In our last article in September, we talked about “new regulation for chain transactions” which is one of the four quick fixes adopted on 4th of December 2018 by the Council of the European Union for Economic and Financial Affairs (ECOFIN) in order to harmonize and simplify intra-community transactions.

In this article we would like to discuss another measure which is meant to improve the current system of VAT application on call-off stock.


Definition “Call-off stock”

A Call-off stock means that goods of a supplier are delivered and stored in a warehouse located near the customer or even directly stored in the warehouse of the customer. The goods remain in the ownership of the supplier until they are removed from the warehouse or the customer withdraws them from his own warehouse. At the moment the goods transfer ownership, they become VAT-liable.

“Call-off stock”- current situation:

A cross-border sale of goods within the European Union that involves transport to a “call-off stock” of another EU member state is considered as an intra-community transfer. For tax purposes this means that the supplying company must report an intra-community purchase and is therefore obligated to register in the EU Member state where the goods have been delivered. When the goods are removed from the warehouse by the customer, it is considered that the supplier has performed a domestic taxable delivery.

Currently, all EU member states are not treating intracommunity transactions in the same way. Some members have yet  to implement call-off stock transactions into their national legal order. This causes uncertainty and complexities for cross-border operating companies. In order to simplify and bring clarity to the the procedure tax offices and companies in participating  member states of the EU have decided to adopt a uniformed simplification measure for call-off stock. It is planned to be implemented in addition to other “quick fixes” in all EU Member states from the beginning of 1.1.2020.

New regulation from 01.01.2020

The update to the regulation implies that if a German company sends goods for call-off stock to a client in Spain, this is not considered an intracommunity transaction and the company does not have to declare VAT tax in either Germany (with a German VAT-ID) nor Spain (with a Spanish VAT-ID). If and when the customer withdraws goods, the transaction is then considered intracommunity. As a result, the German company must declare the transaction in Germany, and issue an invoice with the German VAT ID to the Spanish client. The advantage and simplification of the new regulation is that the supplying company, in this case, the German company, is not obligated to register in Spain.

The intention of the new regulation is to avoid the need of VAT registration for the supplier located in the same member state as the call-off stock. As a result, the transfer of goods between two member states will no longer be regarded as an intracommunity transaction.

In order to apply the simplification measure, the following conditions must to be fulfilled:

  • the customer is a taxable person and has a VAT identification number;
  • the goods are delivered by the supplier or on his behalf and
    it must be provable that these goods reached the customer within 12 months of the delivery date
  • the supplier is not established nor has a fixed establishment;
  • the customer is entitled to remove the goods and to take ownership of the goods based on an existing agreement between the supplier and the customer;
  • the supplier has information about the identity of the customer plus the VAT identification number of the customer in the EU member state of arrival, prior to the moment of dispatch;
  • the supplier and the customer must accurately document all transactions of the call-off stock

How do companies adapt to this new regulation

With this simplification, suppliers can avoid the tax registration in the EU member states where the goods will be sent. If these conditions are not met, the simplification measure for call-off stock cannot be applied and the supplier will need to register for VAT in the EU member state in which the call-off stock is located.

Consequently, companies that want to make use of this simplification should not only meet the above mentioned conditions as of January 2020, but they should also review the internal tax policy of the company. Although the quick fix has apparent advantages, it is advisable the companies take proper care of its implementation. This includes processes such as invoicing, ERP-operations, and VAT return filing, which are all likely to be affected.

All information contained in this publication is up to date on 2019. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.