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Practical Handbook VAT 2021

B) Concept of consignment goods sales agreement

A consignment agreement is an agreement between traders or professionals for the cross-border sale of goods, whereby one trader (supplier) sends goods from one Member State to another, within the European Union, to be stored in the Member State of destination at the disposal of another trader or professional (customer), who may purchase them at a later time after their arrival, provided that the following conditions are met:

  1. The goods are dispatched or transported to another Member State by the seller with a view to the goods being purchased after their arrival by another trader or professional entitled by prior agreement between the two parties.

  2. The seller does not have its place of business or a fixed establishment in the Member State of arrival of the consignment or transport.

  3. The trader or professional who is to purchase the goods is identified for value added tax purposes in the Member State of arrival of the dispatch or transport, and this tax identification number and his full name or business name are known to the vendor at the time of the start of the dispatch or transport.

  4. The seller has included the shipment of these goods both in the register of certain intra-Community transactions and in the recapitulative declaration of intra-Community transactions (form 349).

Transfers of goods from the territory of application of the tax to another Member State carried out within the framework of an agreement for the sale of goods on consignment which meets the above requirements shall not be treated as a transaction treated as a supply of goods and shall therefore not be subject to tax.

From the point of view of transfers of goods from another Member State to the territory of application of the tax carried out within the framework of an agreement for the sale of goods on consignment which meets the above requirements, these will not be treated as a transaction treated as an intra-Community acquisition of goods and will therefore not be subject to tax.