Transfer of own goods

What it means

A transfer of own goods is the movement of a company's goods from one EU member state to another for its business without a sale, for example to its own warehouse abroad, for consignment selling or to a trade fair followed by a sale. Ownership does not change, but for VAT it is a deemed supply.

In the country of dispatch the transfer is treated as an exempt intra-EU supply, and in the country of arrival as an intra-EU acquisition of goods. The company therefore often has to register for VAT in the destination country, declare the acquisition there and charge local VAT on subsequent sales.

The law provides exceptions where a transfer is not a supply, such as temporary use of goods to provide a service, installation of supplied equipment, repairs or short-term temporary use. A special simplified regime applies to call-off stock, where registration in the destination country is not required if the conditions are met.

How it works in practice

An internal document records the value of the goods, usually at cost, and the transfer is reported in the VAT return and the EC sales list under the company's own VAT ID issued in the destination country. At higher volumes, Intrastat reporting also applies.

Online shops using warehouses in other countries, for example through large marketplaces, often move goods without realising it and incur obligations in several states. Before joining such a programme, map out where the goods will physically be stored.

When goods come back or are sold in the destination country, the transactions must be recorded correctly in both countries. Stock records broken down by country are a precondition for reconciling the figures in returns and EC sales lists.

What to watch out for

The most common mistake is not reporting the transfer at all because no sale took place. The tax authority may then assess VAT in the country of dispatch because the exemption lacks support, while registration and taxation are missing in the destination country.

When relying on the temporary use exception, deadlines and purpose must be monitored. If the goods end up being sold in the destination country or stay longer, the exception lapses and the transfer must be reported retroactively as a supply, often with interest.