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08.03.2019

Germany: Supply of goods via consignment stock as of 2019 – update

The German Ministry of Finance further extended the transition period to 1 January 2020

Key Facts
  • At 1 January 2020 the new European simplification rule will come into force in all EU member states.
  • Under the extended transitional period, businesses must review their supply of goods via consignment stocks or other warehouses for compliance with the new (EU) rules.
  • Supplies via consignment stock in Germany from foreign suppliers will continue to be generally regarded as intra-Community acquisitions or imports by the foreign supplier into Germany.
  • The foreign supplier is required to register for VAT in Germany.

In October 2017, the German Ministry of Finance published the German Federal Tax Court’s ruling on how VAT should be handled with respect to goods supplied via consignment stock by foreign suppliers in the German VAT Circular. According to these new rules, the foreign supplier no longer needs to be registered for VAT in Germany in certain situations, e.g. if the customer is already known prior to the goods being dispatched, a direct supply of goods is assumed, or if the goods are temporarily stored in consignment stock. According to the German Ministry of Finance, this applies to cases in which customers have contractually committed to ordering goods or have paid for them before they are dispatched.

The mandatory application of these new rules has been postponed several times. At the end of 2018, the German Ministry of Finance further extended the transition period to 1 January 2020. At that point in time, the new European simplification rule (pursuant to the “quick fixes” passed in October 2018) will come into force in all EU member states. The new European simplification rule differs in some respects from the current German approach. Under the extended transition period, businesses only need to review their supply of goods via consignment stock or other warehouses once to determine whether they comply with the new (EU) rules or whether changes to agreements and procedures are required.

Until then, supplies via consignment stock in Germany from foreign suppliers will continue to be generally regarded as intra-Community acquisitions or imports by the foreign supplier into Germany, followed by a local supply of goods. This generally means that the foreign supplier is required to register for VAT in Germany. 

Article published in WTS Global VAT Newsletter Q1/2019
Recent or expected changes in VAT and GST regulations and compliance duties in various EU and third countries
View publication
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