The German VAT law does not contain any simplification for supplies via consignment stocks/ call-off stocks in Germany. However, due to the recent jurisdiction of the German Federal Tax Court, the German tax authorities have changed their approach in single cases in relation to call-off stocks.

1. VAT - Alert
Call-Off stock – Changes in VAT treatment in
Germany
November 2017
© 2017 Warth & Klein Grant Thornton AG – All rights reserved
The German VAT law does not contain
any simplification for supplies via con-
signment stocks/ call-off stocks in Ger-
many. However, due to the recent juris-
diction of the German Federal Tax Court,
the German tax authorities have changed
their approach in single cases in relation
to call-off stocks.
A. General rule
There are many cases, in which foreign supp-
liers supply goods from other EU Member
States via consignment stocks / call-off
stocks located in Germany. The ownership of
the goods is only transferred to the customer
(VAT payer) upon withdrawal of the goods
from the stock. According to the German
VAT Guidelines, the foreign supplier has to
VAT register in Germany as he has to declare
an IC acquisition in Germany. Upon the
withdrawal of the good by the customer, he
effects a local supply subject to VAT. The fo-
reign supplier has to issue an invoice with
German VAT.
B. Risks for the supplier
In the past, many foreign suppliers have
missed to VAT register in Germany.
Belated VAT registrations and the late pay-
ment of outstanding VAT triggers interest
payments and penalties for late filing. It may
even be qualified as tax fraud resulting in fi-
nes or criminal investigations depending on
the volume of the understated VAT.
C. Change of VAT treatment in spe-
cific cases
Based on current jurisdiction of the Federal
Tax Court, the German tax authorities have
changed their a.m. viewpoint in specific cases.
The described transaction is regarded as a di-
rect delivery from the EU Member State to
Germany, if
the customer is already known at
the moment of the dispatch in the
other EU Member State. This can
be assumed if the customer has
placed a binding order prior to the
dispatch or has already paid for the
goods.
The tax authorities clearly state, that if the
customer is known at the beginning of the
transport to Germany, it is irrelevant, that the
goods are stored in a stock/ warehouse for a
short period of time (several days or weeks)
and if – in addition - the customer has an un-
limited right to enter the stock. Basically, this
new approach of the tax authorities applies –
under the described preconditions – to call-
off stocks only.

2. © 2017 Warth & Klein Grant Thornton AG – All rights reserved
Contact
Head of Indirect Taxes
StB/RA Ulrike Slotty-Harms
T +49 211 9524 8228
F +49 211 9524 95 8228
E ulrike.slottyharms@wkgt.com
In these cases, the tax authorities understand,
that the taxpoint is when the transport of
goods begins in the Member State of dis-
patch.
Consequently, the foreign suppliers do not
have to VAT register in Germany.
D. Timeline
The new rules are applicable for all „open“
cases. However, the tax authorities will not
object, if the parties apply the general rule for
supplies effected prior 2018.
E. Recommendation
The tax authorities have changed their view
on the VAT treatment of supplies via call-off
stocks in single cases. Depending on the
contractual agreements between the supplier
and the customer, the supplier must VAT re-
gister in Germany. On the other hand, for-
eign suppliers who have been VAT registered
due to supplies via call-off stocks may not
need to remain VAT registered in Germany
anymore. The contractual agreements
between the parties must be reviewed in de-
tail in order to verify the need to VAT register
respectively remain VAT registered in Ger-
many.
It is of course a positive development that the
tax authorities have given up their quite rigid
approach on supplies via call-off stocks in the
described scenarios. However, due to the fact
that the new rules do not apply to all cases,
the parties of the transactions have to verify
the VAT treatment in their specific case and
– in case of uncertainty – approach the tax
authorities for clarification.
Please note: If – under the described cir-
cumstances – the foreign supplier issues in-
voices with German VAT to the customer u-
pon withdrawal of the goods, this invoiced
VAT will not be deductible for the customer.
The incorrectly invoiced VAT will become a
cost item for the customer.
Any questions? Feel free to contact us.