VAT for online stores selling to EU customers: OSS explained

Selling online to EU customers? Distance selling is a different regime

If you run an online store as a Bulgarian company (most commonly an EOOD) and some of your customers are individuals, not businesses, in other EU countries, those sales fall under a separate set of rules: intra-EU distance selling. The rules decide who ends up collecting the VAT, Bulgaria or your customer's own country.

• This applies to selling physical goods to consumers (B2C). Selling to another business (B2B) usually falls under the reverse-charge mechanism instead, where the business customer accounts for VAT locally.
• It only covers customers inside the EU. A sale to the UK, the US, or anywhere else outside the EU is an export, and is treated differently.
• It applies whether you ship from a warehouse in Bulgaria, from stock held elsewhere in the EU, or through a fulfillment partner, as long as you are the seller charging VAT to the end customer.

Before 2021, every EU country ran its own distance-selling threshold, so a store selling into several countries had to track several separate limits. Since 1 July 2021, the rules are simpler: there is one single threshold covering the whole EU combined.

The €10,000 EU-wide threshold

The threshold is €10,000 per year, and it applies across all 27 EU countries combined, not separately per country. It bundles two things together: distance sales of goods to consumers in other EU states, and sales of certain telecom, broadcasting, and electronically supplied services (think software subscriptions, e-books, or an online course sold to a consumer).

• The threshold is cumulative from the start of the calendar year, not tracked per customer or per country.
• Below €10,000, you charge Bulgarian VAT (20%) on every EU consumer sale, exactly as you would for a Bulgarian customer, and report it in your normal monthly VAT return with NAP, Bulgaria's National Revenue Agency.
• The moment your cumulative sales cross €10,000, the specific sale that pushes you over is already due at the customer's country VAT rate, not Bulgaria's.
• You can also opt in to charging the customer's country rate voluntarily, before you hit the threshold, if that suits your setup better, but the choice locks you in for at least two calendar years.

For a small store that sells mostly to Bulgarian customers with the occasional order from abroad, €10,000 takes a while to reach. For a store deliberately targeting buyers in Germany, France, or Romania, it adds up faster than it looks.

Above the threshold: the customer's country VAT and the OSS scheme

Once you cross the threshold, or opt in early, you owe VAT at your customer's own country rate: 19% for Germany, 20% for France, 21% for the Netherlands, and so on, each with its own rate and its own reduced rates for certain goods. You have two ways to handle that.

• Register for VAT separately in every country where you have customers, and file a local return in each one. Workable for a handful of large sellers, unworkable for a small store with customers spread across five or ten countries.
• Register for the Union OSS scheme (One Stop Shop) through NAP, and file a single return that covers all your EU sales, instead of separate registrations everywhere.

OSS is not a separate tax, it is a way of paying the VAT you already owe in one place. You still charge each customer's country rate, but you declare and pay everything collected through NAP, which forwards the right amounts to each country.

Registering for OSS through NAP: how it actually works

OSS registration has been open in Bulgaria since 1 April 2021, live since 1 July 2021. Registration goes through NAP electronically, and it is a separate step from your regular Bulgarian VAT registration (you need an existing Bulgarian VAT number first).

• You submit the OSS registration electronically to NAP, with your company details: EIK (company registration number), VAT number, registered address.
• Once approved, you get a separate OSS identification number and access to the dedicated OSS filing portal.
• Unlike your regular monthly VAT return, due on the 14th, OSS returns are filed quarterly, due by the last day of the month following the quarter (for example, 30 April for Q1).
• Registration needs to be in place before you cross the threshold if you want a clean switch from the date you go over it: the application is generally due by the 10th of the month after the one in which you crossed it, for the scheme to apply retroactively to that sale.

The return itself breaks down sales and VAT owed by customer country, not as one lump sum. NAP collects the total and redistributes it to each country's budget. Note that the NAP portal and the OSS forms are in Bulgarian, so factor that into who on your team actually files it.

IOSS: when the goods ship in from outside the EU

OSS covers goods that are already inside the EU, whether made there or held in an EU warehouse. If instead you sell goods shipped in directly from outside the EU (a common setup for stores dropshipping from a supplier in China, for instance), a different scheme applies: IOSS, the Import One Stop Shop, for consignments valued up to €150.

• Registering for IOSS lets you charge the customer VAT at checkout, at their own country's rate, instead of them being hit with an unexpected VAT bill (and a handling fee) when the parcel arrives at the border.
• IOSS returns are filed monthly, not quarterly like OSS.
• From 1 July 2026, the EU removes the existing customs duty exemption for parcels under €150 and introduces a flat €3 duty per item on goods entering from outside the EU. Sellers registered with IOSS handle this more predictably, since VAT is not additionally charged on top of that duty for them.
• For a small store selling goods it owns or bought wholesale within the EU, IOSS usually does not apply. It is aimed at parcels imported directly to the end customer.

If you are not sure whether your sales fall under OSS, IOSS, or a mix of both (some stores run both models at once), it is worth a short conversation with an accountant before you lock in a process.

One return, not ten registrations

The short version: under €10,000 a year in EU distance sales, you charge Bulgarian VAT and there is nothing else to track. Above it, you register for OSS through NAP and file one quarterly return instead of separate registrations in every country your customers live in. For goods imported from outside the EU under €150, IOSS is the separate scheme that applies.

Useful next reads:

How VAT filing works with FreeMe.bg
How to invoice correctly with FreeMe.bg
When you actually need to register for VAT in the first place

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