Non-Union OSS when a US LLC sells digital services in Europe

Centralise European B2C VAT in one Member State while the LLC retains its US legal base, international banking and global sales capacity.

A US LLC can sell software, memberships, downloadable content and other digital services across Europe without incorporating a company in every country. When it sells directly to EU consumers, the decisive questions are not where the payout lands. They are who is the legal supplier, what is being supplied and where the customer belongs.

The Non-Union One Stop Shop allows a business established outside the EU to centralise VAT on B2C services taking place in several Member States. The LLC charges the rate of the consumer's country, files one quarterly return and makes one payment through its Member State of identification. That authority then distributes the VAT to the countries of consumption.

OSS does not turn the LLC into an EU company, nor does it replace the LLC's US tax and corporate framework. It solves one specific layer: EU consumption VAT on services sold to consumers. When that layer is designed properly, the business keeps the commercial flexibility of its LLC while connecting product, checkout, invoice, payment and reporting through one coherent process.

Start with the legal seller

Before considering OSS, identify who makes the supply to the customer.

Stripe, PayPal, a US account or a euro IBAN does not by itself determine the supplier. The answer comes from the terms of sale, the name shown to the buyer, who sets the commercial terms, who authorises the charge, who delivers the service and who handles refunds.

This distinction prevents two costly design errors: registering the LLC for sales actually made by a Merchant of Record, or assuming that an ordinary payment gateway has taken over a VAT obligation that remains with the LLC.

The five-question OSS decision map

Classify the transaction in this order:

1. Is the LLC selling, or does another entity sell in its own name?
2. Is the buyer acting as a business or as a consumer?
3. Is the supply electronically delivered, live professional work or another service with a specific place-of-supply rule?
4. Where does EU VAT law place that service?
5. Does the LLC have a business or fixed establishment anywhere in the EU?

The Non-Union scheme is available to a taxable person with neither its business establishment nor a fixed establishment in the EU when it supplies services to non-taxable persons and those services take place in the Union. Since July 2021, its scope is not limited to telecommunications, broadcasting and electronic services. It can cover other B2C services where the relevant place-of-supply rule puts the transaction in a Member State.

For a digital business, the most common category is an electronically supplied service. The service is delivered over the internet, essentially depends on information technology, is largely automated and involves minimal human intervention. Common examples include:

• automated access to software or SaaS;
• hosting, storage and standard digital functionality;
• ebooks, templates, resources and downloads;
• memberships built around automated content;
• recorded courses without live teaching;
• on-demand audiovisual or digital content.

One-to-one advice over a video call, a live class or creative work personally produced for a customer does not become an electronic service merely because it is ordered and delivered online. It may follow a different place-of-supply rule. Classification starts with the substance of the service, not the payment technology.

Our broader guide to VAT on international digital services explains B2B, B2C, reverse charge and non-EU sales. This article has a narrower purpose: how a non-EU LLC centralises the B2C service sales that are actually located in the EU.

A non-EU LLC does not benefit from the EUR 10,000 threshold

Electronically supplied B2C services are generally taxed where the consumer is established, has a permanent address or usually resides. The familiar EUR 10,000 simplification only applies when the supplier is established in a single Member State.

A US LLC established outside the EU does not meet that condition. The destination rule must therefore be assessed from the first qualifying B2C electronic sale. There is no initial block of sales that automatically remains taxable at a fictional US VAT rate.

That does not make the LLC less useful. It precisely identifies the European layer that sits alongside a US structure capable of providing contractual separation, business banking, international payment rails, USD operations and a scalable legal seller for global activity.

Using OSS is optional. Without it, the supplier would have to meet the VAT obligations in each country of consumption through the applicable national route. The simplification is a single registration, return and payment. It does not change where the tax is due.

B2B sales follow a different route

The Non-Union scheme covers supplies to persons who are not acting as taxable persons. A sale to a properly identified European business will commonly fall under the B2B place-of-supply rule and reverse charge, rather than the Non-Union OSS return.

The checkout should distinguish business and consumer buyers without treating one tick box as conclusive evidence. For a B2B sale, retain the legal business name, address, valid VAT number where relevant and evidence that the service is acquired for business activity. VIES validation and the invoice belong in the commercial record.

