What is the Call-Off Stock service on Amazon?

How exactly does Call-Off Stock work and who can benefit from this service?

Vendors have been informed about the option of utilising Amazon’s Call-Off Stock model, also known as FBA (Fulfillment by Amazon), for a number of years. Amazon has been urging vendors who would find it advantageous to forgo the requirement of obtaining a foreign VAT model to embrace this model.

Amazon Call-Off Stock - the way it works

According to European Union regulations, the transportation of goods between EU countries is classified as an intra-Community supply (ICS) in the country of origin and an intra-Community acquisition of goods (ICA) in the destination country. The requirement to register and settle VAT in the country where the goods are transported is a direct consequence of this provision.

However, an exemption to this rule exists for goods transferred to a consignment warehouse. This exception is utilised by Amazon’s Call-Off Stock model. To provide a comprehensive explanation of the model, let’s take a closer look at the following example.

1. Vendor (Company A) transports goods from Poland to another company’s (Company B) warehouse in another EU country, e.g. Germany. The company in question could either be a provider of fulfillment services or, Amazon itself.
2. The merchandise is stored at Company B’s warehouse in Germany, yet it always remains the property of Company A.
3. If the goods are required, Company B retrieves them from its warehouse.
4. Upon collection, ownership of the goods is transferred to Company B, prompting Company A to issue an invoice to Company B.
5. Despite the presence of goods in Germany during the transaction, the provision of goods to Company B is categorised as an intra-Community supply (ICS) in Poland and an intra-Community acquisition (ICA) in Germany.
6. As a result, Company A is not required to register for VAT in Germany since it doesn’t officially sell the goods within Germany.

In order to start selling under this model, the following requirements must be met:

• The company responsible for warehousing the goods must maintain detailed records of the merchandise in accordance with Art. 54a of Council Implementing Regulation (EU) 282/2011..
• The maximum storage period of the goods in the warehouse is 12 months.
• Upon the expiration of the maximum warehousing period or in the event of goods being lost or destroyed, Company A, as the vendor, is required to present evidence of an intra-Community acquisition (ICA) pertaining to the movement of their own goods.
• Moreover, Company A is obligated to provide a summary of information to the country of dispatch during the movement od goods, including the VAT number of the future buyer of the goods.

If any of the conditions are not met, Company A may be obliged to acknowledge an intra-Community supply (ICS) regarding the movement of goods, and consequently, register for VAT purposes in the country where the goods are stored. As a result, each subsequent delivery made after losing the right to apply the Call-Off Stock scheme will be subject to VAT.

Call-Off stock or Amazon FBA?

The main difference between the two models lies in the fact that, when opting for a Call-Off Stock warhouse, the vendor sells the goods to Amazon instead of directly selling to the end customer. Formally, Amazon plays the role of the final vendor. Both transactions take place only when the customer places an order through Amazon. Until that happens, the goods stored abroad remain the vendor’s property.

Moreover, under this model, the vendor does not engage in retail (B2C) sales, but solely focuses on B2B sales, with Amazon being the only other contracting party involved. From tax purposes, the vendor only declares the intra-Community supply (ICS) for the quantity of goods sold to Amazon. Consequently, Amazon assumes the responsibility of determining the applicable VAT rates for the products and settling VAT on retail sales.

The mentioned streamlining obviously involves certain risks and costs.

What are the potential risks, costs, and restrictions associated with selling via the Call-Off Stock model?

The Call-Off Stock model offers vendors substantial simplification by eliminating the requirement to register for VAT in the countries where goods are stored. This helps mitigate the risk of costly VAT settlement errors and delays. Nonetheless, it is important to consider specific limitations associated with adopting this model:

Call-Off Stock vs. consignment warehouse

Earlier in the article, the concept of a consignment warehouse was mentioned. It is important to highlight that the current service referred to as Call-Off Stock was previously known as a consignment warehouse. This name change took effect on July 1, 2020, coinciding with the implementation of the VAT Act provisions concerning settlements related to the movement of goods under the Call-Off Stock procedure.

Who should utilise Amazon's Call-Off Stock service?

Call-Off Stock presents an intriguing alternative to the FBA and FBM models; however, the associated risks and costs can dissuade numerous vendors from adopting it. Even minor errors or failure to meet necessary filing requirements can lead to significant charges and a lengthy battle with the tax authorities.

In the long run, the FBA and FBM models continue to appear as safer and more cost-effective solutions, particularly since the entire VAT registration and settlement process can be streamlined through a comprehensive VAT Compliance service.

We are here to provide you with the necessary support in this area, ensuring a seamless process and allowing you to effortlessly venture into foreign markets. Book a free consultation.

Discover the most important steps to take when selling globally on Amazon, particularly outside the European Union.

Also check out what VAT rates apply in the European Union or its individual member states: Belgium , Bulgaria, the Czech Republic , Denmark, Portugal, Luxembourg, Croatia, Greece, the Netherlands, France, Romania, Italy, Germany, Spain or Hungary.

Also check out our other articles:

• Cross-border e-commerce. What can be done to successfully go abroad with an online store?
• What is a consignment storage facility?
• Omnichannel and Multichannel strategies in e-commerce
• What is Cross-Docking?
• What are the reasons behind product unavailability in e-commerce stores ?
• Who does VAT OSS apply to?
• How to tax CTSO in other EU countries?
• Social proof in foreign markets, in other words, how to build trust?
• Discover six ways your company can benefit from employing a VAT Compliance specialist.

3. Higher cost of sale

As previously discussed, the Call-Off Stock model provides a significant simplification for vendors regarding formal obligations. Alongside tax matters, Amazon takes full responsibility for the shipping process, handling returns, and addressing potential damages.

Consequently, sellers face significantly higher costs and sales commissions than compared to the FBM and FBA models. However, determining the exact magnitude of these differences is tricky due to various factors such as product categories, quantities and sizes of goods, market demand for certain products, and individual agreements between service providers and recipients.