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Your company based in France sends raw materials to the premises of its Belgian client without transferring the ownership of the goods to him. The Belgian client can take the ownership of the goods at the time he needs them [when he resells the goods or when he uses the goods in his production process].

… VAT registration is normally required in the country of the client

Your company should normally be VAT registered in Belgium to report the physical movement of goods from France to Belgium. The subsequent sale of the raw materials to the client is treated as a domestic transaction subject to local VAT. Your company should therefore invoice its client with Belgian VAT unless a local reverse charge mechanism is applicable [payment of VAT switched to the client].

…unless a special scheme is applicable

Many EU countries have however implemented special measures avoiding foreign companies to register and charge local VAT. The main issue that industry faces is that there is very little uniformity in the application of that scheme.  They are many variances and different requirements in Member States to treat the supply of goods in a consignment or call-off stock.

Companies having consignment or call-off stock in various EU countries must pay attention to the following issues:

  • Check whether or not special measures have been implemented in the country where the stock is held and which conditions should be fulfilled in this respect.
  • In case no special measures are applicable, proceed to the local VAT registration;
  • Check whether or not a local reverse charge is applicable for the subsequent domestic sale to the client.