From MOSS to OSS
The Mini One Stop Shop (MOSS) started on 1 January 2015, when VAT on telecoms, broadcasting and electronically supplied services sold to consumers moved to the customer’s country. It let a seller file one quarterly return at home instead of registering for VAT in every country where it had customers.
On 1 July 2021 MOSS was extended into the One Stop Shop (OSS). The Union scheme now covers all services to consumers that are taxed in the customer’s Member State, plus intra-EU distance sales of goods. The non-Union scheme is for sellers established outside the EU, and the Import One Stop Shop (IOSS) handles low-value imported goods. OSS returns are still quarterly, filed in the Member State where you’re registered.
There’s also an EU-wide threshold. If you’re established in only one Member State and your cross-border sales of digital services and distance sales of goods to consumers stay at or below €10,000 a year, you can keep charging your own country’s VAT (Article 59c of the VAT Directive). Once you go over it, you charge the customer’s rate and report it through OSS.
OSS only covers supplies to non-taxable persons, meaning consumers. Supplies to businesses follow the general rule in Article 44 of the VAT Directive, and that’s where affiliate income usually sits.
Official sources:
What is a digital product?
The European Commission has four criteria that will determine whether something is a digital product:
- It is not a physical, tangible good.
- It’s essentially based on IT. The offering could not exist without technology.
- It’s provided via the Internet or an electronic network.
- It’s fully automated or involves minimal human intervention.
You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:
- E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
- Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
- Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
- Websites, site hosting services, and internet service providers.
Heads up: you might also hear digital goods referred to as “digital services,” “e-goods,” or “e-services.” All of these terms refer to the same thing.
How VAT Applies to Affiliate Commissions
When you promote someone else’s product and earn a commission, your customer is the merchant or network that pays you, not the shopper who clicked your link. Under the VAT Directive, anyone who independently carries out an economic activity is a taxable person (Article 9), whether or not they’re registered for VAT, so a merchant running an affiliate program is a business customer. That gives three common cases:
- The merchant is in your own country: you charge your local VAT as on any domestic invoice, unless you’re exempt under your country’s small business scheme.
- The merchant is VAT-registered in another EU country: you don’t charge VAT. The place of supply is where the merchant is established (Article 44) and the merchant pays the VAT under the reverse charge (Article 196). Check its VAT number in VIES, note “reverse charge” on the invoice, and report the sale in your recapitulative statement.
- The merchant is outside the EU, the US and the UK included: the place of supply is outside the EU, so no EU VAT applies.
An earlier version of this article said commissions from EU merchants without a VAT number should carry the merchant’s local VAT through MOSS, on the basis that affiliate marketing was an electronically supplied service. I haven’t found any Commission or VAT Committee guidance classifying affiliate commissions that way, and OSS doesn’t cover business customers anyway.
The grey area is an EU merchant that doesn’t give you a VAT number. Article 18 of Implementing Regulation 282/2011 lets a supplier treat an EU customer as a consumer when the customer hasn’t communicated a VAT number, unless the supplier has information to the contrary. A merchant running an affiliate program is usually obviously a business, so collect whatever evidence of business status you can, such as a company registration or tax number, and confirm the treatment with a tax adviser in your country.
The UK left the EU VAT system on 1 January 2021, so UK merchants are now non-EU customers for EU VAT purposes.
What’s Changing: VAT in the Digital Age
The EU adopted the VAT in the Digital Age (ViDA) package on 11 March 2025. The parts most relevant to affiliates and online businesses:
- From 1 July 2028, the single VAT registration rules extend OSS to more supplies and make the reverse charge mandatory for more sales by non-established suppliers.
- From 1 July 2030, intra-EU B2B transactions need structured e-invoices with near-real-time digital reporting, which will cover commissions you invoice to merchants in other EU countries.
- Member States can already require domestic e-invoicing without asking the EU for permission, so check your own country’s timetable.
Preparing Invoices
Invoicing for affiliates can be a bit tricky. Affiliates themselves don’t usually invoice the product owners. As a blog owner, for example, you can be signed up to over 200 affiliate programs, so creating invoices every month for small amounts would be ridiculously time-consuming.
Instead, what happens is that affiliate network platforms such as Awin automatically create invoices for the product owners on behalf of the affiliates. That satisfies accounting requirements without adding overheads to the affiliates. It is important that the product owners obtain all the relevant details from their affiliates as this info will be automatically inserted into the invoices, which are a legal obligation to have in all jurisdictions in Europe as far as I know.
Related
Dear Jean, I am a qualified accountant and auditor but would like to consult you for a client that is involved in affiliates, NFT etc which are not my area of expertise. Is it possible to have a chat on way forward please.
Yes, please contact me over email.
Hi ! great article! I’m a little confused. a question … if I, as a Swiss company (not EU member) with Swiss VAT number, collect revenues as affiliated by Amazon (Luxembourg), do I have to pay the VAT in the EU (or do I have to invoice it)?
I have already contacted the Swiss authorities and they confirmed that I do not have to invoice VAT for Switzerland since the customer is abroad, but they advised me to investigate if I have to pay something in the EU, even if it is unlikely.
Hello Jean,
Say you a sole trader or freelancer registered for VAT in an EU country with an affiliate blog about investing. How would you handle VAT in your accounting when commissions are paid out to your personal investor’s account through an internal referral system such as invite-a-friend programmes?
Best wishes,
Zach
forgot to say, yes i am considering options self-employed or company, i guess VAT rule doesnt matter which one of these 2 is.
Hello,
what if I from EU receive affiliate marketing % from USA /California based company (streaming service), so I promote them and get 20% from the customers that spend on their service money. so it’s streaming, no goods/products.
Do I pay VAT within my EU country or not?
for example if i earn 30,000€ from them, will i pay on top of that 25 % (VAT in my country) ?
thank you
My understanding is that you don’t charge/pay VAT in that case.
Hi Jean,
I have come across your content while researching a specific concern of mine on this topic.
I am based in the EU and have a blog where I get paid commission via an affiliate marketing software company which works with the actual company. Both are in Germany and I’m in another EU country.
However, I don’t have a company. I’m just a blogger and content marketer. I tried to ask the ministry of finance here. They told me earning commission this way is not considered as entrepreneurship. But they didn’t sound like they were 100% sure.
I have started receiving payments without a problem but I’m kinda worried if one day I have started receiving 4 digits or 5 digits of money and I would find myself in trouble.
Heard any similar cases?
Thank you
Kind regards
Hi Osman,
Earning commissions is definitely a business activity and you need to be registered as self-employed or have your own company.
Hi Jean. I’m still earning recurring affiliate commissions and various other incomes from businesses and websites I sold some time back. So I am no longer working, no longer own the sites. I just continue to reap the benefits. Now I’ve arrived in Spain to live and I’m not sure how these will be dealt with on my tax return. I don’t want to register as self employed because the social charges are so high – plus I’m not working. It’s just passive income. What can you advise?
Contact me and I’ll put you in touch with a good tax consultant.