Reverse Charge & “Call Off Stock” in Germany
- By utilizing the reverse-charge mechanism, the supplier’s tax burden is transferred to the recipient of the supply. The recipient is responsible for calculating the VAT due.
- Numerous European Union member states have simplified their call-off stock requirements. However, Germany did not, and international suppliers were required to register for VAT when storing call-off stock in Germany.
Everything you need to know about VAT Registration, Returns, Tax Representation (if applicable), and your legal duties in Germany is conveniently located right here!
VAT Reverse Charge in Germany
By utilizing the reverse-charge mechanism, the supplier’s tax burden is transferred to the recipient of the supply. The recipient is responsible for calculating the VAT due.
The recipient may claim reported VAT in the same preliminary VAT return as input tax to the extent that input tax deductions are authorized. The provider must issue invoices that are VAT-free in Germany. As a result, the taxable person invoices only the net amount. Additionally, the entrepreneur is required to indicate on the invoice that the reverse charge applies and that the recipient is responsible for German VAT using the words “Steuerschuldnerschaft des Leistungsempfängers.”
Local Reverse charge
The reverse-charge technique is applicable in principle to the following supply and services (subject to the fulfillment of additional criteria):
Non-established businesses may provide the following services and supplies:
- Certain supplies in connection with immovable property.
- Certain supplies in connection with the real estate transfer tax law.
- Certain supplies of gas and electricity.
- Goods supplied as part of the execution of a security agreement outside of an insolvency procedure.
- Supply of rights to emit greenhouse gases and electricity certificates.
- Cleaning of facilities under specified circumstances.
- Supply of integrated circuits, mobile phones, tablet computers, and gaming consoles for a fee of EUR5,000 or more.
- Supply of basic metals as stipulated in a special addendum.
Selling into Germany?
German “Call off stock”
The German Federal Ministry of Finance announced a decree regarding the VAT treatment of call-off stocks in Germany on 10 October 2017.
A “call off stock” situation occurs when products owned by a non-resident supplier are dispatched to be stored in the customer’s nation, typically at the customer’s facilities. When products are required, the consumer withdraws them from stock. Only at that point does the customer acquire legal ownership of the products from the foreign provider.
Before 2020, the call-off stock simplification would apply in Germany if a purchase contract was in effect at the time of shipment and numerous other conditions were met. These restrictions included identifying the German customer prior to shipping products into Germany and paying for the goods or having a binding order between the customer and the foreign supplier. The client also needed unfettered access to the goods.
Simplifying EU’s call-off stock regime
This means that the foreign business does not need to register for German VAT, and the transaction is treated as a “direct” intra-Community supply of goods from the foreign business to the German client, which results in significant reductions in compliance costs and administrative burdens for the client while also providing significant cash-flow benefits for the foreign business.
Last Updated: 16/01/2022
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
