The limit applies EU-wide, not per country
This is the point at which many miscalculate.
The €10,000 applies to all cross-border sales to private individuals in the EU taken together. Not €10,000 in Ireland and another €10,000 in Estonia, but €10,000 across all countries.
| Below €10,000 | Above | |
|---|---|---|
| Rate | Cyprus 19 % | customer’s country rate |
| Owed in | Cyprus | the customer’s country |
| Return | ordinary VAT 4 | OSS return |
What really creates work above the limit
Not the return. That is one per quarter, instead of up to 26 registrations.
The work lies in the assignment: every individual sale has to carry the rate of the country where the customer sits. That presupposes knowing on each sale where the customer is, and having the rate applicable there on file.
OSS and reverse charge: the customer decides, not you
Here lies the most common misunderstanding: OSS and reverse charge are not two routes to choose between. Which scheme applies is decided solely by who the customer is.
| Business customer in the EU | Private customer in the EU | |
|---|---|---|
| Scheme | reverse charge | OSS |
| You charge | no VAT | the customer’s country rate |
| Who accounts for it | the customer | you |
| Threshold | none, from the first euro | €10,000 EU-wide |
| Filing | VIES | OSS return per quarter |
The reason for the difference is simple: a business has its own VAT identification number and can account for the tax itself. That is why the liability can be shifted to the customer, and that is exactly what reverse charge is.
A private individual has no such number. There is nobody to shift the liability to. The tax is still owed in the customer’s country, so the seller has to account for it.
OSS: the advantage is not against reverse charge
The question “what does OSS give me over reverse charge” therefore has no answer. For the same sale the two are never alternatives.
The advantage of OSS shows against a different alternative, namely the one that would remain without it:
| without OSS | with OSS | |
|---|---|---|
| Registrations | in every country with consumers, up to 26 | one, in Cyprus |
| Returns | per country, each with its own deadline and language | one per quarter |
| Payments | to each national authority separately | one, Cyprus distributes onward |
From that follows a situation often overlooked: a supplier with a mixed customer base needs both at once, OSS for the consumers and VIES for the business customers. Details on the second route in the guide to reverse charge.
The order of registrations
- Tax number (TIC), within 60 days of incorporation, see the guide to the tax number
- VAT registration, per the thresholds in the guide to VAT registration
- OSS registration, through the Cyprus tax department
Step three presupposes step two. No Cyprus VAT identification number, no OSS registration.
What we could not substantiate
- The OSS return deadline. The end of the month following the quarter end and the tenth day of the second following month are both quoted. A third figure of 40 days belongs to the ordinary VAT return and not to OSS. We do not commit.
- The retention period. Ten years in one source, six in another. When in doubt the longer one.
- Whether the limit is calculated on the calendar year or on a rolling basis. One source describes the calendar year, another a rolling total. That decides exactly when the duty arises.
With a limit whose method of calculation is disputed, the question is worth asking before crossing it rather than after: Cyprus setup from one place.
Bookkeeping: the rate belongs on the sale
Above the limit the rate is no longer a setting but a property of each individual sale.
In Volk Accountant the rate sits on the invoice line and the country on the customer, so the reports show turnover by rate and by country. The numbers and countries sit with the clients, and VAT 4 and VIES for the business customers come out of the same transactions.
Which rates apply in Cyprus itself is in the guide to VAT rates.