After Brexit: Triangulation, Call Off Stock & Consignment Stock
This blog was originally posted in March, 2022 and updated in January, 2025. To keep up-to-date with the latest VAT and eInvoicing news, sign up to our newsletter.
As of 31 January 2021, the United Kingdom became a third country for VAT purposes, and the EU reverse charge rules for the supply of goods sent to/from the UK no longer applies (except in Northern Ireland). Companies instead should treat such transactions as exports or imports.
As we shall see below, this change also has an impact on the application of the EU VAT simplifications for triangular transactions, call-off stock, and consignment stock.
Triangular Transactions
A triangular transaction is normally characterized by a number of things. The fact that a supplier (A) established in an EU country concludes sales transaction with a business customer (B) in another EU member state, but the goods are directly delivered by the first supplier (A) to the last business customer (C) in a third EU country.
The simplification of the intra-Community triangular transaction aims to prevent a VAT liability for the middle entrepreneur in the supply chain and the subsequent registration obligations. In order for the EU triangular simplification rules to apply, participants must be companies registered for VAT in different EU countries.
Previously, provided the above conditions were met, it was possible for a supplier (A) in one EU country (for example Ireland) to sell goods to a UK business customer (B) and ship the goods directly to the B’s business customer (C) in let’s say Austria, and the supply would be zero-rated for VAT purposes and there would be no VAT registration obligation in the country where the goods are sent from or the country where the goods are received, for the middle supplier i.e. the UK company (B).
After Brexit
After Brexit, the UK middle supplier (B) can no longer use their UK VAT number for the application of the EU triangulation rules and instead they should use an EU VAT number if they already have a VAT registration in any EU member state or they will need to register for VAT either in the EU country where the goods are sent from or the country where the goods are received.
If the goods are sent from the EU to Great Britain or vice versa, this process is to be regarded as an export delivery from January 1st, 2021. Depending on the direction of delivery, this may trigger registration obligations in Great Britain for EU companies or registration obligations for British companies in the EU.
Call-off stock
Call-off stock arrangements apply where a supplier transfers its goods to a customer’s warehouse in another EU member state and the customer can take ownership of the goods and pays for them i.e. “call-off” the goods when they need them. Where certain conditions are met, the supplier is not required to register for VAT purposes in the member state where the goods are sent to. Under the call off stock simplification arrangements once the customer removes the goods from the facility, they need to report an intra-Community acquisition while at the same time the supplier reports an intra-Community supply.
In order for the call of stock simplifications to apply one of the requirements is the ownership of the goods to be transferred to the customer within a 12-month period. If this is not done within the said period, the supplier will be required to register for VAT in the Member state where the goods are stored and report a deemed intra-Community acquisition or return the goods to the member state of departure.
After Brexit
Due to Brexit, the Call-off simplification no longer applies for movements of goods between the EU and the UK as of January 1st, 2021. This will mean that if a UK supplier sends stock to its customers warehouse in the EU, he will need to register in the relevant EU member state and account for the import of the goods and the subsequent domestic supply. The same will be the case with EU suppliers in case they send stock to their customer warehouse in the UK- the EU supplier will need to register for VAT in the UK and account for the import of the goods in the UK and the subsequent domestic supply.
Transitional rules will however apply for goods transferred from the UK to the EU or vice versa where these goods were transferred before the end of the Brexit transition period and are supplied or returned after Brexit. Under the special rules the EU call off stock arrangements will continue to apply for the goods that were sent under the EU call-off stock arrangements from the EU to the UK or vice versa, before 31 December 2020, where the goods are called off or returned within 12 months.
Consignment stock
Consignment stock is an arrangement where physical stock is moved from one business (the Consignor) to another (the Consignee), but stock ownership remains with the supplier (i.e. most certainly the seller must have a VAT registration in the country of destination). Typically, there will be multiple customers.
After Brexit
Consignment stocks are goods companies dispatch to another EU country, without an identified customer, where they are held in storage before being sold. Therefore, they are treated as a movement of own goods, followed by a supply in the EU country that they are sent to. The movement can be zero-rated, as long as the seller meets all the required conditions. After Brexit, this movement would no longer be considered as an intra-Community supply, but as an export, however, taxpayers will still have to account for VAT in the country of destination, so registration is needed there.
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