Consignment warehouses play a crucial role in modern supply chains, enabling businesses to store goods closer to their customers and reduce delivery times. However, the VAT treatment of transactions involving consignment warehouses can be complex. The recent changes to the VAT regulations in Germany, specifically under § 6b UStG, have introduced a simplified framework for handling such transactions within the EU. This article outlines the current VAT rules for consignment warehouses and the practical implications for businesses.
Overview of § 6b UStG
Effective from January 1, 2020, § 6b UStG was introduced to simplify the VAT treatment of goods moved to consignment warehouses within the EU. This change aligns with the EU-wide “Quick Fixes” aimed at harmonizing and simplifying the VAT system across member states.
Key Points of § 6b UStG:
- Simplification: The regulation aims to simplify VAT compliance for businesses that store goods in consignment warehouses in another EU country before selling them to customers in that country.
- 12-Month Rule: Goods can be stored in the consignment warehouse for up to 12 months. If the goods are not withdrawn by the customer within this period, the transaction is treated as a regular intra-community supply, potentially triggering VAT obligations in both the sending and receiving countries.
- Recipient Identification: The recipient of the goods must be identified at the time the goods are dispatched to the consignment warehouse. This identification includes the recipient’s VAT identification number, which must be reported in the EC Sales List (Zusammenfassende Meldung).
- Documentation Requirements: Extensive record-keeping and documentation are required to benefit from the simplified regime. This includes detailed records of the movement of goods, the recipient’s identity, and compliance with the 12-month rule.
Practical Implications
- Compliance Burden: Despite the simplification intent, the new rules impose significant documentation and reporting requirements. Businesses must maintain precise records of all transactions, which can be burdensome without proper systems in place.
- VAT Registration: While § 6b UStG aims to avoid the need for foreign businesses to register for VAT in Germany when using consignment warehouses, this benefit is contingent upon strict adherence to the rules. Failure to comply can result in the requirement to register and account for VAT in Germany.
- Impact of Non-EU Transactions: The regulation primarily applies to intra-EU transactions. For goods moved from or to non-EU countries (e.g., Switzerland, the UK post-Brexit), different rules apply. Such transactions are generally subject to the existing import and export VAT regulations.
- Audits and Inspections: German tax authorities may audit businesses to ensure compliance with the consignment warehouse rules. Companies must be prepared to present comprehensive records and documentation during such audits.
Conclusion
While § 6b UStG provides a framework for simplifying VAT compliance for consignment warehouses within the EU, it also introduces significant record-keeping and reporting requirements. Businesses using consignment warehouses must ensure meticulous compliance to benefit from the simplification and avoid potential VAT registration and compliance issues.
For expert guidance on managing VAT compliance for consignment warehouses and to navigate the complexities of § 6b UStG, please contact us at WW+KN, a Baker Tilly Company, via email at info@vat-germany.com. Our team of experienced professionals can help you ensure compliance and optimize your VAT processes.
