SME procedure and VAT OSS – what are the differences and can you use both?
SME exempts qualifying sales from VAT. OSS is used to account for taxable sales.
One company can use both procedures in different countries, but cannot apply the SME exemption and OSS settlement to the same sale in the same jurisdiction.
SME and OSS can work side by side
The SME procedure answers the question of whether sales can be exempt from VAT in a selected country. The VAT OSS answers the question of how to declare and pay VAT on sales taxed in the countries of consumption.
Sick leave
- EX identification number;
- €100,000 threshold in the EU;
- country threshold and conditions;
- impact on the right to deduct.
VAT settlement
- VAT due;
- consumption country rates;
- quarterly VIU-DO declaration;
- one payment in the country of identification.
Official Commission notes confirm that the SME procedure and the EU OSS procedure can be applied together, but not in the same jurisdiction for the same sale. See the explanatory notes on SME and OSS.
SME exemption and OSS settlement
Both procedures are voluntary, but have different conditions, data and tax consequences.
| Characteristic | SME procedure | VAT OSS |
|---|---|---|
| Objective | VAT exemption for qualifying sales | Declaration and payment of VAT due |
| Availability | EU-based entrepreneur | Also certain non-EU companies, depending on procedure and transaction |
| Threshold | €100,000 EU turnover and national threshold | There is no entry threshold for the procedure itself; a separate limit of EUR 10,000 applies |
| Scope of countries | Selected eligible countries | State consumption for eligible transactions |
| ID | EX number | OSS Procedure Number |
| Reporting | Quarterly information on turnover in the 27 EU countries | Quarterly VIU-DO declaration for the EU procedure |
| VAT on sales | Exempt sales | Sales taxed at the state consumption rate |
| Deduction | The exemption may limit the deduction of input VAT | Input VAT is not deducted in VIU-DO |
| Voluntary | Yes, country by country | Yes, with the principle of application to covered transactions |
| Exceeding | Loss of exemption in the entire EU or in a specific country | Changing the place of taxation requires a separate analysis of the EUR 10,000 limit |
€100,000 does not replace the €10,000 OSS limit
The thresholds cover different turnovers, have different effects and cannot be used interchangeably.
Annual turnover across the EU
You check the current and previous year and, additionally, the threshold and conditions of the country in which you want to benefit from the exemption.
Taxation place limit
This applies to specific transactions and does not prejudge eligibility for the SME exemption. Details are provided in the OSS VAT limit.
One company can have three different VAT statuses
The Polish company uses SME in France, settles taxable sales in Germany through OSS and has local obligations in the Czech Republic due to the warehouse.
France: exemption
Sales that meet SME criteria are exempt and subject to monitoring. They are not reported to the VIU-DO as taxable sales.
VAT in FranceGermany: VAT payable
The sale is taxed at the German rate and reported in the VIU-DO declaration.
VAT in GermanyCzech Republic: warehouse
Movement and sale from own stock require separate analysis of local obligations.
VAT in the Czech RepublicTo monitor the EUR 100,000 threshold, you need to collect the turnover from the entire European Union, including from countries where the company does not use SME.
VAT in Europe.
Choose your market.
Registration, rates, declarations and local obligations – specifically described for each country where you develop sales.
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Germany
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Italy
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France
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Netherlands
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Czech Republic
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Belgium
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Spain
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in Spain
The EX number is not an OSS number or a local VAT number
The cross-border SME procedure requires prior notification to the country of establishment. The exemption can only be applied after an EX number has been assigned and the countries in which it is active have been confirmed.
One entry
The structure depends on the country of residence, and the common element is the suffix EX.
Same number, different confirmations
Registering as an SME does not automatically deregister from the OSS. Data in both systems must be reconciled, and exempt sales must be separated from taxable sales.
The EU threshold and the national threshold lead to different consequences
After losing the exemption, the appropriate tax treatment must be assigned again to the specific country and transaction.
Turnover exceeds EUR 100,000
The cross-border SME exemption is terminated in all countries in accordance with the rules of procedure.
Exceeded in only one country
The exemption can only end in that country if the EU threshold of EUR 100,000 has still not been exceeded.
Sales may require taxation through the OSS or locally. The OSS VAT guide or foreign VAT registration.
SME is not always economically more advantageous
VAT exemption may limit the right to deduct tax from expenses. Before making a choice, it's important to consider not only the administrative responsibilities but also the financial outcome.
Exemption and possible limitation of deduction
- no VAT due on the sale in question;
- impact on VAT deduction on purchases;
- the importance of cost structure and margins.
Taxable sales
- state consumption rate;
- Input VAT does not go to VIU-DO;
- Tax recovery requires the right path.
Detailed rules for recovering tax are described VAT guide for OSS.
Check the national thresholds in the source applicable on the day of the decision
We do not publish a static table of all national thresholds. Conditions may vary across countries, sectors, and reference periods.
