when the intermediary was deleted from the register.

The registration number, received for the implementation of the IOSS special scheme, is still valid up to two months after the day when the decision concerning the termination of the implementation of the special scheme or the deletion of the person from the register entered into force. This provision is necessary to ensure that when the customer receives the goods, subscribed by him/her from a third country during the time when the special scheme was applied, the import VAT for these goods is already paid and the consignee has no obligation to complete the customs formalities him/herself. This two month period is not applicable for the persons who were deleted from the register because they repeatedly failed to comply with the requirements for the implementation of the special scheme.

The table below lists only those intermediaries who have given written permission to the Estonian Tax and Customs Board to disclose their permission.
 

Name

Registration code

Date of issue of the permit

E-mail address

Eurora FR Services OÜ 16192059 01.04.2021 ioss@eurora.com
ProLox OÜ 14848120 01.07.2021 info@prolox.eu
Capra Solutions OÜ 14113340 31.10.2021 info@caprasolutions.eu

Submitting a VAT return

A taxable person who makes use of the IOSS special scheme is required to submit an IOSS special scheme VAT return (‘the IOSS VAT return’) electronically for each tax period. The tax period of the IOSS special scheme is a calendar month and the IOSS VAT return is submitted by the last day of the month following each month.

The tax returns of special schemes can be submitted only if a valid application for the use of the special scheme has been submitted to a tax authority. Each tax return is related to a specific application. To submit a tax return, go to the online services environment e-MTA and select: Taxes – VAT returns of special schemes for e-commerce and services (OSS/IOSS). The types of tax returns for which an application for special scheme has been submitted will appear in the selection.

The IOSS VAT return types are:

  1. IOSS VAT return
  2. intermediary’s VAT return
  3. intermediated person’s VAT return

When submitting the application, the taxpayer must take into account that the IOSS special scheme can only be used for distance sales of goods imported from non-EU countries with a value not exceeding 150 euros and which are not excise goods. In addition, another factor should be taken into account: in order to qualify as a distance sale of imported goods, the goods must be physically dispatched from outside the EU (from a so-called ‘third country’ or ‘third territory’) directly to the buyer. If goods coming from outside the EU are first placed in a customs warehouse in a Member State of the EU from which they are later delivered to non-taxable customers, such transactions are not covered by the IOSS special scheme, since the goods in stock are already in the territory of the EU.

Each VAT return is assigned a unique reference number which can be used for the payment of the tax, in which case the claim will be paid immediately after the receipt of the money into the prepayment account. You can also use the reference number of the prepayment account, and then the payment will be made automatically after the payment deadline has expired.

Information to be included in IOSS VAT returns

Similarly to the list of data to be provided in an OSS VAT return, the list of data to be included in an IOSS VAT return is set out in Annex III to Commission Implementing Regulation (EU) 2020/194.

An IOSS VAT return must contain the following information:

  1. identification number given to a person to implement the special scheme;
  2. Member State where the goods are delivered;
  3. the total taxable value of goods in euro per Member State;
  4. tax rates per Member State;
  5. the total amount of goods in euro per Member State;
  6. the amount of VAT payable in euro per Member State;
  7. the total amount of VAT due in euro.

The IOSS VAT return provides the information to be declared (taxable value of the goods, tax rate, VAT) by Member State of consumption, plus the total amount of VAT due.

On the basis of the chosen Member State of consumption, the electronic system provides the user with possible types of VAT rates (standard, reduced) and VAT rates (%), but the user can also enter a different VAT rate. The amount of VAT is calculated automatically on the basis of taxable supply. VAT rates of other EU Member States

VAT is collected by the IOSS user from the buyer at the time of sale.
 

Deemed supplier

A taxable person who is not the actual seller of the goods, but who facilitates a transaction concluded between the original seller and the customer via an electronic interface (e.g. a market place, platform, portal) is considered to be the deemed supplier. Regarding the transactions made in the role of deemed supplier, the deemed supplier is liable for the declaration and payment of VAT.

Under the IOSS scheme, a taxable person established within or outside the European Union becomes the deemed supplier if the following conditions apply to the sales transaction:

  1. the goods have been imported from a third territory or third country,
  2. the value of the consignment does not exceed 150 euros,
  3. supply of goods is made to a non-taxable person,
  4. the sales transaction is facilitated via an electronic interface.

The taxable person acting as the deemed supplier declares in the IOSS VAT return all distance sales of imported goods made in the role of deemed supplier. In addition, the deemed supplier must indicate all the so-called ‘his own’ transactions covered by the IOSS special scheme in the same IOSS VAT return. This means that a person acting as a deemed supplier does not register as a user of the special scheme twice, but includes all transactions covered by the special scheme in the IOSS VAT return.
 

Intermediary

The term ‘intermediary’ is used only under the IOSS special scheme and is not linked to the OSS special scheme.

A taxable person not established in the European Union who wishes to use the IOSS special scheme must appoint an intermediary. Taxable persons established in the European Union can also appoint an intermediary to use the IOSS special scheme, but are not required to do so.

An intermediary is a taxable person who fulfils the VAT obligations laid down in the IOSS scheme (submission of a VAT return, payment of VAT, etc.) in the name and on behalf of the taxable person who has appointed him as intermediary.

In order to act as an intermediary, the economic operator must first register as an intermediary. It is only thereafter that the intermediary can register one or more taxable persons who have appointed the economic operator as an intermediary for the purposes of the special scheme. For each taxable person represented, the intermediary receives a separate IOSS VAT identification number.

The person registered as an intermediary submits the IOSS VAT return for each person it represents and pays the amount of VAT indicated in the return to a tax authority in due time.

When adding a VAT return, the intermediary must select the “VAT return of intermediary” as the VAT return type, then select the period and the name of the person intermediated.

Correcting a VAT return

The principles for correcting an IOSS VAT return are not different from those of an OSS VAT return. The general principles for correcting VAT returns under the special scheme are set out under “Short overview of changes in the EU VAT rules since 1 July 2021” and more detailed explanations for the correction of OSS VAT returns with examples under “OSS VAT returns”.

