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The recapitulative statement - Information on procedures for consignment warehouses and the increased importance of the submission obligation

The German Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) published a circular, on 28.1.2020, in connection with the information relating to consignment warehouses in the recapitulative statement (RS). The circular deals with important procedural changes following the new rules under Section 6b of the German VAT Act (Umsatzsteuergesetz, UStG). Furthermore, other new legal rules have to be observed according to which an intra-Community supply would only be tax-exempt if the business had complied with its obligation to submit an RS.

Information on procedures for consignment warehouses

A consignment warehouse is a supplier’s goods depot that is located close to the customer. The legal title to the goods remains with the supplier until the customer takes them out of this depot. It is only when the goods are taken out that a supply is deemed to have taken place and this provides the basis for issuing invoices where VAT is charged in Germany. New rules were introduced under Section 6b UStG in order to simplify the taxation of transactions linked to a consignment warehouse in the EU and have been applicable to such transactions since 1.1.2020. According to these new rules, information will have to be provided in the RS also about supplies of goods that were dispatched or transported, within the context of a consignment warehouse, to another EU member state if the recipient of those goods was already known from the outset.

The BMF, in its recent circular from 28.1.2020 (reference: III C 5 - S 7427-b/19/10001 :002), pointed out that for organisational reasons it was temporarily still not possible to enter the required details within the framework of the existing procedure for submitting the RS. As a substitute, notification in relation to the transportation and dispatching that has been realised should be submitted to the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt), in addition to the existing RS. The form that has to be used is available on the form server of the Federal Fiscal Authority. This can be completed and submitted directly online, or alternatively completed in the offline mode and then sent by e-mail to the BZSt, which will in turn confirm that the notification has been submitted.

Submitting the RS - Stricter requirements in 2020

Under Section 18a UStG, businesses that carry out tax-exempt intra-Community supplies of goods are obliged to submit a recapitulative statement (RS). The RS has to be submitted electronically to the Federal Central Tax Office (BZSt) no later than 25 days after the end of the reporting period (calendar month or calendar quarter). The rules on permanent extensions to the filing deadline do not apply to the RS.

According to the amended Section 4 no.1b UStG, as of 1.1.2020, the submission of a correct recapitulative statement (RS) is one of the prerequisites for the exemption from tax for intra-Community supplies.

If a supplying business does not comply with its obligation to submit an RS, or does not comply fully or correctly then the exemption from tax for the intra-Community supply will not be granted. If the business subsequently realises that an RS it has submitted is incorrect or incomplete then this business would be obliged to correct the original statement within one month. If the business does not submit an RS then the transaction would be subject to tax.

Since 2014, the BZSt has been responsible for imposing sanctions in the case of infringements of the regulations under Section 18a UStG. Owing to the increased importance of the RS it can be assumed that infringements will be punished more quickly and more severely in the form of setting fines.

Recommendation: Currently, it is yet to be clarified exactly when the tax liability for a transaction would be established in the case of an inadequate submission of an RS and over what period a subsequent correction could be made. Likewise, the above-described procedure where a consignment warehouse is used, in practice, could still give rise to many discussions and questions.

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