Pending the overhaul of the VAT rules with the implementation of the permanent system planned for 1 January 2022, the European Council approved a number of small measures to improve the current system, the “Quick Fixes”, which should come into effect as of 1 January 2020.
The first measure concerns the introduction at a Community level of a simplification procedure for Call-Off Stocks.
What is « Call-Off Stocks »?
Call-off stocks is the situation in which a supplier places goods on the premises of his client in another Member State. The goods do not become the property of the customer until the latter resells them in the same state to a sub-purchaser. This process allows the customer to have a stock immediately available without cash advance.
In the absence of simplification measures, the supplier carries out:
in the Member State of departure, a stock transfer assimilated to an intra-Community supply;
in the Member State of arrival, a stock transfer assimilated to intra-Community acquisition followed by local delivery.
It is therefore mandatory for the supplier to register for VAT in the Member State of arrival and to file regular declarations, meaning additional formalities and costs.
Simplification of Call-Off Stocks on a community level
Thanks to the simplification measure, the supplier would be deemed to carry out only intra-Community delivery in the Member State of departure. He would thus be exempt from any obligation in the Member State of arrival.
The simplification measure would apply under the following conditions:
- the supplier and the customer both have the status of certified taxable person;
- the supplier is not established in the Member State of arrival;
- the customer is known before dispatch of the goods from the Member State of departure;
- the storage period does not exceed 12 months.
Application of the simplification measure would be supported by specific reporting obligations for both the supplier and the customer.
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