OSS for digital services: what applies when you sell to EU consumers?
Do you offer a digital service to private customers in other EU countries, such as an online service or a download? If you are established only in Germany, these services count together with your distance sales of goods towards one shared limit of 10,000 euros net: stay under it in the previous and the current year and you charge German VAT; otherwise the VAT of the customer's country applies, and instead of registering in each country you can report it through the OSS scheme with the BZSt (section 18j UStG). The rule is in section 3a(5) UStG.
Last updated: 29 October 2026
In short
- Which services: Telecommunications, radio and television, and "services supplied by electronic means" to private customers (section 3a(5) UStG, German).
- Above the limit: If these services and your distance sales of goods to all other EU countries together exceed 10,000 euros net in the previous or the current year, the customer's place applies.
- Reporting: In the OSS, one return a quarter with the BZSt, instead of registering in every country.
Which services are covered?
Section 3a(5) sentence 2 UStG names three groups: services in the field of telecommunications, radio and television services, and services supplied by electronic means. The provision gives no list of examples. For details the BZSt points to the VAT Application Decree (UStAE), especially sections 3, 3a, 3c and 18j (BZSt: One-Stop-Shop, German).
What this means for you: Assign your service to one of the three groups before you compare tax rates.
When does the customer's place apply?
The customer's place applies only if the recipient is not a business that buys the service for its business (section 3a(5) sentence 1 UStG). The service is then supplied where the customer lives, usually resides or has a seat.
There is an exception for small providers (section 3a(5) sentence 3 UStG). It applies if you are established in only one Member State and the total of these two items did not exceed 10,000 euros in the previous year and does not exceed it in the current year:
| Counts toward the 10,000 euros | To whom |
|---|---|
| Digital services under sentence 2 | Private customers in other EU countries |
| Distance sales of goods under section 3c(1) sentences 2 and 3 UStG | Private customers in other EU countries |
The BZSt counts "without VAT". Below the limit you invoice with German VAT and declare it to your tax office. According to the BZSt, only the sale that takes you over the threshold leads to foreign VAT from that sale on.
What this means for you: Add up goods and digital services in one total, not separately.
Can I give up the limit?
Yes. You can declare to your tax office that you do not want to apply sentence 3 (section 3a(5) sentence 4 UStG). The customer's place then applies from the start. The declaration binds you for at least two calendar years (sentence 5).
What this means for you: Waive it only if you know you will exceed 10,000 euros.
How do I report in the OSS?
- Register: You apply for participation in the BZStOnline portal and give your VAT ID. According to the BZSt, registration generally starts on the first day of the calendar quarter after the application. More: OSS registration with the BZSt.
- Declare: You declare the services by EU country and tax rate, in euros, once a quarter, within one month after the quarter ends (section 18j(4) UStG): by 30 April, 31 July, 31 October and 31 January.
- Pay: The calculated tax is due on the last day of the following month (section 18j(4) sentence 3 UStG). According to the BZSt, direct debit is not possible; transfer with your reference number and the quarter. More: Paying OSS VAT to the BZSt.
For these services the participation applies only to the EU countries in which you have neither a seat nor a permanent establishment (section 18j(1) sentence 4 UStG).
What this means for you: Block a fixed date each quarter for the return and the transfer.
Which tax rate applies?
The rate of the EU country where the customer is established applies. The BZSt writes that the services are subject to the VAT rate of the Member State in which the supply is taxable. You find the rates per country in OSS VAT rates in the EU.
What this means for you: Store the right rate for each customer country before you invoice.
How VAT GPT helps
VAT GPT is a tax software in the browser for online sellers, self-employed people and small businesses.
- Upload: You upload your invoices. The AI reads amounts, countries and tax rates. You check and confirm.
- Check: VAT GPT calculates the OSS return for all EU countries and creates the VAT return, monthly or quarterly. You check and confirm.
- Send: With VAT GPT Pro you send the OSS return directly to the BZSt and the VAT return to the tax office through ELSTER.
Not included: You apply for your OSS participation yourself in the BZStOnline portal. There is Free (basic functions, free of charge) and Go (30 days free with all Pro features). Try for free now
Not tax advice: the content does not replace individual advice.
Frequently asked questions
Does the OSS also cover software and apps? If the service is supplied "by electronic means" and the customer is a private person, it falls under section 3a(5) sentence 2 no. 3 UStG. The classification depends on the individual case.
Do sales to businesses count? No. The limit concerns private customers. For business customers section 3a(5) sentence 1 does not apply; more in OSS and B2B sales.
Do I have to use the OSS? No. You can register in each customer country instead. The OSS is the central alternative.
What about small businesses? The place-of-supply rule and the small-business limits are separate questions. Read OSS for small businesses.