OSS Exclusion in Germany: 5 Essential Steps to Rejoin

OSS exclusion in Germany is one of the most disruptive problems an EU online seller can face. Being excluded from the One Stop Shop (OSS) scheme means more VAT registrations, more local returns and a higher risk of audits if you keep selling cross-border without fixing the issue.

OSS Exclusion in Germany: Main Reasons

OSS scheme exclusion in Germany typically occurs due to various non-compliance issues, organized into key categories:

1. Persistent Non-Compliance:
   • Failure to Submit VAT Returns: Not submitting VAT returns for three consecutive quarters despite reminders.
   • Non-Payment of VAT: Failing to pay the due VAT within the required timeframe after multiple reminders, unless the outstanding amount is less than EUR 100.
   • Failure to Provide Records: Not making records electronically available to the Member State of identification within one month of a reminder.
2. Cessation of Activities:
   • No Supplies for 8 Quarters: If a business has made no supplies under the scheme for eight consecutive calendar quarters, it is assumed that activities under the scheme have ceased.
   • Notification of Cessation: If the business or its intermediary notifies that it no longer supplies goods and/or services under the scheme.
3. Change in Business Location:
   • Non-Union Scheme: A business using the non-Union scheme moves its operations to an EU Member State.
   • Intermediary Notification: An intermediary notifies that it no longer represents the taxable person using the import scheme.

Consequences of Exclusion

Being excluded from the OSS scheme results in several consequences:

1. Quarantine Period: You will face an eight-quarter (two-year) quarantine period, during which you cannot re-register for the OSS scheme. This necessitates managing VAT obligations separately for each EU country.
2. Increased Administrative Burden: Without the OSS scheme, you must register for VAT in each EU country where you exceed the sales threshold, significantly increasing the administrative workload.
3. Potential Penalties: Continued non-compliance can lead to fines and other penalties from the respective EU countries’ tax authorities.
4. Financial Implications: Incurring penalties and interest for late VAT payments in any EU Member State.

For many cross-border sellers, OSS exclusion in Germany means moving overnight from one consolidated OSS return back to multiple local VAT registrations, with extra admin and higher compliance risk in every country where they sell.

Worried about OSS exclusion in Germany or already blocked from the scheme?
Let hellotax review your EU VAT setup, map all affected countries and create a step-by-step plan to stay compliant during the quarantine period and prepare for rejoining OSS. Book a free consultation with our VAT experts today.

Effective Dates of Exclusion – OSS scheme exclusion in Germany

The exclusion of a taxable person from the OSS scheme becomes effective based on the following scenarios:

1. Cessation of Activities, Conditions Not Met, or No Intermediary:
   • Non-Union/Union Scheme: Effective from the first day of the calendar quarter following the decision sent by electronic means.
   • Import Scheme: Effective from the first day of the month following the decision sent by electronic means.
2. Change of Business Location:
   • Union Scheme or Import Scheme: Effective from the date of the change, provided the change is communicated by the taxable person/intermediary to both Member States no later than the tenth day of the month following that change.
3. Persistent Failure to Comply with Rules:
   • Non-Union/Union Scheme: Effective from the first day of the calendar quarter following the decision sent by electronic means.
   • Import Scheme: Effective from the day following the decision sent by electronic means.
   • Intermediary Deletion: Effective from the day following the decision sent by electronic means to the intermediary and the taxable persons represented.

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Steps to Rejoin the OSS Scheme

The goal after OSS exclusion in Germany is not only to fix past non-compliance, but also to rebuild a clean track record so that future OSS participation is stable and low-risk.

To address non-compliance issues and prepare for re-entry into the OSS scheme after the quarantine period, follow these steps:

1. Identify and Rectify Non-Compliance Issues: Review the reasons for exclusion and address any gaps in your VAT compliance processes. Ensure timely and accurate submission of VAT returns and payments going forward.
2. Seek Professional Advice: Consult with a tax advisor or VAT compliance expert to navigate the complexities of EU VAT regulations and avoid future issues.
3. Maintain Compliance: During the quarantine period, ensure full compliance with VAT obligations in each country where you operate. This builds a track record of reliability that can support your application to rejoin the OSS scheme.
4. Reapply After Quarantine: Once the two-year quarantine period is over, you can apply to re-register for the OSS scheme. Be prepared to demonstrate your improved compliance practices and ability to meet OSS requirements.

Case Studies

OSS scheme exclusion in Germany

Case Study 1:

A company based in Italy using the Union scheme was excluded due to including B2B supplies in the OSS VAT return. The French Tax Authorities noticed that some supplies were made to business customers, who included their VAT numbers in the purchase orders. The Italian company was warned that:

• The OSS VAT Return cannot include B2B supplies.
• The supplies should be zero-rated in Italy according to EU VAT Directive.
• An amendment of the OSS Return was required.

Case Study 2:

A company based in the UK using the Union scheme in Poland was excluded for failing to pay VAT liabilities. Despite timely submission of OSS VAT returns, the company did not pay the VAT owed due to financial issues. The Polish Tax Authorities decided to exclude the company, resulting in:

• Exclusion from using OSS and IOSS schemes for two years.
• Potential penalties and interest for late VAT payments across EU Member States.
• The need to register for VAT in each Member State individually, without a sales threshold.

Why Choose hellotax for VAT Compliance?

Navigating VAT compliance across multiple EU countries can be complex and time-consuming. At hellotax, we offer personalized VAT compliance services with a focus on local expertise and transparent pricing. Our team of local accountants in each country provides tailored support to ensure your business stays compliant with all VAT regulations.

• Personalized Service: Our local accountant teams offer customized support to meet your specific needs.
• Transparent Pricing: We provide clear, upfront pricing with no hidden costs.
• Expert Support: Our VAT specialists are available to help you navigate complex VAT regulations and maintain compliance.

By choosing hellotax, you can focus on growing your business while we take care of your VAT compliance needs. If you have been excluded from the OSS scheme or need assistance with VAT compliance, contact us today to learn how we can help.