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One stop shop (OSS) Tax with foreign fixed establishment

by
BCIM srl, Jacques-Etienne Baudoux
- 18/07/2022 11:51:49
Hi all,

Has anymore already faced or/and solved the case where you need to apply the tax based on your fixed establishment providing the goods.
My company is in country C only (no multi-company) and I have a warehouse in country C and D. So accounting is declared in country C, taxes are declared in country C and D according to their respective shipments.
When the SO is placed, the shipping country is not known yet.
If country D is shipping goods to a customer address in country D, this is a national delivery with the VAT of the delivery address country.
If country D is shipping goods to a B2B EU customer address not in country D, this is an intracom delivery without VAT.
Worst use case is if for one SO line of 10 units, you ship 4 from country C to country C (national delivery) and 6 from country D to country C (intracom delivery). You need an invoice for each delivering country and apply different tax while it's related to the same SO line.
For B2C, the tax rate is always the one based on the customer delivery address but the declaration is done to the tax department of the delivering country.

The 2 possible approaches I see are:
- change the SO line at delivery to put the correct tax. But this could lead to SO line splitting and the SO does not reflect the original SO confirmation anymore. This can cause issues in the connections to e-commerce platforms. So I'm not in favor of it
- change the tax set on the invoice at invoice generation. This will need to know what tax to apply, meaning we need to refine the qty_to_invoice to have one qty_to_invoice per delivering country.
Of course, this should also work with returns and credit notes and the goods can be returned to a different country than the one that initially shipped the goods.

Any input is welcome. I created this discussion here:

Kind regards,
Jacques-Etienne Baudoux