Accounting for IOSS and OSS special VAT schemes for SME merchants

EAS versus standard E-commerce sales reports

The cornerstone of EAS EU VAT solution is the provision of multiple precise and easy-to-use sales reports.

All sales reports are available to Merchants via the EAS Dashboard (see Fig. 1)

Figure 1. Reports in EAS Dashboard

Merchants have the following sales identified in EAS reports:

• B2B report – for cross-border EU B2B sales;
• Domestic – B2B and B2C domestic sales for all existing EU VAT registrations;
• Electronic Interface facilitation – sales report for marketplaces when Marketplace is not responsible for VAT (Articles 14a 1 and 2 of EU VAT Directive)
• FC rep – sales report for imported goods with intrinsic value over 150 EUR (both DDP and DDU)
• OSS reports – reports for sales falling within special EU VAT Schemes;
• GIFTS – report on sales of gift cards and other items that are sold VAT free

EAS provides the full set of data with full breakdown for the merchant to decide how to utilise it.

Sales data should be transferred to the accountant as CSV / excel file containing item level sales data, with VAT separately identified. Most of the e-commerce platforms allow for export of various reports, including sales and tax reports. EAS sales reports are more extensive and easy to use for accounting purposes than standard reports.

EAS reports also contain full data on returns and post-sale discounts which are not present in standard or plug-in sales reports from e-commerce platforms.

When EAS EU VAT Compliance Solution is fully integrated, EAS sales reports contain data on reduced VAT sales.

EAS sales reports can easily be mapped for direct upload into accounting solutions. EAS is working on direct integration with most common accounting solutions in Scandinavia and selected EU countries.

Simplified accounting scheme for special IOSS and OSS schemes.

The following bulk entries are taken to the merchant’s books:
1. Monthly full sales
Debit Trade receivables
Credit General sales
Credit VAT

Figure 2. IOSS sales report

All consolidated data on column “1” from all sales reports shall be credited to the general sales report and the data from column “2” will have to be credited to the VAT account.

Consequently, the same operation shall be made from all sales reports with the exception of Electronic Interface facilitation and GIFTS reports.

2. Monthly IOSS sales (net of VAT) from EAS IOSS sales report:
Debit General sales
Credit IOSS sales: Value- IOSS sales net of VAT
Credit IOSS sales: Value – IOSS sales net of VAT

Debit VAT
Credit IOSS VAT: Value: IOSS VAT for all the countries where sales were made to.
Credit IOSS VAT: Value: IOSS VAT for all the countries where sales were made to.

In the example presented in Fig 2 it corresponds to data from column “1” and “2”

As a result of the above entries domestic and IOSS/OSS sales and VAT will be easily accounted for on separate accounts allowing easy preparation of domestic VAT report (since non-domestic sales are removed from report). In EU countries, B2C and B2B sales to other EU countries should be entered into the domestic VAT report, with 0 VAT. That rule is applicable to OSS sales. Thus the value for this entry can be taken directly from EAS OSS sales report and EAS B2B cross border sales report.

3. Monthly IOSS VAT
Debit IOSS VAT
Credit Bank (or “other creditors” and then “bank”)

This amount will always coincide with EAS IOSS fiscal report.

4. Quarterly OSS VAT
Debit OSS VAT
Credit Bank (or “other creditors” and then “bank”)

This amount will always coincide with EAS OSS fiscal report.

Extension of the simplified scheme.

Merchants requiring more detailed analytical accounting can also take advantage of EAS reporting. Based on EAS sales reports all accounting entries can be made on item/order level for extended analytics.

EAS proposal is, that IOSS/OSS sales are credited directly to the IOSS/OSS sales and IOSS/OSS Vat accounts based on sales data. Incidental costs applicable to IOSS/OSS sales can also be kept on separate respective accounts, sub-accounts, to ensure both proper representation of these costs and possibility to provide cost breakdown for these sales. The full data is also available from EAS.

Within the OSS scheme the goods and services can be easily separated. Respective data will coincide with respective sections of EAS OSS fiscal report.
EAS reporting provides data for both the incidental shipping costs and the service and merchandise on item level.

As presented in Figure 2, EAS reports contain data on incidental costs transferred to the end customer on item level representing shipment costs and EAS fee (columns “3” and “4” respectively).

Figure 3.

In the example above one can see also a return as it is presented in the report. Negative values can be used for accounting of returns that happened in the reporting month. Domestic and B2B sales identified in EAS reports EAS sales reports provide full breakdown for domestic (B2B and B2C) and B2B cross border sales, with reverse EU VAT used.

Figure 4. Domestic sales report

In figure 4 one can see a domestic sales report for Finland. Note, that two lines at the bottom
represent the returns. B2B domestic sales are included into the EAS domestic sales report.

Figure 5.

In figure 5 one can see an EAS B2B cross-border sales report. All sales are VAT 0 rated due to the reverse charge rule that is applied for the sales. VAT ID is always identified in the report, VAT ID validation happens during the sale, and validation results can be controlled in the EAS dashboard.