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Place of supply for call-off stock transactions in Germany
In light of the VAT registration liability for suppliers that are resident in other EU-Member States or third countries and transport goods to Germany, a recent ruling by the German Federal Court of Finance (Bundesfinanzhof) bears good news (Federal Court of Finance of October 20, 2015, V R 31/15).
In the underlying case a supplier, resident in Spain, transported goods to a customer in Germany. These supplies were carried out via a warehouse, which was contracted by the customer. Only the customer had access to the goods in the warehouse and was able to remove the goods (call-off stock). The precise quantity of the goods as well as the date of delivery were subject to individual binding orders placed on a regular basis by the customer in advance of the supplies.
The Federal Court of Finance held, that despite a short-termed interruption of a supply of goods due to the placement of those goods into a call-off stock, where they are pending on call-off from the customer that supply qualifies as a moved supply under Sec. 3 para. 6 sent. 1 German VAT Act (Art. 32 VAT Directive 2006/112) and may subsequently meet the requirements for an intra-Community supply. As a consequence, an EU-Member State supplier will not be required to register for VAT in Germany, if the call-off stock is located in Germany. However, the Court emphasizes that the customer’s identity must be known in advance of the supply. Since the provision regarding a moved supply is not limited to supplies within the EU the ruling of Court at hand is applicable to suppliers that are resident outside of the EU as well.
With this ruling the Court opposes the view currently held by the German tax administration in regard of suppliers that are resident in other EU-Member States, according to which the delivery from another EU-Member State to a call-off stock in Germany always constitutes a deemed intra-Community acquisition under Sec. 1a para. 2 German VAT Act (Art. 17 VAT Directive 2006/112) while the following removal of the goods is considered a domestic supply.
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- A moved (intra-Community) supply via a call-off stock requires that the customer’s identity is known in advance of the supply. In that regard, a binding order or contract and an unlimited right of the customer to remove the goods are significant. On the other hand, it is irrelevant when the ownership of the goods is transferred. These criteria should be incorporated into contracts
- The jurisdiction does not give an indication of a maximum timeline for the storage of the goods
- It remains to be seen whether the German administration will agree with the Court's decision