What is a VAT OSS return and how to submit It as an Irish (Non-EU) business?

If your business is based outside the EU and you are selling digital services to consumers in Europe, you need to charge VAT for all your European sales and submit VAT returns to the European tax authorities. The VAT rate you need to charge is that of your customer’s location, and VAT rates in the EU vary by country (e.g. 19% in Germany and 21% in Spain).

What is VAT OSS return?

In order to make VAT returns easier for you, the EU has introduced a scheme called VAT OSS (One Stop Shop, formerly OSS, Mini One Stop Shop) allowing you to pay all the VAT for your sales in the wider EU through one single return in the EU member state of your choice.

So far, so good. You are happy that there is a centralized system for this, have registered for a VAT OSS in Ireland, and are ready to submit your first VAT return. Trouble is, you are not quite sure how this works. Fear not: We have your back and will walk you through the entire process.

Registration for Irish VAT OSS

In order to submit a European VAT return in Ireland, you need to be registered for an Irish VAT OSS. We assume you have already completed this step, but if you haven’t yet, you can do this online on the Irish Revenue On-Line Service’s (ROS) VAT OSS website.

Please note that as a business based outside of the EU, you need to register under the Non-Union scheme; the Union scheme applies only to European businesses.

If you’re a non-EU B2B business, please pay close attention! If all of your EU customers are fellow businesses with valid VAT numbers, then you do not need to register for VAT OSS. Every single one of your EU transactions will be covered by the reverse-charge mechanism, which means you don’t need to collect any tax or file any VAT returns.

For a more thorough explanation, check out our post on how the reverse-charge mechanism works.

The tricky thing is to make sure that every customer has a valid VAT number… and, in fact, only a small portion of EU businesses have one. If you can be 100% certain about your customers, then forgo registering for VAT. But if you aren’t sure, or if you plan to expand your customer base across unknown businesses, then you should register for VAT OSS.

Returns For Non-EU Businesses

Businesses under the Non-Union scheme are required to submit quarterly VAT returns. These relate to the calendar quarters starting on:

January 1st

April 1st

July 1st

October 1st

Deadline of Irish OSS Returns

Each return must be submitted within 20 days of the end of each quarter.

The specific deadlines are:

• Q1 (January–March): Due by April 20th
• Q2 (April–June):Due by July 20th
• Q3 (July–September): Due by October 20th
• Q4 (October–December):Due by January 20th (of the following year)

For example, the return for the first quarter of 2021 (January-March 2021) must be submitted by April 20th, 2021.

How to submit OSS Returns

The returns can be submitted online on the ROS’ (Revenue Online Services) website. They can be accessed through ROS My services – Complete a Form – File Return. In order to submit your return, you will need the Digital Certificate issued to your business when you registered for the Irish VAT OSS.

You will need to submit some basic details such as your VAT OSS registration number and the information regarding the VAT you charged for your EU sales during the calendar quarter in question.

ROS pre-populates the basic details for you, so you just need to review them and make sure they are correct.

Next, you need to enter the VAT you charged in each EU member state. A drop-down menu will allow you to select the individual member states and enter your VAT information for each of them.

You need to enter the taxable amount of sales you made in that country and select the correct VAT rate. (The OSS VAT return will be pre-populated with the relevant VAT rates for all member states.)

The OSS system will then calculate the VAT amount due for each member state. Once you have entered the information for each member state where you made sales in this calendar quarter, the OSS system will calculate the total VAT amount you need to pay for all member states.

You can file your OSS returns online via the Revenue Online Service (ROS):

• Log in to ROS My Services
• Navigate to Complete a Form → File Return
• Use the Digital Certificate issued to your business upon OSS registration

The return process includes:

1. Reviewing Pre-Populated Details: ROS will pre-fill your VAT OSS registration number and some basic company details. Review and confirm accuracy.

2. Entering Sales by Member State:

   • Use the drop-down menu to select each EU member state where sales occurred.

   • Enter the taxable amount (excluding VAT) and select the applicable VAT rate.

   • The system will auto-calculate the VAT due for each country.

3. Final VAT Calculation:

   • Once all countries are filled in, OSS will summarize the total VAT payable across the EU.

Repeat this for each country. Once done, the system totals your EU-wide VAT liability for the quarter. Submit and you’re finished!

Let’s look at an example:

Say that during the first quarter of 2021 (January-March 2021), you sold digital services to consumers in Spain, Germany, France, and Italy.

You select Spain from the drop-down menu, enter the total amount (this is the base amount, i.e. excluding VAT) of all the sales you made in Spain during this quarter, and select the corresponding VAT rate. The OSS system then calculates the VAT amount you need to pay for your sales in Spain.

You repeat these steps for Germany, France, and Italy, and the OSS system will calculate the total VAT amount you need to pay for your sales in the entire EU during this quarter.

Done! Wasn’t that bad, was it?

Payments of VAT in OSS returns

Now that you know how much VAT you owe, you need to find out how you can make the payment.

When you submit your Irish OSS VAT return, the following payment options are available for non-EU based businesses:

• single debit instruction
• card payment
• electronic funds transfer

The OSS system will generate a unique reference number for your return, and your payment must be accompanied by this number. Any bank charges on payments under the OSS are always paid by you.

Penalties for late payments and late filing of OSS returns in Ireland

Failure to submit OSS returns on time or pay the VAT due by the deadline can result in serious consequences:

Late filing

• If your OSS return is not filed by the due date, the Irish Revenue may:
  • Charge you a late fee
  • Invalidate your VAT OSS registration
  • Require you to register and account for VAT separately in each EU member state where you make supplies
  • This can significantly increase your administrative burden and compliance costs

Late payment

• If you submit the return but fail to make payment on time:
  • Interest may be charged on the outstanding VAT amount
  • Repeated late payments may result in exclusion from the OSS scheme
  • You may still be required to pay VAT separately in each member state

Currency

Wait, but…which currency do I apply? What if I made sales in more than one currency?

The OSS VAT return in Ireland must be completed in EURO, irrespective of which currency was applied when making the sale.

If you sold a service in a different currency (e.g. Danish Kroner), you need to apply the official European Central Bank (ECB) exchange rate applicable on the last day of the calendar quarter. These rates are published online on the ECB’s website and are updated daily.

Here is an example: for the first quarter of 2021 (January-March 2021), you need to use the ECB rate for March 31st, 2021.

VAT Refunds

An OSS VAT return will only allow you to pay the VAT you owe. It will not allow you to claim any VAT refunds you may be eligible for.

This is done via the Electronic VAT Refund system. More information about this is available here.

Conclusion

Congratulations! You now know all about successfully submitting an Irish OSS VAT return. You calculated the correct amount, made the corresponding payment and lived to tell the tale 🙂

But remember, if you’d rather have professionals handle VAT compliance for you, Quaderno is here to help! We navigate the maze so you don’t have to! If you want to give us a try, please sign up for our free trial.