EU VAT for Digital Platforms: OSS, IOSS, and the Deemed-Supplier Rule Explained
A plain explanation of the three mechanisms a platform meets in EU VAT, the one case where the platform itself becomes the taxable seller, and how each one is recorded in the books.
A digital platform selling to consumers in several EU countries meets three VAT mechanisms. The Union One Stop Shop (OSS) lets it declare VAT for every EU country on one quarterly return. The Import One Stop Shop (IOSS) does the same for goods imported from outside the EU in consignments worth up to €150. The deemed-supplier rule makes the platform itself the VAT seller for certain sales it only facilitates. All three came in with the EU e-commerce VAT package on 1 July 2021, and all three change what the platform has to invoice, declare and keep.
This article explains each mechanism, works through one cross-border sale, and shows how the resolution and the returns are produced from the books.
Who this applies to
The rules cover any business that sells, or facilitates the sale of, goods or services to consumers (B2C) in EU Member States other than its own:
- Marketplaces that take payment from a buyer on behalf of third-party sellers.
- App stores and content platforms that distribute digital services to consumers.
- SaaS companies selling subscriptions to private individuals across the EU.
- E-commerce shops that ship goods to consumers in other Member States, or import goods from outside the EU.
Business-to-business sales follow different rules (zero-rated intra-Community supplies under article 138 and the reverse charge under article 196), which are covered in the EU VAT engine guide. This article is about consumers.
The 2021 e-commerce package in plain words
Before July 2021, every Member State had its own distance-sales threshold, and a seller that crossed one had to register for VAT in that country. Platforms carried no VAT liability for the goods sold through them. Imports below €22 were VAT-free, which was widely abused.
The package replaced that with four changes:
- One EU-wide threshold of €10,000 for cross-border B2C sales of goods and digital services (article 59c of the VAT Directive). Below it, the seller charges home-country VAT. Above it, VAT is due in the consumer's country.
- The Union OSS, so that VAT due in other Member States is declared on one return filed at home.
- The IOSS and the end of the €22 import exemption, so that VAT on small imported consignments is collected at the point of sale.
- The deemed-supplier rule (article 14a), which moves the VAT liability for certain facilitated sales from the seller to the platform.
Place of supply and the €10,000 threshold
For B2C sales of goods shipped to another Member State, and for telecommunications, broadcasting and electronic (TBE) services supplied to consumers, VAT is due where the consumer is (articles 33(a) and 58). The rate is the destination country's rate.
Article 59c carves out small sellers. If the total of cross-border B2C goods and TBE supplies across the whole EU stayed below €10,000 in both the current and the preceding calendar year, the seller may keep charging its home-country VAT. The threshold is a single figure for the entire EU, not per country, and it applies only to a seller established in one Member State. Once it is crossed, destination taxation applies from that sale onwards, and the seller either registers in each destination country or uses the OSS.
General services to consumers, such as consulting or most non-digital subscriptions, stay taxed at the supplier's location under article 45 and are not affected.
Union OSS
The Union scheme is a filing simplification, not a different tax. VAT is still due in each consumer's country at that country's rate. What the OSS changes is where it is declared and paid.
| Feature | Union OSS |
|---|---|
| Who can use it | EU-established sellers for B2C goods and services taxed in another Member State; non-EU sellers for intra-EU distance sales of goods |
| Return period | Calendar quarter |
| Filed where | The Member State of identification (the seller's home country) |
| Due | By the end of the month following the quarter |
| Content | Per Member State of consumption: taxable amount and VAT at each rate type and rate, plus corrections to earlier periods |
| Payment | One payment to the home tax authority, which distributes it |
The return layout is set by Annex III of Commission Implementing Regulation (EU) 2020/194. One line per consumption country per rate. Credit notes for the same period are netted; a credit note for a sale declared in an earlier quarter is reported as a correction to that quarter, not as a negative amount in the current one, and corrections are allowed for three years (article 61 of Implementing Regulation 282/2011).
