The difficulties regarding consignment or call-off stock (i.e. the transfer of own goods) may vary in the different member states of the European Union (EU).
In general, these kind of stock transfers qualify as so-called deemed (or fictitious) intra-EU supplies from one EU member state to another EU member state, whereas the ownership of the goods at the time of this transfer in fact stays with the supplier of said goods. From a VAT point of view, this means that the supplier of goods performs a (VAT zero rated) intra-EU supply from one EU member state (e.g. the Netherlands), followed by a VAT taxable intra-EU acquisition in the EU member state of destination, for which – in principal – a VAT registration (or the appointment of fiscal representative who is registered for VAT in the country of arrival) is required.
Subsequently, the supplier of the goods performs a VAT taxable domestic or inland supply (for which in some cases a reverse charge rule applies) at the time the goods are sold/called off (change of ownership). The transfer of goods within the same legal entity from one member state to another is deemed to be a supply. The place of supply follows the normal rules for intra-EU movements of goods.
An example of a transfer of own goods is, for instance, the movement of consignment or call-off stocks. This is the term used to describe goods transferred from one member state to another to create a stock from which supplies may be made periodically as required. There is an initial deemed supply of own goods to form the stock which takes place in the member state from which the goods are originally dispatched (e.g. the Netherlands). The place of subsequent supplies of the goods, once a buyer has been found, is normally the member state in which the stock is held.
In a (small) number of EU member states simplification measures have been taken into account to avoid foreign owners of goods held in ‘call-off’ having to register in those member states. The treatment of goods used for call-off stock and consignment stock in another EU member state, however, is often confused and is perhaps best explained by understanding the associated VAT consequences.
Call-off stock is the description given to the transfer of goods (by a VAT registered business) from one EU member state to another to create a stock of goods from which their customer can ‘call-off’ (i.e. use and pay for) the goods as and when they require them.
Call-off goods delivered to storage facilities operated by the supplier, rather than the customer, should be treated as consignment stocks (see below), unless the customer is aware of the details of deliveries into storage. If the customer is aware of the details of deliveries into storage, the intra-EU movement can be treated as call-off stock. If stocks of goods are dispatched by a supplier for call-off by more than one customer, this – in principal – does not qualify for treatment as call-off stock (see consignment stock).
Consignment stocks are created when a VAT registered business transfers its own goods to another EU member state to create a stock over which it has control and from which it makes supplies, or supplies are made on its behalf in that member state.
Because the business is effectively transferring its own goods to itself in another member state it will be making an acquisition of goods in the other member states. The business will be liable to account for acquisition tax in the other member state and may be liable to register for VAT there.
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