Why move stock to another country?
A company may have a commercial interest in relocating part of its stock closer to its customers. This relocation can take different forms: advanced stock, consignment stock, call-off stock, etc.
In an intra-European context, this operation must be processed in two phases (a transfer followed by a local sale) and in principle generates an obligation for the supplier to register for VAT in the country where the stock is sent.
A simplification scheme at European level
Since 1 January 2020, the European legislator has introduced a unique simplification scheme for consignment stock arrangements in the context of the implementation of VAT Quick Fixes.
The conditions for the application of this simplification scheme are therefore harmonised (which was not the case before) and avoid the need to register for VAT in the country where the stock is held.
The end result of a bitter compromise does not live up to expectations.
First of all, the simplification scheme only concerns consignment stock arrangements. This is stock for which, when the goods are transported to another Member State, the supplier already knows the identity of the buyer of the goods to whom they will be delivered at a later stage and after their arrival in the country of destination.
The scheme provides for the operation to be treated as a "non-transfer" at the time the goods are sent into storage and as an intra-Community supply/intra-Community acquisition at the time the power to dispose of the goods as owner is transferred to the purchaser. It may apply if the following conditions are met:
- There must be a call of stock contract between the parties. The goods do not have to be sent to the purchaser's warehouse;
- The supplier must not be established or have a permanent establishment in the country to which the stock is sent;
- The purchaser is identified for VAT purposes in the country where the stock is established;
- The goods must be sold to the purchaser within 12 months or returned within the same period to the country from which they were shipped;
- The supplier and the buyer must keep a record of non-transfers in their respective countries;
- The supplier must include the VAT number of the recipient in his intra-Community listing at the time of dispatch of the goods.
If any of these conditions cannot be met or is missing, the non-transfer ceases to exist and the transaction must be considered as a transfer of goods.
Simplification ?
The solution adopted states that:
- The dispatch of goods to stock is a "non-transfer" which therefore does not require registration in the country of arrival of the goods
- An exempt intra-Community supply in the country of departure and a taxed intra-Community acquisition in the country where the stock is located only occurs at a later stage when the purchaser takes possession of the goods
Companies wishing to apply this so-called simplification regime will nevertheless have to be careful as no slip-ups will be allowed. As the ink is barely dry on the law, the European Commission has had to publish an explanatory note in an attempt to (already) put out the fires. In addition, many practical questions remain unresolved or have been the subject of attempts to reach a compromise in various VAT committees. For example, the issue raised by many sectors (especially those selling perishable goods) in the event of loss or destruction of part of the goods. The new Directive does not provide for any tolerance in respect of loss, destruction or theft. The VAT Committee has agreed on this issue... almost unanimously! It is therefore easy to imagine the reaction of the tax authorities in some countries (such as Poland or Hungary) if they were to discover during an inspection that a small part of the stock could not be sold to the purchaser because it was destroyed, lost or stolen.
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