In its judgment of 20 October 2016, the German Federal Fiscal Court (BFH) has ruled that a taxable supply may already exist at the beginning of the dispatch of goods to a consignment warehouse. This requires that the consignee is already known at the beginning of the dispatch. A taxable supply may exist even if the goods are stored for a short time in a consignment warehouse after the beginning of the dispatch. As a result of the immediate taxable supply, the place of taxation is where the dispatch begins.
In the decided case, the supplier shipped on initiative of the buyer goods from Spain to a consignment warehouse located in Germany. The buyer issued (frequently daily) so-called delivery calls. On basis of the delivery calls the goods were taken out of the consignment warehouse and delivered to the buyer. Legal title and risk of accidental loss passed to the buyer at this time.
The BFH ruled that a taxable supply requires arrival of the goods at the consignee based on the dispatch. Therefore, the dispatch should not be interrupted. However, a short-term storage after the start of the dispatch in a consignment warehouse set up at the initiative of the consignee shall not qualify as harmful interruption. According to the BFH this is at least the case if the consignee has an unrestricted right to access the consignment warehouse.
The decision has significant relevance for intra-Community movements of goods. In case goods are shipped from one Member State to a consignment warehouse located in another Member State, the supply can qualify as VAT-exempt intra-Community supply in the Member State of departure. The consignee has to declare an intra-Community acquisition in the Member State of arrival.