Union OSS, Non-Union OSS & IOSS Tax Control: Codes 2205, 2206 & 2207

Businesses selling to consumers across the EU can register for simplified VAT schemes rather than registering for VAT in every individual member state — these three codes keep that VAT separate from ordinary UK VAT.

The codes, and what each one holds

Code 2205 — Union OSS Tax Control Account tracks VAT collected under the One Stop Shop scheme for cross-border EU sales of goods or services by a business established in the EU (or, for goods, dispatched from the EU).

Code 2206 — Non-Union OSS Tax Control Account tracks VAT collected under the OSS scheme by a business established outside the EU selling digital services to EU consumers.

Code 2207 — IOSS Tax Control Account tracks VAT collected under the Import One Stop Shop scheme, covering low-value goods imported into the EU and sold directly to consumers. All three are Current Liabilities codes and normally carry a credit balance.

A worked example

Say a UK online retailer registered for IOSS sells a £40 item to a customer in Germany, charging German VAT at the point of sale rather than at the border.

IOSS Tax Control Account (code 2207): the German VAT element (say £6.39 at 19%) is credited here, separate from any UK VAT owed on domestic sales.

This IOSS VAT is then declared and paid over through a single monthly IOSS return, rather than a separate VAT registration in Germany.

Why this matters day to day

Mixing OSS or IOSS VAT into the ordinary Sales Tax Control Account (code 2200) would make the UK VAT return incorrect, since this EU VAT isn't declared to HMRC at all — it's reported through the separate scheme return. Keeping each scheme in its own code also makes it far easier to spot which markets are actually generating cross-border sales.