​EU VAT Committee on VAT call-off stock simplifications following Brexit

The VAT Committee discussed the application of the VAT call-off stock simplification rules in relation to Brexit (working paper 998). The application of the call off stock simplification rule, applicable as from January 1, 2020, avoids that suppliers have to register for VAT in the EU Member State where the call-off stock is held provided certain conditions are fulfilled. With the UK leaving the EU, the question came up how to treat supplies of stock that were transported to the UK from another EU Member State or from the UK to another EU Member State before the end of the transition period and are supplied or returned after Brexit.

The VAT Committee was set up under Article 398 of the VAT Directive to promote the uniform application of the provisions of the VAT Directive. Because it is an advisory committee only and has not been attributed any legislative powers, the VAT Committee cannot take legally binding decisions. It can however give some guidance on the application of the EU VAT Directive.

The Committee only discussed the situation were goods were placed under the regime before the end of the transition period and are supplied after the end of the transition period and the situation where goods placed under the call-off stock regime are returned within the 12 months period after the transition period ended (December 31, 2020). As according to the agreement, rights and obligations under EU law continue to apply where the transactions between the UK and the EU took place before the transition period end, the simplification rules also continue to apply.

Goods transported from the UK to the EU

When goods were originally transported from the United Kingdom to a Member State and placed under the call-off stock regime before December 31, 2020, and the intended acquirer purchases the goods after 1 January 2021, the acquirer should report an intra-Community acquisition of the goods. However the supplier in the United Kingdom will not report an intra-Community supply as this is no longer applicable/possible. This will lead to a situation where the tax authorities cannot cross-reference the reported data. However the Committee states that the acquirer needs to adjust its registers and this will be the base for tax authorities to verify the situation. Where goods were transported to the UK before the end of the transition period, the supplier cannot report an intra-Community supply at the time of the actual supply, as the goods are no longer in the European Union. In this respect the VAT Committee advises the suppliers' register to be adjusted for comparison.

In the second discussed scenario, the goods placed under the call-off stock (simplification) regime are returned within the allowed 12 months' period. Applying the quick fix simplification rules, this return is a movement outside the scope of VAT. However, from January 1, 2021, this movement involves crossing the customs borders of the European Union and therefore Customs formalities need to be fulfilled. Where goods return to the original EU Member State of dispatch, the reimportation exemption as stated in article 143(1) e of the EU Vat Directive may be applicable. Where the goods are returned from an EU Member State to the UK, this return now qualifies as an export for VAT purposes.

As mentioned this guidance only applies to the two indicated scenario’s, other potential scenarios, such as loss of goods or when a new customer is found, need to be discussed and looked at separately.

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17 Mar 2021 at 10:25 am
3 min
Published by:
Daniëlle van der Meulen-Idema
Sr. VAT Specialist
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