EU call-off stock simplified VAT rules

What is call-off stock?

We refer to call-off stock when a supplier in a foreign country sends their products to the customer’s country and stores them near their customers so they can “call-off” the products as and when required. In some cases, the goods are stored in the warehouse of the client who buys them.

Normally, the movement of goods between Member States would be considered intra-Community supply in the departure country and an acquisition in the arrival country, obliging the original supplier to be VAT registered in the client’s country. This simplification allows the original supplier to avoid VAT registration by considering that the goods being held as call-off stock are still in the scope of VAT in the original supplier’s country of establishment.

Businesses can make use of this simplification given that certain criteria are met.

What is the difference between call-off stock and consignment stock?

In simple terms, when the original supplier sends his or her goods to be stored in a third-party warehouse in another Member State, this is deemed a call-off stock.

Consignment stock is when the supplier sends his or her goods to be stored in a warehouse that they own in another Member State. 

What is the call-off stock EU VAT simplification about?

When applicable, the call-off stock simplification allows the supplier to avoid a VAT registration in the country of the customer.

In order to qualify for call-off stock simplification, certain conditions laid out by article 17a(2) of the VAT Directive must be met:

• Both the supplier and the client must be taxable persons and have valid VAT numbers
• The supplier must not have any type of fixed establishment in the client’s country
• The client’s identity must be known by the supplier
• The supplier must record the movement of goods and also report the transports in an ECSL return (depending on the quantity of the goods, the supplier might also have an Intrastat obligation)
• The goods cannot be stored in the client’s warehouse for more than 12 months

Administrative requirements on the call off-stock simplification

In addition to the requirements listed above, companies who opt to enroll in this simplification will need to make sure other criteria are met at an administrative level.

For the shipment of goods, companies will need to submit ECSL returns in their country of establishment. Keep in mind that reporting frequencies can differ depending on the country, and some countries have additional reporting. We can look at Spain as an example, as those making use of Spanish SII will notice a book that is specifically dedicated to these types of transactions. Furthermore, businesses must make sure to keep a careful record of the transactions made under this arrangement in a register.

Due to these difficult requirements and taking into account that local applications can be tricky, we recommend seeking the help of a tax professional to help guide you through the process.