EU VAT One-Stop-Shop (OSS) 2026: The €10,000 Distance-Selling Threshold Explained

TL;DR: Once your cross-border B2C sales to EU customers exceed €10,000 in a calendar year, you must charge each customer's local VAT rate and report it. The EU VAT One-Stop-Shop (OSS) lets you file a single quarterly return — instead of registering for VAT in every Member State where you sell.

Last updated: August 2026

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What Is the EU VAT One-Stop-Shop (OSS) and Who Must Use It?

The OSS is a single EU-wide VAT reporting scheme that replaced 27 separate national VAT registrations for cross-border B2C digital and goods sales. Introduced under Council Directive 2006/112/EC as amended by Directive 2017/2455/EU and effective from 1 July 2021, it covers EU-based sellers, non-EU sellers with an EU inventory, and marketplace facilitators. Any business — regardless of where it is incorporated — that makes taxable B2C supplies to EU consumers above the €10,000 annual threshold is eligible and, in most cases, required to use it.

Before OSS existed, a UK business selling digital subscriptions to customers in Germany, France, and Poland had to register for VAT in all three countries separately. OSS collapses that into one quarterly return filed in a single Member State of Identification (MSI).

Three OSS schemes exist:

• Union OSS — for EU-established businesses selling goods or services B2C across EU borders
• Non-Union OSS — for non-EU businesses supplying digital/electronic services B2C to EU customers with no EU establishment
• Import OSS (IOSS) — for goods shipped from outside the EU with a consignment value up to €150

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How Does the €10,000 Distance-Selling Threshold Work?

The €10,000 threshold is a single EU-wide cumulative figure — not a per-country limit. It covers the total value of cross-border B2C sales of digital services and distance sales of goods to all EU Member States combined in the current or preceding calendar year. Once you exceed it, destination-country VAT rates apply to every subsequent cross-border B2C sale — immediately, not from the next year.

Key mechanics of the threshold:

• The €10,000 is calculated net of VAT
• It resets on 1 January each calendar year
• It applies only to cross-border supplies; domestic sales in your home country are unaffected
• Below the threshold, you may apply your home-country VAT rate (if EU-based) — but you can opt in to OSS voluntarily even below €10,000
• The threshold is governed by Article 59c of Directive 2006/112/EC

Example: A German online retailer sells €8,000 to French consumers and €3,500 to Italian consumers in a calendar year. Their combined cross-border EU B2C total is €11,500 — above €10,000. From the sale that pushed them over the threshold, French and Italian VAT rates apply and OSS reporting is required.

Threshold Comparison: OSS vs. Old Distance-Selling Thresholds

Regime	Threshold Type	Threshold Amount	Effective Since
Pre-2021 distance selling (per country)	Per-destination country	€35,000 or €100,000 per Member State	Pre-July 2021
OSS (current)	Single EU-wide cumulative	€10,000 net	1 July 2021
IOSS (imported goods)	Per-consignment	€150 per shipment	1 July 2021

The shift from country-by-country thresholds to one shared €10,000 figure means far more businesses are now in scope than before — particularly small and mid-sized e-commerce sellers.

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Which VAT Rates Apply Under OSS?

Once you are in OSS territory, you charge the VAT rate of the customer's Member State — not your home country's rate. Every EU country sets its own standard rate (minimum 15% under EU law) and reduced rates. You must apply the correct rate for the specific category of goods or services sold.

Standard VAT Rates: Selected EU Member States (2026)

Country	Standard VAT Rate	Reduced Rate(s)	Authority
Germany	19%	7%	Bundeszentralamt für Steuern
France	20%	5.5%, 10%	Direction générale des Finances publiques
Italy	22%	5%, 10%	Agenzia delle Entrate
Spain	21%	10%	Agencia Tributaria
Netherlands	21%	9%	Belastingdienst
Poland	23%	5%, 8%	Krajowa Administracja Skarbowa
Sweden	25%	6%, 12%	Skatteverket
Ireland	23%	9%, 13.5%	Revenue Commissioners
Portugal	23%	6%, 13%	Autoridade Tributária e Aduaneira
Hungary	27%	5%, 18%	Nemzeti Adó- és Vámhivatal

Source: European Commission VAT rates database. Rates shown are standard rates in force as of the date of publication. Always verify current rates with the relevant national authority before filing.

KARR's multi-country tax engine holds destination VAT rates for all 27 EU Member States and automatically applies the correct rate at the point of invoicing — eliminating the manual lookup that leads to rate errors and penalties.

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How to Register for and File the OSS Return

Registering for OSS is straightforward. You register once in your Member State of Identification — your home country if EU-based, or any Member State of your choosing if non-EU. Registration is done through that country's tax authority's online portal.

