Selling a €50 ebook to a customer in France is not just a content transaction — it is a VAT event. That sale generates €10 in French VAT at the French rate of 20%, owed to the French tax authority regardless of where your business is registered. Before 2021, handling that obligation meant either ignoring it (a growing audit risk as tax authorities share payment processor data) or registering for VAT in France. Since July 2021, the One Stop Shop changes the equation entirely — but only if you understand the rules.
This guide covers everything you need to know about EU VAT on digital services: what qualifies, where the tax is owed, how the threshold works, and how to stay compliant without registering in 27 countries.
What Are "Electronically Supplied Services"?
The EU defines electronically supplied services (ESS) in Article 7 of VAT Implementing Regulation 282/2011. An ESS must be:
- Delivered over the internet or an electronic network
- Substantially automated — requiring minimal human intervention
- Impossible to provide without information technology
The practical test is straightforward: if delivery is triggered automatically by a purchase click and requires no meaningful human action, it is almost certainly ESS.
| Product or service | ESS (digital VAT rules)? | Why |
|---|---|---|
| Software download or SaaS subscription | Yes | Automated delivery, no human involvement |
| Ebook or PDF sold via automated checkout | Yes | Instant automated delivery |
| Online video course (pre-recorded, auto-access) | Yes | Automated, no human tutor |
| Streaming music or video subscription | Yes | Continuous automated delivery |
| Website hosting, cloud storage | Yes | Automated infrastructure service |
| Digital advertising (Google Ads, banner ads) | Yes | Automated placement and delivery |
| Online tutoring via live video call | No | Substantial human involvement |
| Freelance design delivered by email | No | Human-performed service |
| Printed book shipped physically | No | Physical goods rules apply |
| Software consulting delivered by a person | No | Professional services rules apply |
The distinction matters because only ESS is always taxed in the customer's country for B2C sales — regardless of any threshold. Other services follow more complex "place of supply" rules that may not automatically trigger destination-country VAT.
Where Is VAT Due on Digital Services?
The fundamental rule for B2C digital services sold across EU borders is simple: VAT is due in the customer's country, at the customer's country's rate.
This applies to all ESS sold to private individuals (non-VAT-registered consumers) anywhere in the EU, regardless of where the seller is based. A Romanian SaaS company selling to a Belgian customer charges Belgian VAT at 21%. A Dutch streaming service selling to a Polish customer charges Polish VAT at 23%.
For B2B sales — where the buyer is a VAT-registered business — the reverse charge mechanism applies instead. The seller issues an invoice with no VAT, and the buyer self-accounts for VAT in their own country. This is covered in detail below.
The €10,000 OSS Threshold: How It Works
Before 2021, EU member states had individual country thresholds (typically €35,000–€100,000) below which sellers could still charge their home country's VAT. These were abolished for ESS and replaced with a single pan-EU threshold of €10,000.
Below €10,000: You may charge your home country's VAT rate on all EU B2C sales. This applies to your combined sales across all EU countries — not per country. A French micro-business selling €9,900 in combined cross-border B2C digital services stays below the threshold and charges French VAT.
Above €10,000: You must charge the VAT rate of each customer's country. For a business selling to customers across multiple EU countries, this creates 27 potential VAT obligations. OSS resolves this with a single quarterly return.
Important nuance: If your business is already VAT-registered in your home country (because your domestic turnover exceeds the registration threshold), the €10,000 pan-EU threshold does not give you an ESS exemption. Once VAT-registered, you must apply destination-country VAT on every cross-border B2C ESS sale from the first euro.
MOSS to OSS: What Changed in 2021
The Mini One Stop Shop (MOSS) scheme, which ran from 2015 to 2021, covered only electronically supplied services. The reformed OSS scheme launched on 1 July 2021 expanded coverage to include:
- All electronically supplied services (carried over from MOSS)
- Telecoms and broadcasting services (carried over from MOSS)
- All other cross-border B2C services (new)
- Distance sales of goods within the EU (new)
If you were registered under MOSS, your registration automatically transitioned to OSS. The filing portal, quarterly deadlines, and OSS number remain the same. The only difference is the broader scope of sales you can now report through the single return.
