Why They Apply and How to Avoid Them

This article explains why penalties may apply to EU VAT OSS filings, what those penalties may look like, and how to avoid them.

1. OSS and France’s Role

If you are registered for the EU VAT OSS in France, the Direction Générale des Finances Publiques (DGFiP) is responsible for:

• Receiving your quarterly OSS returns
• Collecting your OSS VAT payments
• Acting as your Member State of Identification (MSI)

France then distributes the declared VAT to the relevant EU countries where the sales took place.

⚠️ However, penalties and interest for late filing or late payment are generally determined by the Member State(s) of consumption, according to their own national rules.

2. Common Reasons OSS Penalties Are Applied

a) Late filing of the OSS return

OSS returns must be submitted quarterly, by the end of the month following the quarter:

Even short delays can trigger follow-up requests, and penalties may be applied by the relevant Member State(s) of consumption.

b) Late or incomplete VAT payment

The VAT declared in your OSS return must be paid in full by the same deadline as the return.

If payment is late or incomplete, the following may apply:

• Late payment surcharges
• Interest on the outstanding VAT amount

For OSS, individual EU countries receiving the VAT may apply their own interest and penalty rules on late payments.

c) Incorrect OSS reporting

Penalties may arise if:

• Sales are under-reported
• Incorrect VAT rates are applied
• Transactions are reported for the wrong EU country
• Marketplace and direct sales are misclassified

Even small reporting errors can lead to corrections, authority questions, or penalties from the relevant Member State(s).

d) Missing or incorrect corrections

If you discover an error in a previous OSS return, it must be corrected in a later OSS filing.

Failing to fix known mistakes increases the risk of:

• Compliance reviews
• Additional penalties
• Follow-up requests from tax authorities

3. Possible OSS Penalties

Because OSS involves multiple EU countries, penalties and interest are generally applied by the Member State(s) of consumption, not only by France.

These may include:

Late payment interest

Interest may be applied on overdue VAT by the relevant EU country, calculated until the outstanding amount is paid.

Late filing penalties

If an OSS return is submitted late or not submitted at all, authorities may apply:

• Administrative late filing penalties
• Estimated VAT assessments if no return is received
• Additional compliance actions

Additional compliance actions

In cases of repeated or serious non-compliance, tax authorities may initiate further checks or investigations.

Exclusion from OSS

Repeated failures to comply with OSS rules may result in exclusion from the OSS scheme for a minimum of two years.

If this happens, the business may need to register for VAT separately in each EU country where it sells to consumers.

4. How to Avoid OSS Penalties

Most OSS penalties are preventable with good processes in place. Key steps include:

• Track OSS deadlines carefully
• Submit returns before the deadline (not on the last day)
• Double-check VAT rates and country allocation
• Correct errors as soon as they are identified
• Keep clear records and supporting documentation

Working with a VAT specialist such as hellotax can significantly reduce the risk of errors and missed deadlines.

5. Key Takeaway

Most OSS penalties arise due to:

• Late filing
• Late payment
• Incorrect reporting

With accurate data, timely submissions, and proper oversight, these issues are usually easy to avoid.

hellotax helps ensure your OSS filings remain accurate, compliant, and aligned with the requirements of all relevant EU tax authorities.