Where the buyer is a consumer, the B2C rules apply. Where a buyer claims business status but provides incomplete or conflicting information, review the transaction before assigning its treatment. The practical B2B framework is covered separately in EU VAT for services, VIES and supporting evidence.

Choosing Spain as the Member State of identification

An LLC with no EU business or fixed establishment may choose any Member State for the Non-Union scheme. If it chooses Spain, registration is completed through Form 035. The Spanish tax authority allocates an individual Non-Union OSS number in the European format. That number is only used for supplies covered by the scheme.

The Spanish application includes information such as:

• the LLC's legal name;
• postal and email addresses;
• the websites through which it trades;
• its national tax number, normally the EIN;
• a statement confirming that it has no business or fixed establishment in the EU;
• the date covered supplies begin.

Registration normally takes effect on the first day of the calendar quarter following the application. If covered sales begin sooner, the scheme can apply from the date of the first supply when the commencement is reported by the tenth day of the following month. Changes to registration data also need to be reported within the applicable deadline.

Choosing Spain does not mean charging Spanish VAT on every sale. Spain acts as the identification state. Each transaction retains the rate and relevant treatment of its Member State of consumption.

Country evidence belongs inside the checkout

For an electronic B2C service, the consumer's country determines the VAT rate. The checkout needs to resolve that country before the order closes, not at quarter-end from one aggregated processor payout.

A sound transaction record captures at least:

1. the supplier and product sold;
2. the buyer's declared B2B or B2C status;
3. the country of consumption supported by evidence;
4. taxable amount and original currency;
5. VAT rate;
6. VAT amount and customer-facing total;
7. supply and payment dates;
8. order and processor transaction references;
9. discounts, refunds and later adjustments.

EU guidance requires the VAT amount payable by the consumer to be known no later than the end of the ordering process. A business may publish VAT-inclusive pricing or calculate VAT once the country is known, but the final amount must be clear before payment.

Keep two consistent location signals

For ordinary electronic services, the European evidence framework generally relies on two non-contradictory items to locate the customer. Recognised evidence includes:

• the customer's billing address;
• IP address or another geolocation method;
• bank information, such as the country of the payment account or the billing address held by the bank;
• the mobile country code on a SIM card;
• the location of a fixed land line used to receive the service;
• other commercially relevant information.

Billing address plus IP is a common combination. Billing address plus the country attached to the payment method can also work. Where the signals agree, the transaction can be assigned to that country. Where they conflict, the professional response is to request another item or review the order, not to choose whichever country has the lowest rate.

The EUR 100,000 simplification allowing certain suppliers established in a Member State to rely on one item of evidence does not fit the normal case of a US LLC with no EU establishment. Building around two independent signals is the durable approach.

USD sales, euro reporting and quarterly closes

The LLC may charge in EUR, USD or another currency. OSS does not prescribe the commercial currency or the settlement account. The return uses a single reporting currency and, where Spain is the identification state, is prepared in euros.

For supplies made in another currency, the return uses the European Central Bank exchange rate for the last day of the tax period or, if no rate is published that day, the next published rate. The processor's net FX conversion or the bank rate attached to an individual payout is not a substitute for the quarterly OSS rule.

The Non-Union return follows calendar quarters:

A return is required even when no covered services were supplied during the quarter. If Spain is the identification state, Form 369 breaks down the VAT-exclusive value, rates and VAT due for each Member State of consumption. Payment is made within the same deadline and then distributed by the identification state.

A later credit, refund or pricing adjustment is included in a subsequent return with the original country, period and amount identified. Under the standard framework, corrections can be made this way within three years of the original return's due date.

The ten-year transaction record

An OSS record is not merely a processor total. The information must be available electronically and kept for ten years from the end of the year in which the supply took place.

For each transaction, retain:

• Member State of consumption;
• type or description of the service;
• date of supply;
• taxable amount and currency;
• any later increase or reduction;
• VAT rate and VAT payable, including currency;
• dates and amounts of payments, including advance payments;
• invoice or receipt information;
• evidence used to determine customer location;
• evidence of refunds and returns.

