How the ViDA Package Impacts Call-Off Stock Arrangements

The EU’s VAT in the Digital Age (ViDA) Package contains a wide range of proposals with far-reaching impacts. One of the areas impacted by these proposals is the VAT treatment of call-off stock.

What is call-off stock?

Call-Off stock is used to describe an arrangement where a seller ships goods to a customer’s warehouse (stock) but where the actual sale of goods does not occur until the buyer removes the goods from the stock.

VAT complications

When a call-off stock arrangement involves an EU seller shipping the goods to a stock in a different EU member state, VAT complications arise. The seller is viewed as making an intra-community supply in the origin country plus an intra-community acquisition of its own goods in the destination country at the time of shipment, and a domestic supply of goods in the buyer’s member state when the goods are removed from the stock. As a result, the seller is required to register for VAT in the destination member state and account for VAT on their self-supply and on their subsequent supply to the buyer. The need to register in any member state to which such goods are shipped can dramatically increase VAT compliance costs.

Current simplification regime

Article 17a of the EU VAT Directive was created to help simplify intra-community call-off stock arrangements and reduce compliance costs for sellers. Under Article 17a, if certain criteria are met, the seller is deemed to have made an exempt (with right to deduction) intra-community supply and the buyer is deemed to have made an intra-community acquisition at the time the goods are removed from stock. The seller no longer has to account for an intracommunity acquisition nor a domestic supply in the destination member state, and as a result, the seller is no longer required to register in the destination member state.

Both the seller and buyer of goods are required to keep a register of such goods under Article 243(3) of the VAT Directive. Sellers are also required to record the VAT identification number of the intended buyers of any goods transferred under call-off stock arrangements in their recapitulative statements per Article 262(2).

ViDA, the end of call-off stock simplification?

The current proposals would abolish call-off simplification under Article 17a and eliminate the related reporting requirements under Articles 243(3) and 262(2). Call-off simplification would be removed effective January 1, 2025, while the reporting requirements would be eliminated a year later on January 1, 2026. The gap in dates between the end of simplification and the end of reporting is intended to allow for transfers occurring prior to January 1, 2025, to be finalized in the following year. The reporting requirements are being removed not only because of the end of the simplification regime but also because new digital reporting requirements would render the information provided redundant.

The simplification regime is being removed because the expanded OSS scheme proposed under ViDA includes provisions that would render call-off simplification unnecessary. (In particular, proposed Articles 369xa through 369xk). The expanded OSS allows for the reporting of intracommunity transfers of own goods using one’s OSS registration, obviating the need to register in the destination member state. Additionally, the new Article 369xi allows for the exemption of intra-community acquisition of own goods declared under the expanded OSS. Finally, changes to Article 194 would make the buyer responsible for self-assessing VAT on the domestic supply, so long as the seller is not established in the destination member state. As the seller would no longer be required to remit VAT or register for VAT in the destination member state, the call-off stock simplification will become redundant.

Call-off simplification was a useful measure for easing VAT compliance. However, with the expansion of EU wide VAT reporting regimes, the time for such simplification schemes is coming to an end.