If your store sells goods to consumers in other EU countries, at some point you cross the threshold where VAT has to be paid in the customer’s country rather than your own. OSS, the One Stop Shop, is the EU scheme that lets you report and pay that VAT in one place instead of registering for VAT in every country.
This guide covers when the rules apply, how OSS works for a store based in Denmark, and what it takes in your WooCommerce setup. The rules are complicated in the detail, so use the guide to understand what to ask your accountant.
The €10,000 threshold
Selling goods to consumers in other EU countries is distance selling. As long as your total distance sales to all other EU countries together stay under €10,000 a year, you can charge your home country’s VAT. Once you go over, you have to charge VAT in the customer’s country at that country’s rate, starting with the sale that takes you over the threshold.
The threshold applies to total sales to all the countries, not to each country separately. Sales to businesses with a valid VAT number don’t count, because they account for the VAT themselves. The EU describes the rules on its Your Europe page on the one-stop shop.
What OSS is
Without OSS, you’d have to register for VAT in every country you sell to above the threshold, and report to each country’s tax authority. With OSS, you register at home, report sales to all the countries on one return, and pay the total VAT to your own tax authority, which passes it on. For a Danish business, that’s the Danish Tax Agency (Skattestyrelsen).
| Part | How it works |
|---|---|
| Registration | For Danish businesses, through virk.dk or TastSelv Erhverv. The scheme is optional, but the alternative is registering in every country |
| Return | Once a quarter, with sales broken down by country and rate |
| Deadline | By the end of the month after the quarter |
| Payment | The total VAT to your own tax authority |
| Records | The details of the sales must be kept for 10 years |
Sales to consumers in your own country are reported as before on your regular VAT return. OSS only covers sales to the other EU countries.
What it takes in WooCommerce
Once you’re over the threshold, the store has to calculate VAT based on the customer’s country. That takes three things in the setup:
- VAT based on the shipping address. Under WooCommerce → Settings → Tax, tax must be calculated based on the customer’s shipping address, not the store’s.
- A rate for every country. Each country you sell to needs its own row in the rate table with that country’s standard rate. If you have products with reduced VAT in some countries, they need their own tax class. Rates change from time to time, so they have to be kept up to date. There are plugins that fetch the rates for you.
- A report by country. For the return, you need to pull sales broken down by country and rate. Your accounting software or a reporting plugin can do that, as long as VAT is recorded correctly on every order.
How the rest of the tax settings should be set is in our guide to WooCommerce VAT setup for Denmark.
The same price in every country?
When VAT changes with the country, you have to decide what stays fixed: the price the customer pays, or the amount you keep after VAT. A product at DKK 125 with Danish VAT is DKK 100 without VAT. For a customer in a country with lower VAT, the price can either drop, so you still get DKK 100, or stay the same, so you get a little more.
WooCommerce can do either, depending on the setup and your plugins. Decide which you want, and test with a shipping address in another country that that’s what happens. Also remember that prices for consumers have to be shown with VAT. The rules are in our guide to showing prices with or without VAT.
Before you cross the threshold
- Keep an eye on your total sales to consumers in other EU countries during the year.
- Talk to your accountant in good time, and get the OSS registration in place.
- Set up the rates and the VAT calculation on a copy of the store, and test an order to each of the countries you sell to most.
- Check that orders land correctly in your accounting software, with country and rate.
Frequently asked questions
Does OSS cover sales to Norway?
No. Norway isn’t in the EU, and OSS only covers sales to consumers in EU countries. Sales to countries outside the EU have their own VAT and customs rules.
Do I need OSS if I’m under the threshold?
No, but you can choose to apply the customer’s VAT from the first sale. That can be simpler if you expect to cross the threshold during the year. Ask your accountant what suits you.
Want help?
Rates per country, calculation from the shipping address and reports for the return have to work together before you cross the threshold. If you’d like us to set it up in your store, read about how we build and run WooCommerce stores. The overview of it all is in the guide to selling in Denmark with WooCommerce.