It is stipulated according to changes that the persons who own e-shop and facilitate the cross-border transfer of goods to the end users through it, are roped in collecting VAT payable from certain sales transactions and the activities of these persons are treated as if such persons have purchased the goods and resold to the end users themselves (such e-shop is called deemed supplier). According to this order, e-shop has the obligation to calculate and pay VAT instead of the third country person who actually is the seller of the goods.

Hence, the distance selling is divided to two transactions: the transfer of the goods from the actual seller to the person who owns e-shop (B2B) and the resale of the same goods from the person who owns e-shop to the end user (B2C).

A business who facilitates the transfer of goods through e-shop is treated as deemed supplier if:

  • he/she makes possible the distance selling of goods imported from a third country in consignments intrinsic value of which does not exceed 150 euros (e-shop can use the IOSS special scheme);

  • irrespective of the value of the goods, he/she makes possible for a third country business whose company has a registered office in a third country and who has no permanent establishment in EU, to transfer to the end user the goods which are already located in EU (e-shop can use the OSS special scheme).

If intrinsic value of the goods, imported from a third country and resold to the end user whose place of residence is in the EU, exceeds 150 euros or if the actual seller of the goods is a person located in the EU – in such case e-shop is not responsible for the taxation of the goods with VAT.

The obligation to register in Estonia for VAT liability (and also the right to get back from the tax authority the amount of VAT paid upon the import of goods) shall arise for a third country business whose company has a registered office in a third country and who has no permanent establishment in the EU if:

  1. he/she transfers through e-shop, owned by any other business, to the end user his/her goods which are located in Estonia and this e-shop, according to new rules, is treated as the purchaser and reseller of the goods (although the transfer of the goods to e-shop is the supply taxable at 0% VAT rate in such case);

  2. he/she owns e-shop him/herself, sells as deemed supplier through his/her e-shop to the end user the goods located in Estonia of the other third country business and has not registered for the OSS special scheme.

This special scheme, like the IOSS special scheme, is established because since 1 July 2021 the exemption from VAT on the import of consignments with a value of up to 22 euros is abolished. This special scheme is applicable only if the goods are released for free circulation in the same Member State where the end user (the purchaser) has the place of residence. If the goods are subscribed from a third country, by and large, the end user who subscribed and imported the goods also must pay VAT. Upon the implementation of this special scheme, the end user pays VAT to the person who presents goods in customs (usually to the provider of the postal service, to the express company or to the customs agency) – therefore, in contradistinction to the IOSS special scheme, the end user does not pay VAT in e-shop at the moment of the sales transaction.

This special scheme is applicable upon the import of consignments, intrinsic value of which does not exceed 150 euros, which are not taxable with the excise tax and for which the special scheme for imposing VAT on distance selling of goods imported from a third country (the IOSS special scheme) is applied neither in Estonia nor in any other Member State. The implementation of this special scheme is also voluntary.

This special scheme can apply a business who:

  1. presents in customs the import declaration of the goods on behalf of the actual purchaser as indirect representative,
  2. is the holder of the goods and
  3. transports the goods to the consignee whose place of residence is in Estonia.

This special scheme is targeted, first of all, to postal operators and providers of express services who usually declare the import of goods with a small value on behalf of the consignee and are the holders of the goods within the meaning of the Customs Code (holder of the goods is the person who is the owner of the goods or who has a similar right of disposal over the goods as the owner; or who has physical control over the goods).

Upon the implementation of this special scheme, the imported goods are always taxable at the standard VAT rate (20% in Estonia).

A business applying this special scheme who presents the goods in customs pays VAT collected from the end users to the tax authority once a month. VAT shall be paid by the 16th day of the month following the month when VAT was collected.

1.If a business is engaged in intra-Community distance selling in 2021 also before 1 July and the threshold which is today still in force in the Member State of the purchaser is exceeded before 1 July – is it mandatory to register for VAT liability in the Member State of destination, although the OSS special scheme will be in force from 1 July? If the threshold was not exceeded at the end of 2020, does it mean that the calculation of the threshold begins in 1 January 2021 from zero again?
 
Yes, until 30 June 2021 the existing rules are still in force – including the principle that if the threshold for distance selling in particular Member State was not exceeded at the end of a calendar year, the calculation of the threshold begins in 1 January of the next year from zero again.
2. What date is the last possible date to submit the petition for the implementation of the OSS or IOSS special scheme from 1 July 2021?

To be registered as a user of the OSS special scheme from 1 July, a business shall submit the petition for the implementation of the OSS special scheme not later than in 10 August (according to subsection 43 (9) of the Estonian VAT Act). In such case, the field "date of first transaction" shall be filled in in the petition with 1.07.

According to subsection 431 (10) of the VAT Act, a business has the right to implement the IOSS special scheme as of the day when the person implementing special scheme or the intermediary has been given the registration number specified in subsection (9) of the same section.

As a rule, a business receives the registration number immediately from the date when the petition for the implementation of the IOSS special scheme was submitted.

3. Is it mandatory to declare the supplies, taxable according to the OSS special scheme, also in the regular VAT return? Whether the user of the OSS special scheme still has the right to deduct input VAT of the goods, purchased in Estonia, according to the ordinary rules? The supplies, taxable according to the OSS special scheme, shall be declared only in the special OSS VAT return. The input VAT of the purchased goods is still deductible according to the ordinary rules.
4.If a business is today the user of the MOSS special scheme, whether the MOSS special scheme gives place to the OSS special scheme automatically? Yes – the user of the MOSS special scheme must not submit the petition for the implementation of the OSS special scheme. But if a business wishes to implement the IOSS special scheme, the user of the MOSS special scheme must submit the petition for the implementation of the IOSS special scheme like all other businesses.
5. Is it possible for the user of the OSS special scheme to declare in Estonia also such kind of intra-Community distance sales where the goods are not located in Estonia at the moment of dispatch – for example, the goods are in a storehouse located in Germany and are dispatched from this storehouse to France to a private person, a business registered in Estonia sells goods from Latvia to other Member States to non-taxable persons or the Estonian business purchases goods from an Italian factory and this Italian factory, according to order received from the Estonian business, dispatches the goods from Italy directly to Germany to a private person? Yes – inasmuch as the VAT payer of the EU Member State can register as the user of the OSS special scheme only in the Member State where its business has a seat (the Estonian VAT payer – in Estonia), it’s possible to declare according to the OSS special scheme also such kind of intra-Community distance sales where the goods are dispatched to the purchaser from any other Member State.
6. Whether a business established in Estonia must register in Estonia for VAT liability for the implementation of the OSS special scheme? Yes – only a person registered for VAT liability can implement the OSS special scheme and a business established in Estonia can’t register as the user of the OSS special scheme in any other Member State where this business also has the VAT ID number.
7. If an Estonian business, for example, sells goods from a storehouse located in Austria to an Austrian private person or an Italian factory, according to order received from the Estonian business, dispatches the goods directly to an Italian private person – whether the business can declare such sales transaction also according to the OSS special scheme? Is it possible to deduct in Estonia the local input VAT, paid in Austria or Italy upon the acquisition of goods?

