Call-off stock arrangements
Call-off stock arrangements
According to the draft Bill of 7 October 2019 amending the VAT Act by implementing the provisions of Council Directive (UE) 2018/1910 of 4 December 2018, new provisions will become effective on 1 January 2020 to introduce call-off stock arrangements that will replace the present consignment stock simplifications.
As a rule, the movement of a taxable person's own goods, by that person, between EU member states is considered as an intra-Community supply of goods in the member state of dispatch and an intra-Community acquisition of goods in the member state of destination by the same taxable person. However, the VAT Act provides for several exceptions from this rule, e.g. in the case of goods moved to consignment warehouses.
The rules for consignment warehouses are as follows:
- A moves its goods to another EU member state where the goods are stored by B in a specific place, i.e. a consignment warehouse, and are still owned by A;
- B collects the goods from the consignment warehouse on an as-needed basis, which results in the ownership of the goods being transferred from A to B.
- When B collects the goods from the consignment warehouse, A will report an intra-Community supply of the goods in the member state from which they were dispatched to the consignment warehouse and B will report an intra-Community acquisition of the goods in the member state of acquisition.
If the above procedure is followed, A will not have to report an intra-Community acquisition of the goods in the member state of destination and a domestic supply to B. As a result, no registration for VAT purposes is required in the member state where the consignment warehouse is located.
The law as it stands now provides for several requirements that considerably restrict the application of the above simplification. Moreover, under the VAT Directive, EU member states are free to implement such regulations domestically. The result is either inconsistent regulations across the EU or the lack of regulations in certain member states. As of 1 January 2020, new rules are to be introduced by the EU, and they should be implemented as a standard in all EU member states. In Polish law, the new rules are introduced in a draft Bill of 7 October 2019 to amend the VAT Act. The Bill proposes to add a new chapter with provisions regarding call-off stock arrangements. The following is a comparison of the existing rules and the proposed provisions.
Consignment stock warehouse (until 31 December 2019) |
Call-off stock warehouse (from 1 January 2020) |
A may not be registered for VAT purposes in the member state where a consignment warehouse is located.
|
A may be registered for VAT purposes in the member state where a call-stock warehouse is located, but may not be established or have a fixed establishment in that member state. |
The goods stored in a consignment warehouse must be intended for B's production or services, not for sale by B.
|
B's use of the goods is unlimited, meaning that B is free to resell the goods. |
The consignment warehouse must be operated by B. |
A call-off stock warehouse may be operated by a third party as well. |
B must give written notice to the head of the relevant tax authority of B's intention to operate a consignment warehouse before the first goods enter the warehouse. Such notice must contain A's statement of its intention to move goods to the warehouse.
|
B has 14 days of the date when the first goods enter the warehouse within which to notify the head of the relevant tax authority, using means of electronic communication, that B operates a call-off stock warehouse. |
B must keep records of the goods entering the warehouse, including the dates of entry, the dates of collection of the goods from the warehouse, information identifying the goods, as well as details of the original movement of the goods. |
A, B and, if any, a third party operating a warehouse must keep detailed records of the goods in the warehouse in accordance with Article 54 of Council Implementing Regulation (EU) No 282/2011. |
Goods may be stored in the warehouse for a maximum of 24 months to avoid a tax obligation. |
Goods may be stored in the warehouse for a maximum of 12 months to avoid a tax obligation. |
The expiry of the maximum storage period / loss of or destruction of the goods is equated with the collection of the goods by B (no consequences for A). |
The expiry of the maximum storage period / loss of or destruction of the goods means that A must report an intra-Community acquisition of goods as a result of moving its own goods. |
None |
A is required to submit an EU VAT recapitulative statement in the member state of dispatch when the goods are moved and to communicate its VAT number to the future acquirer of the goods (a new type of a recapitulative statement). |
None |
B may be replaced by another acquirer in relation to goods already stored in a call-off stock warehouse, without losing the related simplification. |
Marek Bielawski, Senior Manager, Tax Advice Department, VAT Team, KPMG in Poland
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