A seller registered for the OSS must use it for all supplies that fall under the scheme. It cannot pick some countries for the OSS and register locally in others.
IOSS
The Import scheme covers goods shipped from outside the EU directly to an EU consumer in a consignment with an intrinsic value of up to €150. The seller, or the platform acting as deemed supplier, charges the destination country's VAT at the time of sale and declares it monthly through the IOSS. In exchange, the consignment is released at customs without import VAT being collected from the consumer.
Consignments above €150 are outside the IOSS. For those, import VAT and any customs duty are collected at the border in the usual way.
Non-EU sellers generally need an EU-established intermediary to use the IOSS. An EU-established platform acting as deemed supplier registers directly.
The deemed-supplier rule
Article 14a of the VAT Directive creates a legal fiction for two situations:
- A platform facilitates a distance sale of goods imported from outside the EU in a consignment of up to €150, whoever the seller is.
- A platform facilitates a supply of goods inside the EU by a seller not established in the EU to a consumer, whatever the value and whether the goods cross a border or not.
In both cases the law treats the single sale as two supplies:
- Seller to platform. A B2B supply of goods. For goods already inside the EU this supply is exempt with the right to deduct under article 136a. For imports it takes place outside the EU and carries no EU VAT.
- Platform to consumer. A B2C supply. The platform charges the consumer's country VAT, declares it (through the IOSS or Union OSS, or a local registration) and pays it.
The platform does not own the goods and never physically handles them. It is nonetheless the taxable person for the second supply. "Facilitates" is defined in article 5b of Implementing Regulation 282/2011: the platform sets the terms, authorises the charge to the customer, or orders or delivers the goods. A platform that only processes payments, lists advertisements or redirects customers to another site does not facilitate.
The rule does not apply to services, nor to EU-established sellers' domestic or intra-EU sales of goods. For those, the platform remains an agent, and the seller remains the VAT supplier. Whether the platform books gross or net revenue in its own accounts is a separate question, covered in Principal vs Agent for Marketplaces.
What ViDA adds
Council Directive (EU) 2025/516, the "VAT in the Digital Age" package, extends the deemed-supplier idea to services. Platforms facilitating short-term accommodation rental (up to 30 nights) and passenger road transport become the deemed supplier when the underlying provider does not charge VAT, for example a private host or a small exempt business. The new rule applies from 1 July 2028, and a Member State may defer it to 1 January 2030. From 1 July 2030 the same package replaces recapitulative statements with transaction-level digital reporting and makes structured e-invoicing the default for intra-EU B2B, which is covered in E-Invoicing in the EU: Country-by-Country Requirements.
Record-keeping and DAC7
Article 242a requires any platform that facilitates B2C supplies, deemed supplier or not, to keep records of those supplies for ten years and make them available electronically on request. Separately, DAC7 (Directive (EU) 2021/514) obliges platforms to report the income of their sellers to the tax authority of their home Member State each January, which the authorities exchange between themselves. The two duties cover different data, VAT records on one side and seller income on the other, and both start from the same transaction log. A ledger that stores the VAT treatment and the seller identity on each sale serves both.
A worked example
A consumer in Germany buys a €100 item (VAT-exclusive price) from a seller established in China through a marketplace established in Lithuania. The item ships from a warehouse in Poland, so the goods are already inside the EU.
| Step | Supply | VAT treatment |
|---|---|---|
| 1 | Chinese seller → Lithuanian marketplace | Deemed B2B supply, exempt under article 136a. No VAT charged. The Polish stock location means the seller has a Polish supply to report, but no VAT on it. |
| 2 | Lithuanian marketplace → German consumer | Deemed B2C distance sale. The marketplace charges German VAT at 19 %: €19.00. |
| 3 | Marketplace OSS return | The €100 taxable amount and €19.00 VAT appear on the marketplace's quarterly Union OSS return under Germany, filed with the Lithuanian tax authority (VMI). |
| 4 | Marketplace commission | The marketplace's commission to the Chinese seller is a B2B service to a non-EU business, out of scope of EU VAT under article 44. |
If instead the same item had been shipped from China in one consignment, step 1 would be a supply outside the EU, step 2 would be an IOSS sale, and the €19.00 would be declared monthly through the IOSS. If the seller had been established in Germany, the deemed-supplier rule would not apply at all; the German seller would charge its own VAT, and the marketplace would invoice only its commission.
