Italian consignment and call-off stock
Under a consignment stock arrangement, the supplier (consignor) places the goods at the disposal of the buyer (consignee), who purchases and "flash sells" the goods as soon as he finds a client.
Where consignment stock happens as part of an international trade agreement, the supplier is often required to register for VAT in the country of the customer. However, some countries allow a simplification where the supplier does not register and the customer reports an intra-Community acquisition when he retrieves the goods from the warehouse. In Italy, this simplification is foreseen under contracts called "contratti estimatori". In these cases, the goods must be stored in the consignee’s premises, who has full control on the sale of these goods.
Italy introduced a consignment stock simplification for intra-Community trade within the EU. The conditions for this simplification to apply are:
- The stock must be kept under control of the consignee either in its own premises or a warehouse designated by him.
- Separate VAT books are required for all movements under the consignment stock simplification.
- A written agreement is required between consignor and consignee
- There is a time limit of one year for the goods to stay in consignment.
- An intra-Community acquisition is reported by the consignee at the time the goods are effectively sold. At that time, a pro-forma invoice must be issued by the consignor making reference to the notice issued by the authorities about EU consignment stock.
- The consignor reports the sale in the ECSL of its home country. The consignee reports an intra-Community acquisition in Italy followed by a domestic sale to the final client.
We refer to consignment stock when the goods are placed in a warehouse in the country of the customer and they are under control of one or more clients, who can retrieve them from the warehouse as and when required. Call-off stock refers to goods placed at the premises of one single client who has full individual control over the sale of these goods.