One of four areas under the EU’s value added tax (VAT) “quick fixes” concerns simplified treatment for call-off stock.
The EU Council in December 2018 adopted the “VAT quick fixes” that are intended to simplify international trade and to be implemented by the EU Member States by 1 January 2020.
The VAT quick fixes concern the following four items:
Read an earlier report discussing the rules under the simplified proof for intra-Community supplies item: TaxNewsFlash
Harmonizing and simplifying the rules for call-off stocks
To reduce delivery times, suppliers often transfer their goods to a warehouse of a regular customer in another EU Member State. The goods remain the property of the supplier until the customer takes the goods out of the stock. This process is also referred to as “call-off stock.”
Under the current VAT rules, the supplier performs a deemed intra-community supply in the EU Member State of departure of the goods and a deemed intra-community acquisition in the EU Member State of arrival of the goods. When the customer takes the goods out of the call-off stock, the supplier performs a domestic supply in the EU Member State where the warehouse is located. Generally, the supplier will have to register for VAT purposes in that EU Member State.
Currently, most EU Member States foresee a simplification measure for call-off stocks, but these simplification measures differ from EU Member State to EU Member State. Therefore, the EU Council introduced a harmonized simplification measure that will be applicable in all EU Member States.
Beginning 1 January 2020, the transfer of goods to a call-off stock in another EU Member State will no longer qualify in the hands of the supplier as a deemed intra-Community supply and a deemed intra-Community acquisition of goods. When the customer takes the goods out of the stock, the supplier is deemed to perform a direct intra-Community supply of goods to the customer. The supplier, thus, will not have to register for VAT purposes in the EU Member State of arrival of the goods.
In order to apply this simplification, several conditions need to be fulfilled. For example:
It remains to be seen if companies are able to comply with the strict conditions or will rather opt to register for VAT purposes in the EU Member State where the call-off stock is held.
The Belgian VAT authorities are currently working on an administrative circular letter with respect to the implementation of the quick fixes in Belgium.
Read a December 2019 report prepared by the KPMG member firm in Belgium
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