No, because it’s not the intra-Community distance selling but the Austrian or Italian domestic supply which is not covered by the OSS special scheme and is taxable and shall be declared according to the Austrian or Italian local VAT rules.

Local VAT, paid in the other Member State upon the acquisition of goods, is not deductible in the Estonian regular VAT return as input VAT – such VAT is deductible in a regular VAT return submitted in this particular Member State (if the Estonian business has the VAT ID number also in this Member State) or, if the Estonian business has no VAT ID number in the correspondent Member State, the business can apply for cross-border EU VAT refund.

8.If a non-taxable person purchases goods from Estonia and notifies that his/her main place of residence is located in a third country (for example – in the UK, in London; in Norway, in Oslo) but asks to deliver the subscribed goods to Sweden to address located in Stockholm – how to draw up the invoice? Is it possible to calculate VAT with the tax rate of the correct Member State after the transfer/unloading of the goods? How to determine the place of residence of the purchaser, is it sufficient to determine the place of destination?

If the goods are dispatched to Sweden – although the purchaser is living in a third country, the transaction shall be treated as the intra-Community distance selling from Estonia to Sweden.

Upon the intra-Community distance selling, the seller always must set out the VAT with the tax rate of the place of supply, i.e. with the tax rate of the Member State of destination (which is Sweden in present case) in an invoice – but if the seller is the user of the OSS special scheme, the sales transaction can be declared according to this special scheme. Actually, the seller must set out in the invoice, issued to the purchaser, and must ask from the purchaser VAT with the tax rate of the country of destination already when subscribes the goods.

The place of supply of services is usually the country where the services are actually provided – irrespective of the country where the non-taxable person who receives the services has the place of residence.

9. An Estonian business is engaged in intra-Community distance selling already today and is registered for VAT liability in all Member States whither the goods are delivered to private persons. If the business wishes to implement the OSS special scheme in future, is it necessary to delete this business from the register of VAT payers in Member States of destination? The problem is that the business is engaged in distance selling also through the Amazon platform and Amazon presupposes that the business must register for VAT liability in the Member States of destination – does it mean that such Estonian business can’t implement the OSS special scheme?

If an Estonian business has the VAT ID number in the Member State whither the goods are delivered as intra-Community distance selling – such distance selling is also possible to declare according to the OSS special scheme, the business has no obligation to be deleted from the register of VAT payers in the Member State of destination.

It’s not possible to declare according to the OSS special scheme the sales transaction where the goods are delivered to the purchaser from a storehouse located in the same Member State – such sales transaction shall be still declared in a regular VAT return submitted in this Member State.

The only exception – an e-shop or other similar online marketplace who is so-called deemed supplier can declare according to the OSS special scheme such kind of domestic sales transaction where a business of a third country who has no permanent establishment in any EU Member State sells the goods located in an EU Member State to a non-taxable purchaser in the same Member State through that online marketplace (according to new rules, in such case the e-shop shall be deemed to have acquired and resold these goods by itself but can declare such domestic resale according to the OSS special scheme).

10. If an Estonian business today already has the VAT ID number in some EU Member States due to distance selling – is it possible to declare intra-Community distance sales to these Member States directly in a local regular VAT return and distance sales to all other Member States according to the OSS special scheme? Is it mandatory to implement the OSS special scheme or the business can continue to declare distance sales directly in the Member States of destination? How an Estonian business shall declare distance sales performed through an Amazon storehouse located in Germany?

The business must chose – to declare all intra-Community distance sales to all Member States according to the OSS special scheme (the VAT ID number received in the Member State of destination does not close out the possibility to implement the OSS special scheme) or to declare all distance sales directly in Member States of destination according to regular rules. It’s not allowed to declare some distance sales according to the OSS special scheme and some distance sales according to regular rules.

The OSS special scheme is voluntary, it’s not mandatory to implement this special scheme, a business can continue to declare the distance sales in Member States of destination.

A business established in Estonia can implement the OSS special scheme only in Estonia (a business can register as the user of the OSS special scheme only in the Member State where its business has a seat), but can declare in the OSS VAT return submitted in Estonia also distance sales performed from other Member States.

11. What happens if the goods are sold through an e-shop from any other Member State to Estonia to a private consumer?

If the seller is an Estonian business who implements the OSS special scheme – the business declares such distance selling also in the OSS VAT return submitted in Estonia.

If the seller is a business of any other Member State – the business must register for VAT liability in Estonia or to declare such intra-Community distance selling according to the OSS special scheme in its own Member State.

12. Whether the transfer of goods to the UK to private persons is now the export of goods and is not covered by the OSS special scheme? If the goods are transferred to a private person to Russia or Norway – is it possible to declare such sales transaction also according to the OSS special scheme? If the seller transports the goods to a private person to a third country (including the UK after Brexit) – it is the export of goods taxable at 0% VAT rate and is not covered by the OSS special scheme (excluding the transfer of goods to Northern Ireland to a non-taxable person which is still intra-Community distance selling).
13. When a person fills in an OSS VAT return – shall the person set out the VAT rate(s) of every country him/herself and therefore must know the VAT rates of all EU Member States whither he/she sells the goods or provides the services, to issue correct invoices to the purchasers? Does the common database concerning VAT rates of Member States exist? Or the VAT rates for every country are already set out in the OSS VAT return?

