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VAT: BMF letter on consignment warehouses within the meaning of § 6b UStG

21 December 2021

Petra Pinkepank , Senior-Manager Value Addes Tax |

With effect from 1 January 2020, the German legislator introduced the EU requirements regarding the VAT treatment of cross-border storage in consignment warehouses in the EU in § 6b UStG (VAT Act). Since then, many affected companies have had to deal with questions of differentiation and delimitation as well as uncertainties regarding the implementation. In a letter dated 10 December 2021, the Federal Ministry of Finance (Bundesministerium der Finanzen - BMF) has now amended and expanded the VAT Application Decree (UStAE) with regard to the new legal regulation. Below we present some of the most important points from the BMF letter:

By amending the UStAE, the BMF made it clear that the previous regulations on consignment warehouses (1a.2 para. 6 s. 4 et seq. UStAE) shall continue to apply. However, these regulations only have effect if § 6b UStG does not apply, so that the statutory regulation pursuant to § 6b UStG takes precedence over the legal position on consignment warehouses previously derived from case law.

Equally welcome is the clarification that a permanent establishment of the supplying entrepreneur in the country of destination, but not a simple VAT registration, excludes the application of § 6b UStG. This is particularly to be viewed in light of the fact that the registration obligation can arise from transactions in connection with the consignment warehouse (e.g. if the consignment is not withdrawn within 12 months). Contrary to the already existing regulations on consignment warehouses (1a.2 UStAE), pursuant to the current BMF letter it is not important for the application of § 6b UStG that the acquirer enters into an obligation to take delivery. The authorisation to remove the goods from the consignment warehouse is sufficient.

The revised UStAE now also contains specific comments on the calculation of the 12-month time limit with a concrete example. It is also clarified that the period is not extended by switching the acquirer. Likewise, transfers do not lead to an extension of the 12-month time limit. However, if they take place within the same EU Member State, they are not detrimental to the application of § 6b UStG.

The BMF also explicitly addresses the fact that a combination of the simplification regulation pursuant to § 6b UStG together with a tax exemption within the scope of an import is not possible. Also, pursuant to the BMF’s explanations, the warehousing process or the delivery carried out at the time of withdrawal cannot be part of a chain transaction.

The BMF letter also indicates that the supplying entrepreneur and the subsequent acquirer are jointly responsible for bringing about or preventing the application of § 6b UStG (see amended 3.12 para. 3 s. 5 UStAE). It is noteworthy that the BMF expressly points out that the supplying entrepreneur can achieve that § 6b UStG does not apply by not fulfilling the requirements pursuant to § 6b para. 1 and 5 UStG. Presumably, this refers in particular to the question of whether § 6b UStG can be applied or excluded if entrepreneurs do not comply with their special record-keeping obligations (§ 22 para. 4f UStG). It is particularly positive to see the object-related view in this context, which means that the general application of § 6b UStG is not excluded by individual circumstances.

The BMF’s comments on so-called “small losses” should lead to easier application of § 6b UStG in practice, as not every shortfall triggers a registration obligation for the supplying entrepreneur in the country of destination. However, the term “small losses” offers room for discussion.

In addition, detailed provisions were made relating to storage in consignment warehouses taking into account the VAT status of Great Britain and Northern Ireland after Brexit.

The application regulation provided for in the BMF letter is based exclusively on the commencement of the transport, not on the withdrawal, so that taxable persons receive a reliable distinguishing criterion for the temporal application of § 6b UStG.