Consignment Stock:

In a consignment stock scenario, a supplier transfers their goods to a customer’s location in France. The buyer in France only acquires ownership of these goods when they are subsequently sold in their original state to other parties.

Call-off Stock:

Here, under a business agreement, a seller relocates inventory to a customer’s site. The customer utilizes these items as required, often incorporating them into a manufacturing workflow. Ownership only shifts from the seller to the customer when the items are withdrawn from stock.

In the French context, both “Consignment stock” and “Call-off stock” share identical VAT responsibilities.

Regulations:

Under the standard system, if goods are shipped or moved from another EU Member State to France on behalf of a taxable entity and stored before being bought by the latter, the supplier is considered to have made an intra-community acquisition in France that is subject to VAT. When the customer in France eventually takes ownership, this supply by the initial supplier is also taxable. Since the supplier is not based in France, the VAT is covered by the purchaser registered for VAT in France, using the reverse charge mechanism.

Since January 1^st, 2020 (“2020 Quick Fixes”), there has been a simplified scheme. The new regime is not optional, but mandatory if the conditions for its application are met. The intra-community transfer of goods under this scheme is not treated as an intra-community supply, nor as an intra-community acquisition, under certain conditions. Taxation is deferred until the time of transfer of ownership. However, the business is not exempt from all obligations, since it must keep a register of the goods transferred and ensure that the goods concerned are indeed acquired by the recipient within 12 months. If the conditions are not fulfilled, the normal scheme will apply.