In the OSS VAT return the VAT rates of Member States are set out but the user of the OSS special scheme can change them, if necessary, when fills in the OSS VAT return.

The seller of the goods or the provider of the services must know the VAT rate of the country of consumption (the VAT rate of the Member State where is the place of supply) already at the moment of the sales transaction and must charge the VAT rate of that country.

The VAT rates of the EU Member States is possible to check over on the web page of the European Commission, there is also the correspondent link on the web page of the Estonian Tax and Customs Board.

14. Whether the transport costs are included in the taxable value upon the intra-Community distance selling of goods and are not included in the intrinsic value upon the distance selling of goods imported from third country?

As a rule, the transport costs are included in the taxable value upon the intra-Community distance selling of goods and are also included in the intrinsic value upon the distance selling of goods imported from third country. 

Upon the intra-Community distance selling of goods, the taxable value is determined according to subsection 12 (1) of the Estonian VAT Act – it means, the transport costs are included in the taxable value of the goods, unless the separate invoice is issued for the transport service.

If the transport and insurance costs of the goods imported from third country are included in the price of the goods and the separate invoice is not issued to the purchaser about these costs – in such case the transport and insurance costs are a part of the intrinsic value of the imported goods. The transport and insurance costs of the goods imported from third country are not included in the intrinsic value of such goods only if the separate invoice is issued for these costs.

15. If the accounting service is provided from Estonia to a Finnish non-taxable person or the electronically supplied service (for example, the service related to the use of an app) is provided to a Latvian non-taxable persion – is such service covered by the OSS special scheme?

As a rule, the accounting service is not provided to an ordinary natural person who is not a proprietor. The accounting services and the electronically supplied services both are immaterial services, listed in subsection 10 (5) of the Estonian VAT Act – it means, a person of the other Member State engaged in business who receives such service has the obligation to calculate and pay VAT from the service itself even the recipient of the service is not registered for VAT liability in its own Member State at the monent of the receipt of the service yet. The Estonian business declares the service in a regular VAT return as a supply taxable at 0% VAT rate – not in the OSS VAT return.

Although, if the accounting service is really provided to a person of other Member State not engaged in business – unlike the place of supply of the electronically supplied services, the place of supply of the accounting services in such case is Estonia and the Estonian 20% VAT rate shall be charged and the service shall not be declared according to the OSS special scheme.

16. Whether the drawing up of plans for a building is covered by the OSS special scheme, if the service is provided to the other Member State? Yes – if the service is provided to a non-taxable persion of the other Member State and is related to an immovable which will be located in any other Member State, not in Estonia.
17. The route of the transport of the goods is Estonia-Sweden-Finland-Estonia. The goods are picked up in every country. Whether the Finnish domestic transport service to a non-taxable person during this route is covered by the OSS special scheme? Yes – the transport service, ordered in Finland by a Finnish natural person can be declared according to the OSS special scheme.
18. Whether the services of Bolt, Wolt, Uber are also covered by the OSS special scheme? The passenger transport service or the transport service of goods, if provided to a non-taxable person, is covered by the OSS special scheme, if the place of supply is the Member State where the provider of the service has no permanent establishment.
19. A taxable person resells second-hand goods and implements the special arrangements for imposing VAT according to Article 41 of the Estonian VAT Act. A part of goods to be resold are imported from third countries. Whether the reseller can after 01.07.2021 still implement the margin-based special arrangements for imposing VAT and can declare VAT in Estonia according to these special arrangements – or, if the purchaser is a non-taxable person, it is the situation where the IOSS special scheme should be implemented? In all cases where it’s possible to implement the special arrangements according to Article 41 of the VAT Act, VAT shall be imposed according to these special arrangements also after 01.07.2021 and the OSS or IOSS special scheme shall not be implemented.
20.Where a taxable person can see the register of VAT ID numbers with EU designation? Taxable persons can’t see it, it’s not the public information. In order to get the purchaser's VAT ID number for using the special scheme, the buyer needs to contact the purchaser.
21.If a taxable person sells to natural persons through an e-shop both Union goods and imported goods – is it necessary to implement the OSS special scheme or the IOSS special scheme or both? If a business is engaged, through the e-shop, in intra-Community distance selling of goods as well as in distance selling of goods imported from third countries (and the requirements for the implementation of both special schemes are met) – the taxable person, if wishes, can register as a user of the OSS special scheme as well as a user of the IOSS special scheme (the implementation of both schemes is voluntary).
22. If a company is a taxable person and acquires the goods from other EU Member States – is it also necessary to register as a user of any special scheme? A taxable person has no need for any special scheme when acquires goods from other Member States. The acquisition of goods from a taxable person of another Member State together with the transportation of these goods from the other Member State to Estonia is still intra-Community acquisition of goods, subject to reverse charge. For the seller it’s still intra-Community supply taxable at 0% VAT rate, the seller has no obligation to add VAT with the regular VAT rate of its Member State to the sales price.
23. Whether the IOSS VAT returns are automatically created from the customs declarations? No, the IOSS VAT returns shall be submitted separately.
24. If a business implements the IOSS special scheme – in such case it’s not necessary to submit the import customs declaration any more and VAT shall be calculated from the sales price? The customs declaration shall still be submitted, but if the IOSS registration number is set out in the customs declaration, VAT is not payable upon the import in customs but is really calculated only from the sales price.
25. What happens, if the goods are located in a third country and the holder of the goods sells the goods from this third country directly to a private person whose place of residence is in the EU?

In such case there are three different opportunities:

1) the seller, a third country business, registers through an intermediary as a user of the IOSS special scheme (if the requirements for the implementation of the IOSS special schemes are met), the purchaser pays VAT to the seller at the moment of the purchase and VAT is not payable upon the import of goods;

2) the person who presents goods in customs as an indirect representative on behalf of the purchaser of the goods (the express company, the provider of the postal service, the customs agency) implements the special scheme stipulated in Article 432 of the Estonian VAT Act – the purchaser pays VAT to the person who presents goods in customs and has no obligation to complete customs formalities him/herself;

3) the purchaser pays VAT for goods in customs and completes all customs formalities him/herself.

