How Non-Union OSS works in Kintsugi

If your business is based outside the EU and you sell digital services or SaaS subscriptions to consumers in the EU, Non-Union OSS lets you handle all of it through one registration and one quarterly return instead of registering in each country you sell into. Kintsugi calculates the VAT, prepares the return, and files it through our filing partner.

Quick Summary

• Non-Union OSS is for businesses with no EU establishment that supply services to EU consumers

• One registration, in one EU country of your choosing, covers your B2C service sales into all 27 Member States

• It covers business-to-consumer sales only. Business-to-business sales are never reported through OSS

• There is no sales threshold. The €10,000 threshold is not available to non-EU sellers, so the first taxable supply counts

• Returns are quarterly, due at the end of the month following the quarter

• You choose your Member State of Identification freely, and the choice does not change what VAT you pay

• If you later open an office or hire staff in the EU, you lose Non-Union OSS entirely and move to a different setup

Who Non-Union OSS is for

The scheme has one hard eligibility test: your business must have no fixed establishment anywhere in the EU. A US company selling SaaS subscriptions to European consumers from a US office qualifies. The same company with a branch in Dublin does not.

Being VAT-registered somewhere in the EU is a separate question from being established there, and the two have different consequences. See What happens if you gain an EU presence below.

What it covers, and what it does not

This is the part most worth reading carefully, because the boundary is sharper than people expect.

Covered by your Non-Union OSS return:

• Cross-border B2C sales of digital services and SaaS subscriptions to consumers in any EU Member State

• B2C sales to consumers located in your Member State of Identification itself. These go on the OSS return, not a separate domestic return

• B2C services caught by a special place-of-supply rule, for example admission to an event physically held in an EU country

Not covered, and this is the one that catches people:

• All business-to-business sales. OSS is a consumer-sales scheme. When you sell to an EU business, the place of supply is your customer's country and the customer accounts for the VAT under the reverse charge. You do not charge EU VAT and you do not report the sale on your OSS return

• Ordinary non-digital B2C services, such as remote human consultancy. For a non-EU supplier these are generally taxable where you are established, which usually means outside EU VAT altogether

• Goods of any kind. Non-Union OSS is a services scheme. If you start shipping physical products into the EU, you need a different scheme

• Sales made through a marketplace or platform that acts as the deemed supplier. The platform accounts for that VAT, not you

If your business sells to both consumers and businesses in the EU, expect your compliance to have two distinct halves. The consumer half runs through OSS. The business half runs on reverse charge and produces no EU VAT for you to collect or remit, provided your customer's VAT number is valid.

That last condition does real work. Confirming your business customers' VAT numbers is what supports treating a sale as B2B. A customer recorded as a business without a valid VAT number may be treated as a consumer.

Choosing where to register

Under Non-Union OSS you pick your Member State of Identification freely. Any of the 27 Member States is available, and Kintsugi does not require a particular one.

The choice does not change your VAT. You charge each customer the rate of their own country regardless of where you are registered, and your return covers all 27 either way.

See Choosing your Member State of Identification for what the choice does affect and how long it binds you.

What Kintsugi does automatically vs. what you do

Kintsugi handles:

• Tracking your EU exposure and telling you when a registration obligation arises

• Determining each customer's country and applying the correct VAT rate to each sale

• Distinguishing your B2C sales from your B2B sales so the right treatment applies to each

• Preparing your quarterly OSS return

• Submitting your registration and your returns through our filing partner, Taxually

You handle:

• Choosing your Member State of Identification

• Providing your entity documents for the registration

• Keeping customer location evidence and customer VAT numbers in your source system so they flow through with the transaction

• Paying the VAT due by the deadline

• Telling us before you open an office, hire staff, or hold stock anywhere in the EU

What happens if you gain an EU presence

Non-Union OSS is available only while you have no EU establishment, so gaining one ends it. There is no running both schemes side by side.

The moment your business acquires a fixed establishment in an EU country, meaning an office, branch, or staff of the same legal entity:

• Non-Union OSS ceases to apply, completely

• B2C services to consumers in the country where that establishment sits move to that country's domestic VAT return

• B2C services to consumers in every other EU country move to Union OSS

The whole company moves, not just the part that operates from the new office. Sales still billed from your head office move too.

In Kintsugi, obtaining an EU VAT registration has the same effect as gaining an establishment, and moves you to the Union OSS setup. Under EU law a bare VAT registration is not an establishment, so this is a deliberate simplification on our side rather than a rule you will find in the Directive. If you hold or plan to hold an EU VAT registration without an establishment, raise it with us so we can look at your specific position.

If you are still deciding on your corporate structure, this is worth factoring in early. It is much easier to plan for than to unwind.

FAQs

Q: I sell to both consumers and businesses in the EU. Does OSS cover all of it?

A: No. OSS covers your consumer sales only. Your sales to EU businesses fall under the reverse charge, where your customer accounts for the VAT, and they never appear on your OSS return. Both halves are handled in Kintsugi, but they are handled differently.

Q: Can I choose any EU country as my Member State of Identification?

A: Yes. Under Non-Union OSS the choice is free, and it does not change the VAT you charge or pay.

Q: Do I need a fiscal representative or an intermediary?

A: Not for Non-Union OSS. An intermediary is required for IOSS, which is a different scheme for imported goods.

Q: Is there a sales threshold before I have to register?

A: No. The €10,000 EU threshold is not available to businesses outside the EU, so your first taxable B2C supply into the EU can create the obligation.

Q: What VAT rate do I charge?

A: Your customer's country's rate, not the rate of the country you registered in. Kintsugi applies this automatically from the customer location on the transaction.

Q: My customers are in the same country I registered in. Do I need a separate domestic return?

A: No. Under Non-Union OSS, sales to consumers in your Member State of Identification go on the OSS return like any other.

Q: When are returns due?

A: Quarterly, by the end of the month following the quarter.

Q: What if I open an EU office later?

A: You leave Non-Union OSS and move to Union OSS plus a domestic return in the country where the office sits. Tell us before it happens so we can plan the transition.

This article is general information about how Kintsugi works, not tax advice for your specific situation.

Need help?

For further concerns, we're always here to help. If you can't find the answer you're looking for, reach out to us using the chat in the bottom right corner of your screen.