Older support pages may still show a value of PLN 200,000. Before applying the exemption, please check the current regulations and rules of the specific country. Source verification: August 10, 2026.
In OSS you use the state consumption rate
If the sale is not exempt in a given country and is subject to OSS, select the appropriate rate for the product and the customer's country.
What to check before connecting SME and OSS?
Make your decision for each country and type of sale separately.
SME Terms
- the entrepreneur's registered office in the EU;
- turnover throughout the EU;
- country threshold and conditions;
- EX number and activation date;
- quarterly SME information.
Taxable sales
- type and place of transaction;
- state of consumption;
- appropriate VAT rate;
- sales reported in VIU-DO;
- local duties outside OSS.
Joint monitoring
- separation of exempt sales;
- separation of taxable sales;
- local VAT numbers;
- right of deduction;
- Threshold alerts for the EU and countries.
Not sure where to use SME and where to use OSS?
We help you separate exempt sales, OSS taxable transactions and obligations requiring a local VAT number.
VAT OSS Library
Select a topic on the left. On the right, you'll see a brief summary and a direct link to the relevant guide.
VAT OSS
General guide to the One Stop Shop mechanism, procedures, country of identification and country of consumption.
Read the guideOSS VAT Limit
Explanation of the EUR 10,000 threshold, how it is calculated and when the place of taxation changes.
Read the guideWSTO and VAT OSS
Conditions for intra-Community distance sales of goods, recipients and most important exclusions.
Read the guideOSS and IOSS
Comparison of sales of goods located in the EU with import sales from a third country.
Read the guideVAT OSS registration
Separate instructions for registration to the EU OSS procedure via the VIU-R form.
Read the guideVIU-DO
A practical guide to the OSS quarterly VAT return, EUR currency and UNR number.
Read the guideVAT OSS correction
Rules for settling refunds, discounts and errors relating to a previous period.
Read the guideOSS VAT records
The scope of data needed to prepare declarations and subsequent control of OSS settlements.
Read the guideDeregistration from VAT OSS
Withdrawal from the procedure and change of country of identification.
Read the guideExclusion from VAT OSS
Reasons for exclusion, consequences and conditions for re-registration.
Read the guideOSS VAT audit and penalties
Risks related to errors, missing declarations, arrears and incomplete records.
Read the guideVAT OSS and Amazon FBA
Separation of STO from stock movements and local sales from the foreign warehouse.
Read the guideVAT OSS for sale without own warehouse
Analysis of the supply chain and the choice between OSS, IOSS and local VAT.
Read the guideVAT OSS and trading platforms
Cases in which a platform may be considered a supplier for VAT purposes.
Read the guideVAT OSS and business-to-business sales
Distinguishing the OSS procedure from IDT, INT, place of supply and reverse charge.
Read the guideVAT OSS for consumer services
Services where the place of taxation may be in the country of the consumer.
Read the guideVAT OSS and INTRASTAT
Explanation of why the OSS procedure does not replace statistical obligations.
Read the guideInvoices, KSeF, JPK and cash register
The relationship between the OSS procedure and national documentation and record-keeping obligations.
Read the guideOSS or local VAT
Scenarios in which the procedure does not replace registration and declaration in another country.
Read the guideSME procedure and VAT OSS
Comparison of two separate solutions for cross-border VAT settlements.
Read the guideVAT charged at OSS
Ways to recover VAT on costs outside the OSS declaration.
Read the guideOSS Non-Union Procedure
Non-EU scheme for eligible consumer services provided by non-EU companies.
Read the guidePermanent place of business
The influence of a permanent establishment on the choice of the country of identification and the scope of OSS settlement.
Read the guideEU special territories
Areas that require a separate analysis of the territorial scope of EU VAT.
Read the guideGift cards and vouchers
Settlement of single-purpose and multi-purpose vouchers and the moment of VAT liability.
Read the guideDo you have exempt and taxable sales in several countries?
Organize your data country by country before preparing your SME information and VIU-DO declaration.
SME and VAT OSS procedure - questions and answers
Yes, for different countries or sales, but not for the same transaction to be exempt and taxable simultaneously in the same jurisdiction.
No. The SME threshold and the limit on the place of taxation of STOs and certain TBE services have a different scope and effect.
No. The cross-border SME procedure is available to entrepreneurs based in the European Union.
This is the SME procedure identifier, not the OSS procedure number or the usual local VAT number.
No. The impact of the exemption on VAT deduction, margin, gross price and settlement costs must be taken into account.
It applies to both the provision of services and the sale of goods, according to the rules for determining turnover appropriate to the SME procedure.
From the date the EX number is issued and confirmed that it can be used in the selected country. Sending the notification itself does not trigger the exemption.
Yes. In other countries, a company can account for taxable sales through OSS or local rules, depending on the transaction.
Additional practical answers are published by the Ministry of Finance in the questions and answers section regarding the SME procedure.