26. If the goods with intrinsic value below 150 euros are imported to Estonia and after that are transported from a customs warehouse located in Estonia to any other EU Member State to the end user – if the importer registers as a user of the IOSS special scheme, does it mean that VAT shall be added to the price of every consignment, the purchaser must not pay VAT in customs of his/her Member State and the importer declares distance selling of goods imported from third country? In what country the importer must do it, if the importer is a Swedish taxable person?

If the goods are placed in a customs warehouse before they are sold to the customer, the IOSS special scheme is not applicable. To implement the IOSS special scheme, the goods shall be transported from a third country directly to the EU private consumer.

If the goods are taken out of the customs warehouse, VAT shall be paid upon the import of goods in the country where the customs warehouse is located.

If the goods are already released for free circulation, the OSS special scheme is applicable. The Swedish business can register as a user of the OSS special scheme only in Sweden.

27. Whether the OSS VAT return or IOSS VAT return shall be always amended by the return of the running period – irrespective when the mistake was detected, during the same year (for example, the taxable person found out in December the mistake which was made in the IOSS VAT return submitted for September) or when the new year has already begun (for example, the taxable person found out in January the mistake which was made in the IOSS VAT return submitted for November of the previous year)? Yes.
28.If a taxable person amends the OSS VAT return or IOSS VAT return, does it bring about the tax arrear with the interest? In Estonia the electronic implementation does not calculate the interest, but the tax authority of the country of consumption (country where is the place of supply) can collect it according to the tax rules of this Member State.
29. If the Estonian Tax and Customs Board terminates the implementation of the special scheme itself – can the business submit the application for registration as a user of the special scheme again already from the next month (if the business makes the transaction covered by the special scheme) or there is certain period when is not allowed to register as a user of the special scheme again? As a rule, the tax authority terminates the implementation of the special scheme if the person implementing the special scheme has repeatedly failed to comply with the requirements established for the implementation of the special scheme (according to subsections 43 (21) and 431 (24) of the Estonian VAT Act). In such case, the person shall not have the right to implement the special scheme within two years as of the month following the month in which the decision to terminate implementation of the special scheme enter into force.
30. Does the holder of the goods always have supply with 0% VAT rate, if the holder sells goods to the end user through an e-shop? In Estonia the holder of the goods has supply with 0% VAT rate only if the holder is a third country business who sells through an e-shop its goods, located in Estonia, to a non-taxable person who is also located in Estonia and the e-shop is treated as deemed supplier.
31. How a user of the OSS or IOSS special scheme determines the time of supply of the goods or services?

The day on which the person implementing the IOSS special scheme has received confirmation of payment for the goods or payment obligation or notice of payment authorization shall be treated as the time of supply of distance selling of the goods imported from a third country (and for an e-shop who is treated as deemed supplier and applies the IOSS special scheme, also as the time of the acquisition of the goods imported from a third country).

A user of the OSS special scheme determines the time of supply according to regular rules.

32. How is the VAT treatment if an e-shop is not treated as deemed supplier – the Union goods are sold to the consumer or intrinsic value of the goods imported from a third country exceeds 150 euros?

If an e-shop is not treated as deemed supplier for abovementioned reasons – the sellers of the goods must declare their supplies themselves. To charge VAT with the correct rate, the sellers must recieve from the e-shop the information about purchasers and Member States whither the goods were sold. The e-shop in such case taxes with VAT and declares only the services provided to the sellers of the goods.

If the intrinsic value of the goods imported from a third country exceeds 150 euros, the import of the goods is not exempt from VAT. It means that the VAT is payable upon the entry of the goods into the EU in the Member State where such goods are imported.

33.If an Estonian business is not registered for VAT liability yet and the taxable value of its intra-Community distance selling is less than 10 000 euros per year – whether such business has no obligation to register for VAT liability and must not add VAT to the sales price of its intra-Community distance sales?

If an Estonian business meets the conditions of subsection 101 (7) of the Estonian VAT Act (inter alia, the business does not have a seat or permanent business establishment in a Member State other than Estonia) and the business does not wish to implement the OSS special scheme – if its gross supply of digital services provided to non-taxable persons of other Member States and intra-Community distance selling of goods created from Estonia to all Member States together does not exceed 10 000 euros in total during the calendar year, the business has no obligation to register for VAT liability in Estonia and also has no obligation to register for VAT liability in any Member State of destination and must not add the Estonian VAT and also must not add VAT of the Member State of destination to the sales price of its intra-Community distance sales.

If an Estonian business has no permanent business establishment in the other Member State but has a storehouse in that Member State and the business sells the goods from this storehouse only to private persons of the same Member State or, additionally, also creates intra-Community distance selling from that storehouse to other Member States and does not wish to implement the OSS special scheme – the business has no obligation to register for VAT liability in Estonia also in such case but the goods sold from the storehouse, located in the other Member State, to non-taxable persons are taxable with VAT in the Member State of the place of residence of the purchaser.

If the conditions for implementation of 10 000 euros threshold are not met (for example, a business has permanent business establishment also in any other Member State) and the business does not wish to implement the OSS special scheme – the business shall register for VAT liability in the Member State of destination, shall charge VAT with the VAT rate of the Member State of destination and shall pay VAT for intra-Community distance selling directly in the Member State of destination.

If a business wishes to implement the OSS special scheme, such business shall register in Estonia for VAT liability at first.

