Call-off stock procedure

What is the call-off stock procedure and what is its application?

In Intra-Community trade, as a rule, the movement of goods by a taxpayer constitutes an Intra-Community acquisition of goods. This means that the taxpayer carrying out such a movement is required to register for VAT purposes in the country of the buyer and account for VAT on the movement of goods, followed by a regular domestic supply subject to local VAT according to the regulations of the buyer’s country.

Since July 1, 2020, Polish VAT taxpayers in Intra-Community trade have the option to use the so-called call-off stock procedure.

A taxpayer registered for VAT in the European Union or a third party acting on their behalf moves goods from one country to the territory of another EU member state for later delivery of those goods. The transaction is carried out under an agreement previously made between the contractors. The application of this simplification aims to avoid a significant obligation – it allows taxpayers to avoid the need to register for VAT in another EU country when moving goods.

The call-off stock procedure has the following tax consequences:

• The movement to the warehouse is not subject to VAT but must meet the additional requirements listed below.
• The Intra-Community supply occurs only when the goods are withdrawn from the warehouse by the buyer, i.e., ownership rights to the goods are transferred to the EU contractor.
• The buyer recognizes the Intra-Community acquisition of goods.

Additionally, the amendment to the VAT Act introduced several other changes, including allowing third parties to operate warehouses; the goods stored can be intended for production, service, or trading activities, and the storage period without creating a tax obligation is 12 months.

When can the call-off stock procedure be applied?

EU regulations introduced specific requirements, meaning that the application of the call-off stock procedure requires fulfilling certain conditions, which are the same for all EU countries:

• The seller and the buyer must be VAT-registered taxpayers, with the buyer registered in the country to which the goods are being transported. The seller must have the buyer’s details at the time of the shipment or transport of the goods.
• The seller shipping or transporting the goods cannot have a business establishment or a fixed place of business in the EU member state to which the goods are being moved.
• The shipment or transport of goods must be carried out between two different EU countries by the taxpayer or a third party acting on their behalf. The future buyer of the goods may also be responsible for the shipment or transport, but only if they are transporting the goods on behalf of the taxpayer, who is the owner of the goods.
• The movement of goods from the warehouse must be recorded in a special registry containing the information specified in the EU regulation. The supplier must include the buyer’s VAT number in the summary VAT-UE report. Failure to maintain the required records or any inaccuracies may cause significant problems for taxpayers.
• The supplier and buyer must have previously entered into an agreement confirming that the buyer is entitled to acquire goods from the call-off stock warehouse.

Benefits of the call-off stock procedure

The rules of the call-off stock procedure introduced in EU member states have certainly standardized, simplified, and sped up the settlement of trade transactions involving goods between EU countries using warehouses. The simplification is also a more cost-effective solution as it avoids foreign VAT registration. As we know, the VAT registration process in a foreign country takes time and often requires the use of local tax advisors, which only prolongs the process and increases unnecessary costs of adapting to the applicable rules in another EU country related to the movement of goods.