Situation:

Company A has a subsidiary B, of which it holds 100% of its shares. Both companies have their seats in Germany (DE) and form a VAT group in DE. A also has a permanent establishment in Austria (AT) (that is also VAT-registered there). Both (media house) companies sell print, e-paper and combinations of both products and generate B2C revenues from several EU countries, including AT.

Issue / Task:

A can’t use the DE OSS online portal for AT revenues because of its permanent establishment in AT, but also B can’t declare AT revenues via DE OSS, as they are part of A’s VAT group (in DE) and hence don’t have their own DE VAT numbers – correct?

Questions:

• What is the impact of a VAT group in relation to OSS?
• Is the kind of service relevant?

Basics OSS:

The EU One-Stop Shop (OSS) is a voluntary regime since JUL 2021 to report and pay VAT of all B2C supplies of goods and services in a single electronic return in one EU Country (generally the country of establishment) for all the company’s turnover into EU countries out of (a) “intra-Community distance sales of goods“, (b) sale of goods by platforms (under certain conditions) and (c) “supplies of services” (as here: electronically provided services). Different VAT rates of the target countries need to be applied.

Basics VAT Group:

The EU VAT System Directive allows member states to introduce a VAT group regime with the effect, that several legally independent persons can be regarded as a single taxpayer, if they are closely connected to each other. The VAT group regime is limited to companies within one member state, thus having no cross-border effect.

The consequences of considering all companies/entities of the VAT group as one entity subjected to VAT are, that (a) all transactions between the group entities are free from VAT and (b) the taxable revenues as well as input VAT from all entities are attributed to the controlling company. The latter one is considered as the sole tax subject and hence declares the group’s data in a single VAT return and recapitulative statement as well as receives/pays VAT credit/debt - thus simplifying administration.

Legal Provisions for the Combination of VAT Group and OSS:

The possibility for a VAT group to declare via OSS declaration its turnover in another EU country, where a group member has a permanent establishment, is derived from the right of a single taxpayer with a permanent establishment in another EU country (here: company A). This possibility depends on the kinds of services rendered:

For (a) “intra-Community distance sales of goods“ and (b) sale of goods by platforms the OSS can still be used, but for (c) “supplies of services.” OSS can’t be used:

E-paper is a supply of services under Art. 369g, item 1, lit. (c), VAT System Directive 2006/112/EG, where a permanent establishment in the target state is blocking the OSS for those turnovers (Art. 369b, lit. c, in conjunction with Art. 369a, item 1, leg. cit.).

Solution / Summary:

The combined products are regarded as a unified service and in the case here the value of the e-paper outweighs the one of the print and thus the combi is also regarded as a supply of services.

The print products (journals) sold from A and B out of DE to costumers in AT are declared via DE OSS by a single declaration, whereas E-paper and combi products of A and B have to be declared in AT by separate tax returns (as the DE VAT group has no effect in AT). So, B also needs to be registered for VAT in AT (without having – different to A – a permanent establishment in AT).

Klaus Fiebich, Dr. iur., Partner, fk@fiebich.com

Fiebich & PartnerInnen Steuerberatung und Wirtschaftsprüfung GmbH, Austria

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