German 'call off stock' – changes in VAT treatment
A 'call off stock' is the situation where goods which are owned by a non-resident supplier have been sent to be held in stock in the customer’s country, normally at the customer’s premises. The customer withdraws the goods from the stock when they are required. Only at that time the legal ownership of the goods transfers from the foreign supplier to the customer.
Following the basic VAT rules these situations require the foreign supplier to register in the customer Member State as the supplier is deemed to perform an intra-Community acquisition followed by a domestic supply.
Many European Union Member States have implemented simplification rules on call-off stocks, however Germany did not implement a call-off stock simplification process and foreign suppliers had to register for VAT when holding call off stock in Germany. On 10 October 2017, the German Federal Ministry of Finance published a decree concerning the VAT treatment of call-off stocks in Germany.
The Federal Ministry of Finance (Bundesministerium der Finanzen) has now accepted the judgments from the German Supreme Tax Court that under conditions the call-off stock can be treated in a different way. Under the condition that the customer of the goods is known and definite when the transport to Germany begins, the foreign supplier will no longer be required to register for German VAT. According to the Decree, 'known and definite' requires that the goods either have already been paid for, or that there is a binding order for the goods. Furthermore, the customer must have unlimited access to the goods. Therefore the goods may not be used for other customers, or withdrawn from the stock by the supplier.
What does this mean for your organization?
If you are already VAT-registered in Germany for call-off stocks, the VAT registration can be reviewed, as it may be possible to deregister. The Decree can also be used for situations in the past.
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