This does not require a clumsy buying experience. It requires the checkout, gateway, invoice and sales ledger to share one order identifier. A monthly report by country, product, rate, currency and refund turns the quarterly close into a review instead of a reconstruction exercise.

The aggregate cross-border payment data that certain payment providers report under CESOP belongs to a separate framework. CESOP neither replaces an OSS return nor determines the legal supplier.

Input VAT does not belong on Form 369

The OSS return reports output VAT charged to consumers by Member State. It is not a domestic VAT return on which the LLC automatically deducts all VAT paid on European costs.

If the LLC incurs Spanish or other EU VAT on business expenses, recovery follows the refund route applicable to a non-established business or, where other activity requires a domestic registration, the relevant national return. Keep three balances separate:

• VAT collected from consumers and declared through OSS;
• input VAT incurred on European costs;
• domestic VAT obligations outside the special scheme.

Centralising consumer sales does not merge every VAT position into one form.

A properly structured LLC sells as a business

Non-Union OSS works particularly well where the LLC is already the real centre of the commercial activity: it appears in contracts and terms, owns or licenses the product, invoices customers, collects into business accounts and retains transaction evidence.

The structure becomes stronger when the following all tell the same story:

• the LLC's legal name and address;
• EIN and corporate records;
• domain, terms and refund policy;
• seller identity shown at checkout;
• processor descriptor and settlement account;
• customer invoice or receipt;
• OSS registration and quarterly calendar.

That alignment preserves the advantages of the LLC without pretending that a non-EU bank account removes consumption VAT. The US company remains a flexible vehicle for global trade; OSS adds one efficient route for a defined European obligation.

How Exentax coordinates the structure

Exentax starts with the commercial model, not the registration form. We establish who sells, classify each product and service, separate B2B from B2C, review any Merchant of Record arrangement and determine which sales are located in Europe.

We then coordinate the identification state, registration where required, country evidence, applicable rates, pricing presentation, refund rules, euro conversion and quarterly calendar. Where the LLC uses US banking, a euro IBAN and several processors, we align the flow so that one sale remains traceable from order to return.

Design my international tax strategy

Questions about Non-Union OSS for LLC owners

Does an LLC need OSS when selling to an EU company?

Not merely because the customer is European. Properly evidenced B2B services commonly follow the business place-of-supply rule and reverse charge. Non-Union OSS is for services supplied to consumers and other non-taxable persons where the supply takes place in the EU.

Is there a EUR 10,000 allowance for a US LLC?

Not for the normal case of electronic services supplied by a non-EU LLC. The threshold requires the supplier to be established in one Member State. Destination VAT must be considered from the first qualifying B2C sale.

Can the LLC choose Spain if its customers live elsewhere?

Yes. A non-EU business can choose Spain as its Member State of identification and report covered sales to consumers across all Member States there, using the rate of each country of consumption.

Does Non-Union OSS cover physical goods?

No. It covers services. Goods may fall within the Union scheme, IOSS or national rules depending on where stock is held, where dispatch begins and the value and nature of the shipment.

Do Stripe or PayPal automatically handle the VAT?

Payment processing alone does not make the gateway the seller. Check whether it is only a payment service provider or a genuine Merchant of Record contract makes another entity the supplier facing the customer.

Must the LLC file a quarter with no sales?

Yes. While registered, it submits a quarterly return even when it made no supplies covered by the scheme in that period.

Can customers pay in dollars?

Yes. The LLC may sell in USD while the Spanish OSS return is made in euros. Foreign-currency supplies are converted using the ECB rate for the final day of the quarter under the scheme's rule.

One European entry point for a global business

Non-Union OSS lets a US LLC sell services to consumers across Europe without fragmenting VAT into multiple registrations. The simplification delivers its full value when the business identifies the true supplier, classifies the service correctly, separates B2B and B2C, and keeps consistent evidence of customer location.

The opportunity is not to hide a sale behind a gateway or bank account. It is to preserve the international capacity of the LLC and add a proportionate, centralised European layer. When product, checkout, currency, invoice and records are aligned, the business can scale in Europe through a structure that remains clear to customers and manageable for its team.