OSS registration and filing at a glance:

• Registration deadline: Before the start of the quarter in which you want OSS to apply
• Filing frequency: Quarterly (Q1: January–March, Q2: April–June, Q3: July–September, Q4: October–December)
• Filing deadline: Last day of the month following the quarter end (e.g., Q1 return due 30 April)
• Payment deadline: Same as filing deadline — one payment to your MSI, which distributes VAT to destination countries
• Currency: Returns filed in euros; if your home currency differs, use the European Central Bank exchange rate for the last day of the reporting period
• Record retention: All OSS records must be kept for 10 years (Article 369 of Directive 2006/112/EC)
• Correction mechanism: Corrections are made in a subsequent return, not by amending a filed return

KARR prepares the OSS quarterly return by aggregating destination-country sales, applying the correct VAT rate per country, and producing a return-ready summary — with each line itemised by Member State and tax rate as required by the OSS XML schema.

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Cross-Border B2B Supplies: How the Reverse Charge Works

The OSS applies exclusively to B2C supplies. B2B cross-border sales within the EU use a completely different mechanism — the reverse charge — under which no VAT is charged by the seller. The buyer accounts for VAT in their own country under Article 194 of Directive 2006/112/EC.

Reverse charge rules for EU B2B cross-border supplies:

• Seller issues a zero-VAT invoice and annotates it with "Reverse charge — Article 194, Directive 2006/112/EC"
• Seller must verify the buyer's VAT registration number via the EU VIES system (ec.europa.eu/taxation_customs/vies)
• Buyer self-assesses and reports VAT in their local return
• Seller reports the supply as an intra-community supply on their EC Sales List (or equivalent national form)
• If you cannot verify the buyer's VIES number, treat the sale as B2C and apply destination VAT

B2B vs. B2C cross-border EU: Key differences

Criterion	B2B (Reverse Charge)	B2C (OSS)
VAT charged on invoice	0% (no VAT)	Destination-country rate
Who accounts for VAT	Buyer, in their country	Seller, via OSS return
Verification required	VIES VAT number check	None
Filing mechanism	EC Sales List + local VAT return	OSS quarterly return
Threshold	None — applies from first euro	€10,000 EU-wide annual threshold

KARR detects the customer type (B2B or B2C) from the invoice, auto-populates the reverse charge annotation for B2B supplies, and routes B2C transactions to the OSS reporting module.

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Common OSS Mistakes That Trigger Audits

EU tax authorities share OSS data across Member States under Council Regulation 904/2010. A mis-categorised sale in your OSS return can trigger a coordinated audit in multiple countries simultaneously.

Mistakes to avoid:

• Applying your home-country VAT rate to cross-border B2C sales after exceeding €10,000
• Including domestic sales in the OSS return (OSS covers cross-border supplies only)
• Mixing B2B and B2C — if a business customer hasn't given you a valid VAT number, do not apply the reverse charge
• Using the wrong reduced rate — a digital book may qualify for a reduced rate in France (5.5%) but the standard rate in another country
• Missing the quarterly deadline — repeated late filing can result in exclusion from OSS and forced registration in every destination country
• Incorrect currency conversion — must use ECB rate on the last day of the reporting period, not a commercial rate

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How KARR Handles EU VAT OSS Compliance

KARR is cloud accounting software built for business owners who sell across borders without a dedicated tax team. For EU VAT OSS specifically, KARR provides:

• Automatic destination VAT rate application — KARR identifies the customer's country and applies the correct OSS VAT rate at invoicing, covering all 27 EU Member States
• B2B/B2C classification — the invoicing flow prompts for the customer's VAT number; a valid VIES number triggers reverse charge; no VAT number triggers OSS treatment
• OSS quarterly return preparation — KARR aggregates cross-border B2C sales by destination country and VAT rate, producing a return-ready summary aligned with the OSS XML format
• €10,000 threshold tracker — a running dashboard shows your cumulative cross-border B2C sales against the €10,000 limit so you know exactly when OSS applies
• Multi-currency invoicing with ECB rate conversion — KARR uses the European Central Bank reference rate for the last day of each quarter, as required by OSS rules
• Audit trail — every transaction is logged with the applied rate, customer country, and classification rationale — the record retention OSS requires for 10 years

KARR's "What Happened?" guided wizard lets a non-accountant business owner record a cross-border sale correctly without knowing the difference between Union OSS and Non-Union OSS upfront — the wizard asks plain-language questions and routes the transaction correctly.

Ready to automate your EU VAT OSS reporting? KARR's Pro plan (from $12/month) includes full multi-country VAT support and OSS return preparation. Start free at karr.pro