34.If a business registers as a user of the OSS special scheme from 1 July 2021, but the 10 000 euros threshold is exceeded only in August 2021 – until the threshold is not exceeded, should the business add VAT with the Estonian 20% VAT rate to the sales price? Until the 10 000 euros threshold is not exceeded, a business, if wishes, can add VAT with the Estonian 20% VAT rate to the sales price of intra-Community distance sales and digital services provided to non-taxable persons of other Member States and can apply VAT rates of the Member States of destination only from the day when the 10 000 euros threshold is exceeded. But it presupposes that until the 10 000 euros threshold is not exceeded, a business does not implement the OSS special scheme. If a business has registered as a user of the OSS special scheme from 1 July 2021, the VAT rate of the Member State of destination shall be applied for intra-Community distance sales and digital services provided to non-taxable persons of other Member States and such supplies shall be declared in the OSS VAT return also right away from 1 July, although the 10 000 euros threshold is not exceeded yet.
35. If a business has registered as a user of the OSS special scheme – is it possible in every new calendar year to charge VAT with the Estonian 20% VAT rate upon the intra-Community distance selling until the 10 000 euros in this particular year is not exceeded and to submit the OSS VAT returns only when the threshold is exceeded? No. If a business has already registered as a user of the OSS special scheme – from the day when the business was registered as a user of the special scheme, always the VAT rate of the Member State of destination shall be applied for all intra-Community distance sales and such supplies shall be always declared according to the OSS special scheme, irrespective the 10 000 euros threshold in the particular calendar year is already exceeded or not.
36.Whether in 2021 the calculation of the 10 000 euros threshold begins from 1 July? There were different viewpoints concerning this topic – but today the Estonian Ministry of Finance and the Estonian tax authority have the common understanding that, in consideration of the absence of the correspondent transitional provision in the EU VAT Directive and in the Estonian VAT Act, the calculation of the 10 000 euros threshold also in reference to intra-Community distance selling always begins from 1 January, including 2021 – not as the exception from 1 July in 2021.
37. If I understand correctly, the 10 000 euros threshold is applicable in Estonia. If the threshold in the country where the service was provided is less than in Estonia, how the business must calculate the threshold? The 10 000 euros threshold is the same in all Member States, it is stipulated in the EU VAT Directive.
38. If a business who is engaged in intra-Community distance selling is not registered for VAT liability yet and exceeds the 10 000 euros threshold, is it necessary to register in Estonia for VAT liability? Such business must register for VAT liability only if the business wishes to implement the OSS special scheme – because only a business who is registered for VAT liability can be registered as a user of the OSS special scheme. The OSS special scheme is voluntary, the business can not implement this special scheme, can not register in Estonia for VAT liability and can pay VAT directly in the Member State of destination of goods.
39. If there were no transactions during a taxable period - is it necessary to submit the return concerning special scheme for this taxable period also in such case? If a user of the special scheme doesn't create any transaction, covered by the special scheme, during the taxable period and has no corrections to make in respect of any previous return - in such case the user of the special scheme shall submit a nil-VAT return. (Article 59a of the Council Implementing Regulation 2019/2026.)

A representative of a company is required to have access permissions in order to use the service of the special schemes OSS/IOSS.

Packages of access permissions

The access permission for using the service of the special schemes OSS/IOSS is included in the following packages of e-MTA access permissions:

  1. packages for legal person’s representative and sole proprietor’s representative, and the accountant’s package include the access permission "Managing applications for and declarations of special schemes for e-commerce and services (OSS/IOSS)", which allows full use of the service
     
  2. package for viewing the data of legal person and package for viewing the data of sole proprietor include the access permission "Viewing applications for and declarations of special schemes for e-commerce and services (OSS/IOSS)", which allows to use the service without the right to amend data.

separate access permissions

It is also possible to grant separate access permissions for using the service of OSS/IOSS.

Name and code of the access permission
Permits the following activities
Viewing applications for and declarations of special schemes for e-commerce and services (OSS/IOSS)
(code: OSS_CLIENT_VIEW)

- viewing the list of applications for the use of special scheme
- viewing the data of the applications for the use of special scheme

Managing applications for and declarations of special schemes for e-commerce and services (OSS/IOSS)
code: OSS_CLIENT_EDIT)

- adding the application for the use of special scheme
- amending the data of the application for the use of special scheme
- deleting an unfinished application for the use of special scheme
- submitting the application for the use of special scheme
- viewing the list of applications for the use of special scheme
- viewing the data of the applications for the use of special scheme
- requesting the termination of the application for the use of the special scheme


Granting access permissions

Representatives of a company shall receive access permissions from a person who has the package for legal person's (company’s) representative or who has the access permissions of a representative for managing permissions.

Select in the e-MTA Settings – Access permissions – Access permissions of representatives to grant access permissions.

To grant an access permission:

  1. click on the button New access permission;
  2. insert a personal identification code or user ID to the search field or choose from shortcuts. The results will be displayed in a table named "Selected persons".
  3. click on the button Next;
  4. in the section of access permissions, choose whether you want to give a package of access permissions or a separate access permission. After that, insert the name of the package or separate access permission in the name box, or enter the code of the access permission in the code box. Click on the button Search.
  5. choose the required access permission from the results and click on the button Add.

Special scheme for imposing value added tax on electronic communications and electronically supplied services – MOSS (Mini One Stop Shop)

The amendments in the EU VAT Directive (2006/112/EC) concerning the taxation of electronic communications services and electronically supplied services (hereinafter digital services) entered into force on 1 January 2019. The purpose of these amendments is to simplify the performance of the VAT obligations for small enterprises. Thereafter the Estonian Value Added Tax Act was also amended and Article 101 “Place of supply of electronic communications service and of electronically provided service provided to person who is not taxable person or taxable person with limited liability in any Member State” was added to the Act.

To whom the amendment concerns

The amendment concerns persons liable to value added tax who are providing electronic communications services (telecommunications and broadcasting services) and electronic services to persons not liable to account for VAT who are established in other European Union Member States.

What are electronic communications and electronically supplied services

You will find the list of electronic communications and electronically supplied services (henceforth digital services or services supplied under special arrangements), the taxation of which is affected by the above mentioned amendment, in the list of digital services.
 

1. Determination of a customer’s actual location

As from 1 January 2015 the telecommunications, broadcasting and electronically supplied services shall be subject to taxation always in a Member State where the recipient of a supplied service is established and the tax rate applicable in this Member State shall be used.

Essentially, the taxation of services provided to persons not liable to account for VAT residing in another Member State will change, as the services provided to persons liable to VAT are currently already being taxed by the recipients of the supplied services in their Member States (reversed charge of VAT).

In this context it is important that the supplier of services determines the actual location at which the customer is established (the place of supply) and what evidence he should have to identify the location of the customer.

Read more

2. Special scheme for imposing value added tax on digital services or the MOSS special arrangements

According to the currently effective arrangements the supplier of digital services declares and pays VAT in its country of location if it is providing services to a person established in another Member State who is not liable to account for VAT (non-taxable person), but relating to the change in the place of supply VAT is to be paid in the customer’s country of location as from 2015.

