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LFR, consignation, and call-off stock

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Monday, May 8, 2017

Limited Fiscal Representation (LFR) is unique in the Netherlands. Today, we bring to your attention a lesser known aspect: consignation storage and call-off stock with LFR.

LFR in the Netherlands

The customs clearance of goods with LFR in the Netherlands offers many benefits: customs clearance without having to pay import VAT, storage of the goods in the Netherlands for future sales in the European Union, and export of the products that have been cleared with LFR. Plus: you do not have to register in the European Union if your company is located outside the EU. Our encyclopedia offers a broad range of information on Limited Fiscal Representation, including videos that explain various aspects of LFR.

LFR, consignation and call-off stock: how does it work?

This is best explained with an example.

An American company wants to build inventory in Europe to reduce delivery times. Often, the buyer of the goods demands this, the possibility to deliver just in time (JIT).The goods are customs cleared with LFR, thus with liquidity advantage, upon arrival in the Netherlands.  They are then stored in a warehouse as consignation or call-off stock, while the American company remains the owner of the products. The goods are now free for distribution in the Netherlands, in other EU businesses or for export. The sales can be made using reverse charge.

LFR and drop shipments

LFR with consignation stock or call-off stock can even be combined with drop shipments. Another example: you, as an American company, buy products in Japan for delivery in Europe. You have your Japanese supplier deliver these products directly (drop shipped) in the Netherlands. The goods are customs cleared with Limited Fiscal Representative, without payment of import VAT. The products are then stored under consignation or as call-off stock; you remain the owner of the goods. The products can now be sold, with reverse charge, in the Netherlands, other EU member states and outside of Europe.

Please note: customs clearance with LFR can only be applied for B2B sales. If you are looking to sell your products to consumers (B2C), other fiscal solutions are available.

The advantages

Summarizing, the use of LFR for consignation and call-off stock in the Netherlands offers the following benefits:

  • Customs clearance without payment of import VAT
  • Consignation and call-off stock: the non-EU company remains the owner of the goods
  • Products are free for distribution in the Netherlands, Europe and outside of the EU
  • Products are sold with reverse charge
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