A common business practice for companies who provide regular supplies to customers is to keep inventory in a warehouse that either belongs to the customer, or is located in close proximity. This reduces transport costs and times and gives the customer very easy access to stock when required.
The EU has created a special set of VAT rules for companies holding their stocks in foreign countries. They provide guidance on when VAT should be charged, and if a company needs to VAT register as a non-resident trader in another EU country where it is warehousing its goods.
There are two distinct categories for such setups: Call-off Stock; and Consignment Stock. They are separated based on who controls access to and use of the stock, which triggers the VAT point and compliance rules.
Call-off stock occurs when the goods are sent to the client’s storage facility in another EU country, but title ownership of the goods still remains with the seller. If a customer has control of the storage, is aware of stock movements and may take stock whenever he requires, then it will usually be classified as Call-off stock and does not generally require the seller to VAT register in the foreign country as a non-resident trader.
If the stock is sent to the seller’s own warehouse which is under their control, then the set-up is treated as Consignment Stock. Typically, there are multiple potential customers for Consignment Stock.
This has a different treatment of EU VAT purposes: the movement of goods to the warehouse is treated as a supply and when the goods are then sold to the customer, local VAT is charged. Therefore in most cases a foreign VAT registration will be required by the seller.