Digital services provided to a person of another Member State who is not liable to value added tax shall not be declared in the national VAT return (KMD in Estonia) any more, but in the so-called MOSS VAT return.

In order to simplify the declaration of digital services provided in other Member States a special scheme for imposing value added tax on electronic communications and electronically supplied services or the so-called MOSS scheme (Mini One Stop Shop) has been introduced. Application of the special arrangements is described in § 43 of the Value Added Tax Act.

If the service provider wishes to supply the services under the special scheme, then it must declare and pay the value added tax calculated on the services provided to a non-taxable person established in another Member State with the tax authority of his own country of location (Member State of registration), who in its turn will remit the received amount to the tax authority of another Member State (Member State of consumption).

Consequently, any person liable to value added tax in Estonia who is providing digital services to a non-taxable person of another Member State has to choose, if:

  1. it will register as a person liable to value added tax and will perform the value added tax liability in the Member State where the recipient of the supplied services is established, or
  2. it will register as the user of MOSS special arrangements in Estonia.

The user of special scheme shall:

  • submit the quarterly MOSS VAT return to the Estonian Tax and Customs Board stating the services provided to non-taxable persons established in other Member States, including the services provided from its permanent business establishment outside Estonia;
  • pay the value added tax to the Estonian Tax and Customs Board, who in its turn will remit the received amount to the tax authority of another Member State.

Use of special scheme is voluntary.

Special scheme cannot be used in Member States where a person has VAT ID number, including his Member State of registration. Digital services provided in these Member States shall not be declared in the MOSS VAT return but VAT shall be paid to the tax authority of the particular Member State according to the regular rules. All persons who are registered for VAT liability in Estonia shall declare the digital services provided in Estonia (including digital services provided to non-taxable persons) in the Estonian VAT return (Form KMD).

VAT obligations shall be fulfilled according to the MOSS special scheme only in Member States where a person:

  • has no VAT ID number,
  • has no seat of his business, and
  • has provided in this Member State digital services to non-taxable persons.

The user of special scheme shall declare the digital services provided in the MOSS VAT return. The form of a MOSS VAT return is laid down by the Commission Implementing Regulation no 815/2012 and it is applicable in all the EU Member States.

Declaration period is a quarter of a year and the VAT return must be submitted by the 20th day of a month following the declaration period.

Declaration period Due date of submission of MOSS VAT return
1st quarter
From 1 January to 31 March
20 April
2nd quarter
From 1 April to 30 June
20 July
3rd quarter
From 1 July to 30 September
20 October
4th quarter
From 1 October to 31 December
20 January


The first MOSS VAT return on the 1st quarter of 2020 must be filed latest by 20 April 2020.

This VAT return may be filed only electronically in the e-MTA by selecting "Taxes" > "Value added tax" > "Declaration of digital services (MOSS)".

It is not possible to submit MOSS VAT return on paper carrier.

The value added tax must be paid in one of the bank accounts of the Estonian Tax and Customs Board.

The MOSS VAT return must be filed and the value added tax must be paid by the set terms (i.e. latest by the 20th day of a month following a quarter of a year) even if the due date falls on a public holiday or on a weekend. The same terms apply to the taxpayers of all EU Member States.

The payment of VAT based on MOSS declaration is done automatically from the taxpayer's prepayment account after the due date, similarly with the VAT return (from March 23, 2018).

You can also make a bank transfer using the reference number of the MOSS declaration, which can be found on the declaration form after it has been verified. Each declaration has its own reference number.

A payment is deemed to be executed if the tax amount has been received in the bank account of the Estonian Tax and Customs Board. Therefore, the time period needed for making a bank transfer should be taken into account when paying the value added tax.

Particular attention should be paid on interbank payment transfers. We advise you to acquaint yourself with money transmission conditions of your home bank.

The Estonian Tax and Customs Board is sending on monthly basis the data of submitted VAT returns and of the VAT amounts received on the basis of these returns to the tax authorities of the Member States of consumption. The Estonian Tax and Customs Board must also ensure the timely transmission of the received VAT amounts to the tax authorities of other EU Member States.

Upon failure to pay the value added tax by the due date, the tax authorities of other Member States in which the VAT is due, may address you directly and in that case you have to pay the tax amount directly to them. This way the process will take more time and it will be more expensive for the taxpayers. The tax authorities of other Member States have the right to apply the coercive measures and penalties provided by the legal acts of their countries for delaying the declaration and payment of value added tax in relation to the taxpayers registered in Estonia, because the value added tax is due in the Member State of consumption not in the Member State of registration.

The list of services mentioned below is not exhaustive and makes sense in the imposition of the value added tax only.   

Digital services are:
1. electronic communications services and
2. electronically supplied services.

    1. Electronic communications services

    Electronic communications services are described in:
    • Article 24 of the Council Directive 2006/112 on the common system of value added tax
    • Article 1 of the Council Implementing Regulation (EU) No. 1042/2013 amending Implementing Regulation (EU) No. 282/2011 with articles 6a, 6b

    Electronic communications services are:

    a) telecommunications services and
    b) broadcasting services.

    a) Telecommunications services

    ‘Telecommunications services’ shall mean services relating to the transmission, emission or reception of signals, words, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception, with the inclusion of the provision of access to global information networks.

    Telecommunications services shall cover, in particular, the following:
    a) fixed and mobile telephone services for the transmission and switching of voice, data and video, including telephone services with an imaging component (videophone services); 
    b) telephone services provided through the internet, including voice over internet Protocol (VoIP);
    c) voice mail, call waiting, call forwarding, caller identification, three-way calling and other call management services;
    d) paging services;
    e) audiotext services;
    f) facsimile, telegraph and telex;
    g) access to the internet, including the World Wide Web;
    h) private network connections providing telecommunications link for the exclusive use of the client.

    Telecommunications services shall not cover the following:
    a) electronically supplied services;
    b) radio and television broadcasting (hereinafter “broadcasting”) services.

    b) Broadcasting services

    Broadcasting services shall include services consisting of audio and audiovisual content, such as radio or television programmes which are provided to the general public via communications networks by and under the editorial responsibility of a media service provider, for simultaneous listening or viewing, on the basis of a programme schedule.

