New VAT rules for call-off stock
Since this year a number of changes have been introduced in the VAT-rules. One of the changes concerns the treatment of call-off stock. If you have not yet adapted to the new treatment, action is required.
What is Call-off stock
Call-off stock concerns the situation where goods are moved by their owner (the supplier) to a storage location in another Member State, whereby it is already known to whom the goods will be supplied after the goods arrive in that other Member State. In most cases the goods will already be stored at the storage location of the buyer.
This comes down to a modern supply chain arrangement, whereby customers can use the stocks as required without a direct obligation to buy. While the logistical side of the arrangement is very friendly, the VAT-treatment was always less so.
Call-off stock rules before 1 January 2020
Before 1 January 2020 the above movement of goods would have led to an elaborate situation.
Moving the goods from one Member State to another required the supplier to register in the Member State of destination. In both the domestic and the foreign VAT-return, the supplier needed to report the stock transport. Once the buyer uses the stock (and in turn buys it) a domestic supply takes place and the supplier needed to records the sale in the foreign VAT-return, as a domestic sale with local VAT.
While there were countries in the EU, amongst which the Netherlands, that simplified the arrangement by not requiring local registration, this was not a uniform system across the EU.
Simplified call-off stock rules as of 1 January 2020
Member States can no longer require the supplier to register for VAT-purposes. Only when the buyer uses the stock a VAT-relevant transaction takes place and this transaction will be a zero-rated intra community supply.
Requirements for application of the simplified rules
While the new system is a huge simplification, there are a number of requirements to be taken into account when dealing with call-off stock. These are:
- The supply of stocks is to a single buyer;
- The buyer has a VAT registration in the Member State of destination;
- The stocks are at or near the location of the buyer and under its control;
- The buyer does not have a fixed establishment in the Member State of origin of the goods;
- The movement of the foods is recorded in the EC Sales Listing of the supplier;
- Both supplier and buyer register the movement of the goods in their administration;
- The stocks are used by the buyer within a time-frame of twelve months.
Be aware of the changes
A lot has changed with regards to the VAT-treatment of call-off stock that moves across borders. There is a lot of administrative simplification to benefit from, but there are also a number of requirements to keep an eye on.
Always consult with a VAT expert to ensure you understand the rules that apply. Get in touch with myself or your local Crowe expert.