As of July 2021, most companies shipping goods to other EU member states through a mail order system have started using the special regime of the so-called One Stop Shop („OSS“). In most cases, VAT has to be levied in the EU member state of the goods‘ destination. For that purpose, as of July 2021, the companies can use the OSS portal maintained by the Czech Finance Administration. Within the OSS regime, a VAT return is filed once every quarter and includes only foreign VAT levied from shipments to end consumers (non-entrepreneurs).
How to transition from the legacy regime applied until the end of June and into OSS? We are going to cover that in our next article.
VAT correction upon return of goods
Does it happen to you that a customer returns delivered goods, either as a warranty or because they did not want the goods? Then you would also know the rule that the reduction of VAT levied from such goods follows the same VAT regime under which the goods were originally sold.
VAT registration in another EU member state
If you registered for VAT in another EU member state in the past and levied VAT there using a local VAT return, then you have to continue to report the VAT reduction from return of goods originally shipped until 30 June 2021 in such a foreign VAT return.
However, do pay attention to goods that were shipped to the same EU member state after 1 July 2021. If such goods are returned to you, you will have to process the VAT reduction as part of the OSS regime.
Levying VAT in the Czech Republic
If you were not registered in a given EU member state for VAT and you levied VAT in your Czech VAT return in the Czech Republic due to the fact that your sales were below a threshold, you will report the VAT correction when returning goods as part of your regular VAT return in the month when the return of goods occurred (e.g. July 2021) i.e. it will not be reported as part of filing a VAT return within the OSS regime.
Regular VAT return and OSS
Even when you levy VAT on behalf of other EU member states within OSS regime, you should nonetheless report the value of these mail orders in your regular Czech VAT return. Only the value of sales excluding VAT is reported though.
The applicable row in the current VAT form is no. 24.
Although the VAT form or instructions for filling it in are not yet updated with respect to the implementation of the OSS regime as of 1 July 2021, the row 24 can generally be recommended for the reporting of goods sold as part of the OSS regime.
If you have further questions in connection with the OSS regime, feel free to arrange a consultation with us. We will be happy to discuss with you all the issue that interest you.