Consignment and Call-off Stock

Where businesses keep stock locally to meet customer needs quickly, this may be classed as call-off or consignment stock. The VAT treatment of these differ and simplifications may be available.

A common business practice for companies who provide regular supplies to customers is to keep inventory in a warehouse that either belongs to the customer or is located in close proximity. This reduces transport costs and times and gives the customer very easy access to stock when required.

The EU has created a special set of VAT rules for companies holding their stocks in foreign countries. They provide guidance on when VAT should be charged, and if a company needs to VAT register as a non-resident trader in another EU country where it is warehousing its goods.

There are two distinct categories for such setups: Call-off Stock and Consignment Stock. They are separated based on who controls access to and use of the stock, which triggers the VAT point and compliance rules.

Call-off stock occurs when the goods are sent to the client’s storage facility in another EU country, but title ownership of the goods still remains with the seller. If a customer has control of the storage, is aware of stock movements and may take stock whenever he requires, then it will usually be classified as Call-off stock and does not generally require the seller to VAT register in the foreign country as a non-resident trader.

If the stock is sent to the seller’s own warehouse which is under their control, then the set-up is treated as Consignment stock. Typically, there are multiple potential customers for Consignment Stock.

This has a different treatment of EU VAT purposes: the movement of goods to the warehouse is treated as a supply and when the goods are then sold to the customer, local VAT is charged. Therefore, in most cases a foreign VAT registration will be required by the seller.

Thus, in order to summarize the mentioned practices, the essential aspects to remember are:

  1. The European Union has created a special set of VAT rules for companies holding their stocks in foreign territories. They provide guidance on when VAT should be charged, and if a company needs to VAT register as a non-resident trader in another EU country where it is warehousing its goods;
  2. The treatment of foreign stock for VAT is split into two: Call Off Stock; and Consignment Stock. They are separated based on who controls access and use to the stock, which triggers the VAT point and compliance rules.

EU VAT on call off stock

Call Off stock are goods sent from your home country to a warehouse or client’s storage facility in another EU country. Title of the goods still remains with the seller. If a customer has control of the storage, is aware of stock movements and may take stock at will, then if is categorized as Call Off stock and does not generally require the seller to VAT register in the foreign country as a non-resident trader.

For European VAT purposes, any eventual sale it is treated as an intra-community VAT supply. This means the sale is recorded under the seller’s domestic VAT number and return, and there is nil VAT charged. The customer only has to register the sale as an acquisition in its local VAT return. Reporting under Intrastat and EC Sales Listing may still be required.

EU VAT on consignment stock

If the stock is initially sent to the seller’s warehouse which is under their control (including rented storage), then the set-up is treated as Consignment Stock. Typically, there are multiple potential customers for Consignment Stock.

This has a different treatment of EU VAT purposes than Call Off stock. The movement of goods to the warehouse is treated as a supply. This means the seller almost certainly has to VAT register itself in the country of destination. The movement is treated as a self-sale (acquisition). Intrastat reporting will be required at this point, too. When the goods are then sold to the customer, the local VAT is charged and recorded in the seller’s foreign VAT registration.

Contact an Advisor

If you have any questions regarding this topic and how it might have an impact on your business, please contact the Mirus Consultant with whom you regularly work, or:

Ionut Zeche

  • Tax & Legal
  • Bucharest
  • + 40 (31) 228 20 77