BFH rules on VAT treatment of supplies via consignment stock
Global Tax Update:February 2017/Germany
Germany’s Federal Tax Court (BFH) issued a decision on 20.10.2016, V R 31/15, on the VAT treatment of supplies made via consignment stock. (Global Tax Update:February 2017/Germany)
(1) Supplies via call-off-stock can be zero rated intra-community supplies if certain conditions are fulfilled.
Germany’s Federal Tax Court (BFH) issued a decision on 20.10.2016, V R 31/15, on the VAT treatment of supplies made via consignment stock. The BFH confirmed the 2015 decision of the lower Hessian tax court (FG Hessen 25.8.2015, 1 K 251910 1 K 2519/10), in which that court disagreed with the German tax authorities’ position regarding supplies via German call-off stock. According to the tax authorities, the supply of goods from other EU member states via consignment stock located in Germany should be deemed to be an intra-community supply of goods followed by a domestic supply by the supplier. This in general results in VAT reporting obligations for the supplier in Germany.
(2) Deloitte’s Comments
The BFH decision does not include any new guidance as to how storage contracts should be drafted to ensure the assumption of a binding order before transport commences. Although the BFH does not follow the position taken by the German tax authorities for nonresident taxpayers, potentially affected parties should continue to register for VAT in Germany in the case of supplies via call-off-stock since it is unclear if and when the tax authorities will implement the BFH decision in practice.