CONSIGNMENT STOCK & VAT RULES IN FRANCE
This page explains the French VAT rules applicable to a foreign company transferring its own products in France in order to operate a consignment stock or a call-off stock.
Operating a “consignment stock” in France
Sales under consignment stocks held in France occur when a foreign supplier transfers its own goods to its customer’s premises located in France. The customer in France becomes the owner of the goods only when they are resold in the same state to thirds parties.
Since 2012, a foreign company which effectively transfers goods from another Member State to France is no longer liable to register for VAT in France in order to file the Intrastat declarations. This obligation is shifted to the VAT registered client in France. However, if there is for example a will to keep control on the price of goods introduced in France (especially when the price of transfer is different from the sale price to the end customers), the overseas supplier still has the opportunity to opt for a voluntary VAT registration.
When the goods are introduced into France directly from a non-EU country, the overseas supplier must act as the importer of record and pay duty and taxes to the French Customs. The part of taxes corresponding to import VAT can be reclaimed by appointing a tax representative in France like Corintax®.
Operating a “call-off stock” in France
Call-off stock is an inventory transfer, under a commercial agreement, by a vendor in the premises of a customer who takes the goods as and when needed, in order to integrate them in a manufacturing process. The transfer of ownership from supplier to customer occurs at the time of the withdrawal of the goods out of the stocks
In France, the VAT rules for “Consignment stock” and “Call-off stock” are the same.
Example: Call-off stock and VAT implications in France
A UK company specialized in designing and manufacturing automotive seating receives a long-term order from a French car manufacturer. The UK company delivers the car seats to storage facilities operated next to the car manufacturer factory. The car manufacturer company will withdraw the seats only as they are needed in the car production process. The transfer of ownership between the UK company and the French company occurs at the time of the withdrawal.
If the car seats stored in France are sourced from a non-EU country, the UK company will have to pay import VAT and duty (if any) in France. The import VAT is however recoverable by the UK company provided that certain conditions are fulfilled:
- The UK company acts in France as the Importer of Record. In order to be able to act as the importer of record, the UK supplier must first get a French EORI number issued by the Customs Office.
- The UK company appoints a fiscal representative located in France. Under the 13th Directive procedure, the fiscal representative will prepare and submit a VAT refund claim to the French Tax Authorities.
According to specific VAT provisions in France, the invoices addressed by the UK supplier to the French car manufacturer should be issued without VAT because of the domestic reverse charge mechanism. The UK company will not be required to be registered for VAT purposes in France, except in the case where some of the goods introduced into France are either dispatched from another EU Member State (where he is not registered for VAT) or re-exported.