VAT quick fixes 2020 part 2 - Simplified treatment for call-off stock
On 4 December 2018, the Council of the European Union adopted the so-called “VAT quick fixes”. The “VAT quick fixes” aim at simplifying international trade and are to be implemented by the EU Member States by 1 January 2020.
The VAT quick fixes concern the following four changes:
- Simplified treatment for call-off stock
- Uniform rules to simplify chain transactions
- Mandatory VAT identification number to apply the exemption for intra-community supplies
- Simplified proof for intra-community supplies
In this article, we elaborate on the first quick fix aimed at 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 unfortunately, these simplification measures differ from EU Member State to EU Member State. Therefore, the Council introduced a harmonized simplification measure that will be applicable in all EU Member States.
As of 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 will thus 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, the supplier may not be established in the EU Member State of the call-off stock, the supplier must keep a register that complies with specific conditions and must report both the transfer of the goods as well as the actual supply to the customer in its EC sales list. The EC sales listing will have to be amended to allow such a double reporting. In addition, in case the goods are not sold within 12 months to the customer or in case of theft or loss of the goods (most likely a small lost or theft of maximum 5% might be allowed), the simplification measure ceases to apply. 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.
If you have any questions or would like to know more about the conditions that need to be fulfilled in order to apply this simplification, please contact your local KPMG Tax Adviser.