The case law confirms that suppliers and customers must carefully consider what is included in their consignment contracts. The supplier could not be aware that it had made VAT deliveries, as the delivery was considered the value of the land where the stock is located. Or the customer could not be entitled to a VAT deduction upstream, as the delivery is not deemed to have been made if the stock was located. In the latter case, the client may consider asserting legitimate confidence under paragraph 176 of the General Tax Code. In the meantime, deliveries from foreign suppliers via shipments from foreign suppliers to Germany are generally regarded as intra-EU acquisitions or imports into Germany by the foreign supplier, followed by a local supply of goods. This usually means that the foreign supplier must be subject to VAT in Germany. The Federal Ministry of Finance has granted a transitional period until January 1, 2019 to allow affected taxpayers to make changes until the end of 2018 (notification of December 14, 2017). As a result, both suppliers and customers must now check whether their shipments of goods through consignment inventory or other warehouses comply with the new rules or whether there is a need to change agreements and procedures. In October 2017, the Federal Ministry of Finance transposed the Bundessteuergericht`s opinion on the treatment of VAT on goods deliveries in batches into the VAT circular (communication of 10 October 2017).
Under these new rules, the foreign supplier is no longer subject to VAT in Germany under the following circumstances: 1. FactsA British car supplier (complainant) supplied decorative fittings to a German car manufacturer (customer). The goods were manufactured in Britain and shipped to Germany. The goods were temporarily stored in a warehouse rented by the applicant, where it was registered in the customer`s ERP system and repackaged for the customer. The customer removed the goods from the warehouse after a few days or a maximum of 4 months. Orders were placed 8 to 10 weeks before the necessary goods were delivered. The parties involved had entered into important agreements, including an agreement whereby the risk, ownership and right to sell the goods had to be transferred from the stock at the time of Vinz. A key term mentioned in the manual is „binding order.“ According to the guidelines, the shipment of goods from another EU Member State to a consignment stock located in Germany, on the basis of an existing „firm order“, followed by the use of these goods by the recipient, leads to intra-community delivery from the supplier to the recipient at the time of the transfer. Previously, this would have been considered an intra-community transfer and a national supply.