B2B Reverse Charge for Digital Services
When your customer is a VAT-registered business in another EU member state, the reverse charge mechanism completely changes the VAT treatment. Instead of collecting VAT, you:
- Issue the invoice with no VAT charged
- Add the mandatory statement: "Reverse charge — VAT to be accounted for by the buyer per Article 44, Directive 2006/112/EC"
- Include the buyer's EU VAT number on the invoice
- Verify the buyer's VAT number via the VIES portal (ec.europa.eu/taxation_customs/vies/) before issuing
The buyer then accounts for VAT in their own country — they self-assess VAT at their local rate as both output tax and (usually) deductible input tax in the same return. For most B2B transactions, the net VAT cost to the buyer is zero.
Key compliance step: Always verify VAT numbers via VIES before applying the reverse charge. Issuing a reverse charge invoice to a customer whose number is invalid or belongs to a different entity leaves you liable for the uncollected VAT.
Worked Example: VAT on a €50 Ebook Sale
Scenario: A German software company sells a €50 ebook to four different customers.
| Customer | Customer type | Country | VAT treatment | VAT amount |
|---|---|---|---|---|
| Marie (private individual) | B2C | France | OSS — charge 20% French VAT | €10.00 |
| Kowalski GmbH | B2B (VAT registered) | Poland | Reverse charge — no VAT charged | €0 |
| Lena (private individual) | B2C | Italy | OSS — charge 22% Italian VAT | €11.00 |
| Klaus (private individual) | B2C | Germany | Domestic — charge 7% German VAT (ebooks) | €3.50 |
The German VAT on Klaus's sale goes on the company's normal German VAT return. The French and Italian VAT on Marie's and Lena's sales go on the quarterly OSS return filed via the German BZSt portal. Kowalski GmbH receives an invoice showing the reverse charge statement and their VAT number — no VAT is collected or remitted.
How to Register for OSS: Step by Step
Step 1 — Confirm your registration country. EU businesses register in their country of establishment. Non-EU businesses (e.g., a US SaaS company with EU customers) can choose any EU member state and use Non-Union OSS.
Step 2 — Access your country's OSS portal. Germany: BZSt Online Portal (BOP). Ireland: Revenue Online Service (ROS). France: impots.gouv.fr. The portal will be in your national language but the process is standardised across the EU.
Step 3 — Complete the registration form. You will need your domestic VAT number, registered business address, bank account for OSS payments, and an estimate of cross-border B2C turnover. Registration typically takes 15–30 minutes and is confirmed within one to five working days.
Step 4 — Receive your OSS identification number. This is separate from your national VAT number. You will use it on all OSS returns. Do not confuse the two.
Step 5 — Configure your checkout for destination-country VAT. Every B2C sale to an EU customer must be charged at that country's correct VAT rate. Most payment platforms (Stripe, Paddle, WooCommerce) have VAT automation settings — verify them against the official EU VAT rates table.
OSS Filing: Quarterly Deadlines
| Quarter | Period | Filing and payment deadline |
|---|---|---|
| Q1 | 1 January – 31 March | 30 April |
| Q2 | 1 April – 30 June | 31 July |
| Q3 | 1 July – 30 September | 31 October |
| Q4 | 1 October – 31 December | 31 January |
Returns are filed in euros even if some sales were made in other currencies — convert at the European Central Bank rate for the last day of the reporting period.
Your OSS return must break down sales by member state and VAT rate. You are not filing a single lump sum — you report, for example, €8,200 in French sales at 20% and €3,100 in Polish sales at 23% as separate line items.
Common Mistakes EU Digital Sellers Make
Charging home-country VAT on all EU sales. A Spanish SaaS charging 21% Spanish VAT to a Swedish customer is non-compliant. Swedish VAT is 25%. The difference is owed to Sweden.
Applying OSS to B2B sales. OSS is only for B2C. If a business customer provides a valid VAT number, the reverse charge applies regardless of OSS registration.
Missing the €10,000 threshold mid-year. The threshold resets each calendar year, but if you cross it in, say, October, you must apply destination-country VAT from October onwards — not from 1 January of the following year.
Not verifying customer type at checkout. If a buyer does not provide a VAT number, treat them as B2C. You cannot assume business status without a verified VAT number.
Filing domestic digital service sales in the OSS return. Sales to customers in your country of registration go on your national VAT return. Mixing them into OSS creates discrepancies between your OSS return and your domestic return.
Use our EU VAT Calculator to check the correct VAT rate for any EU destination country before your next OSS filing. For the full registration walkthrough, see our OSS scheme explained guide.