Germany: New VAT “quick fixes” system valid as of 1 January 2020 – Amendments and additions to the EU VAT Directive

Magdalena Silbereisen

Largest European VAT reform since 1993 – amendments to call-off stock, chain transactions and intra-Community supplies from 1 January 2020.

Following the German Annual Tax Act 2018 (also known as the Tax Act for the Prevention of VAT Revenue Losses from Trading with Goods over the Internet and Amendment of Further Tax Provisions – “Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften”) we can already look ahead to 2019, with the rules underpinning the quick fixes decided at EU level in December 2018 set to be transposed into German law by 1 January 2020.

The short-term measures are designed to facilitate intra-Community trade in goods pending the introduction of the definitive VAT system. The objective of the definitive VAT system will be to implement the destination principle as follows: instead of the current VAT exemption for intra-Community supplies in the Member State of origin, VAT will be declared by the supplier in their home Member State and charged at the rate applicable in the Member State of destination. The currently valid system will then only remain in place in relation to third-party states.

Given the urgent need for simplified rules, separate from the rest of the Action Plan on VAT, the quick fixes applicable from 1 January 2020 focus on the following areas:


Call-off stock

Call-off stock is the description given to stock owned by a supplier or service provider (the consigner) but stored in close proximity to the customer or purchaser (the consignee), which can then take the goods directly from the warehouse. A distinction is generally made between two main types of call-off stock: “call-off stock” and “consignment stock”. If only a specific customer can take the goods from the warehouse, this is referred to as call-off stock. If more than one customer can take the goods from the warehouse, this is referred to as consignment stock.

In the case of call-off stock, operators were already benefitting from established case-law before the reform. If the customer is already known at the time of the dispatch or transport of goods and is obliged to accept the goods, and the goods will only remain in the warehouse for a short period of time, the process of stocking the warehouse is considered a direct intra-Community supply in the Member State of departure and an intra-Community acquisition by the domestic customer.

The quick fixes (Article 17a of the VAT Directive in the latest version) introduce the following amendment: The transfer by a taxable person of goods forming part of his business assets to another Member State under call-off stock arrangements shall not be treated as a supply of goods for consideration if certain conditions are met.

This means that the intra-Community supply and acquisition of goods shall only occur when the goods are taken out of the call-off stock and the duty of the supplier to declare this in the Member State of destination will no longer apply.


Intra-Community supplies

Pursuant to Article 138 paragraph 1 of the VAT Directive in the latest version, the registration of the taxable person or non-taxable legal person for whom the supply is intended along with the disclosure of a valid VAT identification number to the supplier will become substantive conditions that will have to be met in order to benefit from the VAT exemption for intra-Community supplies.

Previously, the provision of proof that either the foreign VAT number of the customer had been recorded or the conditions for a VAT exemption for an intra-Community supply (the movement of goods to another EU Member State) had been met was sufficient for such an exemption to be granted. This also had to be stated in the recapitulative statement. Persons who failed to comply with this duty to declare previously faced a fine of up to €5,000, but were not at risk of jeopardising their VAT exemption.

Following the amendments to the VAT Directive, the VAT exemption shall no longer apply “where the supplier has not complied with the obligation provided for in Articles 262 and 263 to submit a recapitulative statement or the recapitulative statement submitted by him does not set out the correct information concerning this supply as required under Article 264, unless the supplier can duly justify his shortcoming to the satisfaction of the competent authorities.”

Pursuant to Article 45a of the VAT Directive in the latest version, an intra-Community supply shall be proved by at least two items of non-contradictory evidence issued by two parties independent of each other – vendor and acquirer. This may include CMR consignment notes, bills of lading and invoices from forwarding agents.

These stricter rules for VAT exemptions for intra-Community supplies and the introduction and overhaul of the operational tax compliance management system will force companies to undertake a more qualified check of the customer’s VAT ID number and recapitulative statements, and to comply with the correct invoicing process.



The quick fixes as short-term measures that have been put in place pending the introduction of the definitive European VAT system are to be welcomed as such. In most cases these measures represent a long overdue step towards the harmonisation of VAT rules.

A notable positive aspect is the enhanced legal certainty regarding the fiscal treatment of call-off stock. Operators who wish to continue claiming VAT exemptions for intra-Community supplies will be subject to new obligations regarding the provision of proof.

Hopefully, the planned transition to the definitive VAT system will succeed in its aim of making the VAT process easier for operators.

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