The simplification rule for the consignment stock is regulated by the Article 16 (4) of the Czech VAT Act. According to this regulation, the acquisition of goods from another EU Member State by a tax payer shall also mean the relocation of goods from another Member State to the Czech Republic, by a person that is registered for tax in another Member State and is neither an exempt person nor a payer, for the purposes of subsequently delivering the goods to the acquirer in this country.

As a consequence of this rule, it is the Czech customer of an EU-supplier who declares the Intra-Community acquisition (IC-acquisition) at the moment in which the goods are transferred to the consignment warehouse in the Czech Republic. The EU-supplier does not have to make the VAT registration in the Czech Republic.

Conditions of the VAT simplification

In practice, the implementation of this rule is conditioned as follows:

• the supplier wanting to use the simplification rules must be registered for VAT in another Member State (not having the Czech VAT number);
• goods must be transferred from another Member State while the legal ownership remains with the supplier till
  the goods are withdrawn from the warehouse;
• at the moment the goods are relocated to the Czech Republic, it must be apparent who will purchase them (and
  consequently who will declare the IC-acquisition of these goods in the Czech Republic);
• no purchase order is necessary for the transfer of goods into the Czech consignment stock (a framework agreement would be enough);
• the Czech customer must be registered for VAT in the Czech Republic;
• goods transferred into the consignment stock can be delivered only to the particular customer who is known before the goods arrival in consignment stock;
• the Czech customer must be aware of the usage of the simplification rule and his liability to declare the IC acquisition;
• one (tax) invoice shall be issued at the moment of the goods relocation into the Czech consignment stock, i. e. goods arrival, based on which the Czech customer declares the IC-acquisition, nevertheless the liability to declare the IC-acquisition occur via the goods transfer not the issuing of this invoice;
• another (pro-forma / commercial) invoice shall be issued at the moment of the transfer of ownership of the goods after the particular goods are withdrawn from the warehouse.

Usage of the simplification rule is based on the acceptance of the Czech customer and on the fulfillment of the above mentioned conditions.

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