Recently, the German tax authorities published a long-awaited circular on the VAT treatment of supplies in consignment stocks or for ‘shipment on hold’ cases. The circular deals with the current case law of the Federal Finance Court (BFH) on consignment stocks and reflects the tax authority´s new position on this topic. If a supplier delivers goods from abroad to a customer’s consignment stock in Germany, the question arises whether the place of supply is located in the place of departure or in Germany. In the past, the German tax authorities took the view that the place of supply was in Germany. As a consequence, the supplier had to become registered for VAT in Germany, and to declare German VAT on the supply of goods to his customer. Accordingly, the supplier issued sales invoices showing German VAT.
The circular refers to recent court decisions and makes clear that a delivery from another EU-member state to a consignment stock in Germany does not necessarily lead to a domestic supply of goods in Germany.
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