The consumer pays €119 in every case. What changes is who owes the €19 to which authority and on which return.
How Nordlet resolves and reports it
Nordlet treats the VAT decision as data on the transaction rather than a calculation done at invoicing time and discarded.
Resolution. POST /v1/reference/vat/resolve takes the partner or the customer's country code, the supplyType (goods, services or digital), the date and the situation flags: belowDistanceSalesThreshold, facilitatedByMarketplace (you sell through a deemed-supplier platform), actingAsMarketplace (you are the platform), sellerEstablishedInEu and importedConsignmentValueEur. It returns the scheme, the vatCountryCode, the reverseCharge, deemedSupplier and zeroRated flags, the destination country's rate menu, the article of the VAT Directive the decision rests on, and notes. The marketplace in the example above gets oss_union with vatCountryCode: "DE" and deemedSupplier: true; the seller side gets marketplace_deemed, zero-rated under article 136a. When the threshold flag is omitted, the engine reads the running €10,000 totals from the ledger itself.
Documents. Sales invoices carry vatScheme, vatCountryCode and deemedSupplier. E-commerce orders carry shipToCountryCode and marketplace, and orders/fulfill resolves the treatment from the ship-to country and stamps the draft invoice. The PDF prints the legal mention the scheme requires.
Returns. POST /v1/declarations/eu/oss/compute with { year, quarter } builds the Union return in the Annex III layout: rows per Member State of consumption, rate type and rate, with credit notes netted and a corrections array for credit notes linked to an invoice from an earlier quarter. POST /v1/declarations/eu/ioss/compute with { year, month } does the same for IOSS sales. Both warn about non-statutory rates, documents without a consumption country and unlinked credit notes.
Threshold. POST /v1/declarations/eu/distance-sales-threshold/get reports the current and preceding year's cross-border B2C totals, whether the company is still below €10,000 and the remaining headroom.
The seller-side bookkeeping for a platform, including what it owes each seller between payment and payout, is covered in Marketplace Seller Subledgers: Revenue vs Payables. The per-country rates and rate changes are available through reference/eu-vat-rates/list, and the full scheme table is in the EU VAT engine guide.
FAQ
Does a platform have to use the OSS?
No. The OSS is optional. A platform that is the deemed supplier may instead register for VAT in every Member State of consumption and file local returns there. In practice the OSS is simpler for any seller with consumers in more than two or three countries, and once a seller opts in it must use the OSS for all supplies the scheme covers.
Does the deemed-supplier rule apply to services sold through a platform?
Not under the current rules. Article 14a covers goods only. A separate presumption in article 9a of Implementing Regulation 282/2011 treats a platform as the supplier of electronically supplied services unless it clearly names the underlying provider on the invoice and in the contract. ViDA adds short-term accommodation and passenger transport from 2028.
What does the €10,000 threshold count?
Cross-border B2C sales of goods and TBE services to consumers in other Member States, added together across the whole EU, net of VAT. Domestic sales, B2B sales and general services do not count. The threshold is checked against both the current and the preceding calendar year, and it is available only to a seller established in one Member State.
What happens to a consignment worth more than €150?
It falls outside the IOSS. Import VAT, and customs duty where applicable, are collected at the border. The deemed-supplier rule for imports also stops at €150. For goods already inside the EU, the deemed-supplier rule has no value limit.
Can a credit note for last quarter be put on this quarter's OSS return?
Not as a negative line. The Annex III layout requires it to be reported as a correction of the original period, identified by country, year and quarter. Nordlet moves a credit note that references an invoice from an earlier period into the corrections array automatically and flags credit notes with no reference so they can be linked.