    The services shall cover, in particular, the following:
    a) radio or television programmes transmitted or retransmitted over a radio or television network;
    b) radio or television programmes distributed via the internet or similar electronic network (IP streaming), if they are broadcast simultaneous to their being transmitted or retransmitted over a radio or television network.

    The services shall not cover the following:
    a) telecommunications services;
    b) electronically supplied services;
    c) the provision of information about particular programmes on demand;
    d) the transfer of broadcasting or transmission rights;
    e) the leasing of technical equipment or facilities for use to receive a broadcast;
    f) radio or television programmes distributed via the internet or similar electronic network (IP streaming), unless they are broadcast simultaneous to their being transmitted or retransmitted over a radio or television network.

    2. Electronically supplied services

    Electronically supplied services are described in:
    • Subsection 2 (4) of the Value Added Tax Act
    • Annex II of the Directive 2006/112
    • Article 7 of the Council Implementing Regulation No 282/2011
    • Article 1 of the Council Implementing Regulation No 1042/2013 amending Article 7 of the Regulation 282/2011

    Electronically supplied services shall include services which are delivered over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

    Electronically supplied services are the following:
    1) website supply;
    2) web-hosting;
    3) distance maintenance of programmes and equipment;
    4) transfer and updating of software transmitted by electronic means;
    5) images, text and information transmitted by electronic means, and making electronic databases available;
    6) music, films and games, including gambling games, transmitted by electronic means;
    7) political, cultural, sporting, scientific and entertainment broadcasts transmitted by electronic means;
    8) distance education and other services similar to the services specified above.

    Electronically supplied services shall cover, in particular, the following:
    a) the supply of digitised products generally, including software and changes to or upgrades of software;
    b) services providing or supporting a business or personal presence on an electronic network such as a website or a webpage; c) services automatically generated from a computer via the internet or an electronic network, in response to specific data input by the recipient;
    d) the transfer for consideration of the right to put goods or services up for sale on an internet site operating as an online market on which potential buyers make their bids by an automated procedure and on which the parties are notified of a sale by electronic mail automatically generated from a computer;
    e) Internet Service Packages (ISP) of information in which the telecommunications component forms an ancillary and subordinate part (i.e. packages going beyond mere internet access and including other elements such as content pages giving access to news, weather or travel reports; playgrounds; website hosting; access to online debates etc.);
    f) the services listed in Annex I of the Regulation 282/2011:

    1) Website supply, web-hosting of webpages, distance maintenance of programmes and equipment:
    a) website and webpage hosting;
    b) automated, online and distance maintenance;
    c) remote systems administration;
    d) online data warehousing where specific data is stored and retrieved electronically;
    e) online supply of on-demand disc space.

    2) Supply of software and  updating thereof:
    a) accessing or downloading software (including procurement/accountancy programmes and anti-virus software) plus updates;
    b) software to block banner adverts showing, otherwise known as Bannerblockers;
    c) download drivers, such as software that interfaces computers with peripheral equipment (such as printers);
    d) online automated installation of filters on websites;
    e) online automated installation of firewalls.

    3) Supply of images, text and information and making available of databases:
    a) accessing or downloading desktop themes;
    b) accessing or downloading photographic or pictorial images or screensavers;
    c) the digitised content of books and other electronic publications;
    d) subscription to online newspapers and journals;
    e) weblogs and website statistics;
    f) online news, traffic information and weather reports;
    g) online information generated automatically by software from specific data input by the customer, such as legal and financial data, (in particular such data as continually updated stock market data, in real time);
    h) the provision of advertising space including banner ads on a website/ web page;
    i) use of search engines and internet directories.

    4) Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events:
    a) accessing or downloading of music on to computers and mobile phones;
    b) accessing or downloading of jingles, excerpts, ringtones, or other sounds;
    c) accessing or downloading of films;
    d) downloading of games on to computers and mobile phones;
    e) accessing automated online games which are dependent on the internet, or other similar electronic networks, where players are geographically remote from one another;
    f) receiving radio or television programmes distributed via a radio or television network, the internet or similar  electronic network for listening to or viewing programmes at the moment chosen by the user and at the user’s individual request on the basis of a catalogue of programmes selected by the media service provider such as TV or video on demand;
    g) receiving radio or television programmes distributed via the internet or similar electronic network (IP streaming) unless they are broadcast simultaneous to their being transmitted or retransmitted over a radio and television network;
    h) the supply of audio and audiovisual content via communications networks which is not provided by and under the editorial responsibility of a media service provider;
    i) the onward supply of the audio and audiovisual output of a media service provider via communications networks by someone other than the media service provider.

    5) Supply of distance teaching:
    a) automated distance teaching dependent on the internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the internet or similar electronic network is used as a tool simply for communication between the teacher and student;
    b) workbooks completed by pupils online and marked automatically, without human intervention.

    Electronically supplied services shall not cover the following:
    a) radio and television broadcasting services;
    b) telecommunications services;
    c) goods, where the order and processing is done electronically;
    d) CD-ROMs, floppy disks and similar tangible media;
    e) printed matter, such as books, newsletters, newspapers or journals;
    f) CDs and audio cassettes;
    g) video cassettes and DVDs;
    h) games on a CD-ROM;
    i) services of professionals such as lawyers and financial consultants, who advise clients by e-mail;
    j) teaching services, where the course content is delivered by a teacher over the internet or an electronic network (namely via a remote link);
    k) offline physical repair services of computer equipment;
    l) offline data warehousing services;
    m) advertising services, in particular as in newspapers, on posters and on television;
    n) telephone helpdesk services;
    o) teaching services purely involving correspondence courses, such as postal courses;
    p) conventional auctioneers’ services reliant on direct human intervention, irrespective of how bids are made;  

    points (q), (r) and (s) are deleted;
    t) tickets to cultural, artistic, sporting, scientific, educational, entertainment and similar events booked online;*
    u) accommodation, car-hire, restaurant services, passenger transport or similar services booked online.
     

    Last updated: 25.11.2021

    Was this page helpful?