How Tax Authorities Spot an Undeclared Stock Movement

An undeclared stock movement may remain unnoticed for months. That does not mean it is invisible.

When your goods move between EU warehouses, information about the movement can appear in VAT returns, recapitulative statements, marketplace reports, payment data and logistics records.

Tax authorities can compare these sources to identify missing or inconsistent declarations.

This guide explains how an undeclared stock movement can be detected, what information authorities may use and what online sellers should check before a discrepancy leads to a tax authority letter.

Key takeaway

A transfer of your own goods between two EU countries can create VAT reporting obligations in both countries, even though no customer has purchased the goods.

Tax authorities may identify an undeclared stock movement by comparing:

• the transfer reported in the country of departure;
• the acquisition reported in the country of arrival;
• the VAT numbers used for the movement;
• VAT returns and recapitulative statements;
• Amazon or other fulfilment reports;
• supporting payment, marketplace and logistics data.

The most common problem is that one side of the movement is reported and the other is missing. However, even where neither side is declared, the underlying stock movement may still be visible in marketplace and warehouse records.

Why stock movements create VAT reporting obligations

Imagine that your business moves inventory from a warehouse in Germany to a fulfilment centre in Poland.

There is no sale to a customer. However, for VAT purposes, the movement is generally treated as two connected transactions:

1. A deemed intra-Community supply or transfer in Germany.
2. A corresponding intra-Community acquisition in Poland.

The German side may need to be reported in the German VAT return and the relevant recapitulative statement. The Polish acquisition normally needs to appear in the Polish VAT return.

One physical movement can therefore create reporting obligations in two countries.

The exact forms, deadlines and correction procedures depend on the Member State. However, the underlying principle is the same: the information reported in one country can be compared with the information reported in another.

For more background, see our guide to VAT on stock movements in the EU.

How tax authorities detect an undeclared stock movement

Tax authorities do not need to rely on one database. They can compare several sources to determine whether the seller’s VAT filings match its actual stock and fulfilment activity.

One side of the movement is missing

This is one of the clearest discrepancy scenarios.

For example:

• the seller reports a transfer from Germany to Poland;
• the German recapitulative statement identifies the seller’s Polish VAT number;
• no corresponding acquisition appears in the Polish VAT return.

The departure country has reported that goods were transferred to Poland, but the Polish declaration contains no matching acquisition.

Because EU Member States exchange VAT information, this type of mismatch can be detected through automated or semi-automated checks. The Polish authority may then ask the seller to explain or correct the discrepancy.

The reverse can also happen. The acquisition may be reported in Poland while the German transfer or recapitulative statement entry is missing.

Both sides are reported, but the details do not match

An undeclared stock movement is not the only risk. A movement may be reported in both countries but still contain inconsistencies.

Typical problems include:

• different taxable values;
• different reporting periods;
• an incorrect destination VAT number;
• the wrong country code;
• duplicated entries;
• a transfer reported as a customer sale;
• different currency-conversion methods.

Some timing differences may be explainable. Repeated or substantial discrepancies are more likely to lead to questions.

The VAT number is not active for intra-EU transactions

A seller may have a domestic VAT number that is not yet active or recognised for intra-EU transactions.

The European Commission’s VIES system allows sellers and suppliers to check whether a VAT number is currently recognised by the relevant Member State for intra-EU trade.

If the destination VAT number is inactive, the authority may question whether the stock transfer was reported correctly and whether the VAT treatment applied in the departure country was justified.

However, VIES has an important limitation: it validates VAT numbers, not transactions.

It does not show whether stock moved, whether the movement was declared or whether VAT returns are correct.

For practical guidance, read our article on how to check a VAT number in VIES.

Are your warehouse countries and VAT numbers correctly connected? Contact hellotax to review your stock locations, registrations and filing setup.

What is a recapitulative statement?

A recapitulative statement is a periodic report covering certain intra-EU transactions. It is often referred to as an EC Sales List, although the name and format differ by country.

For a transfer of own goods, the departure-country statement may include:

• the seller’s VAT number in the departure country;
• the seller’s VAT number in the destination country;
• the value of the transferred goods;
• the relevant filing period;
• a transaction code required by local rules.

This information can be exchanged between Member States and compared with the acquisition reported in the destination country.

If the transfer appears in the departure-country statement but not in the arrival-country VAT return, the mismatch can lead to a discrepancy notice.

A missing or incorrect recapitulative statement may also affect the VAT treatment of an intra-Community supply. The detailed consequences depend on the facts and the country involved.

Can VIES detect an undeclared stock movement?

No. A VIES check cannot identify an undeclared stock movement.

VIES answers one limited question: is the VAT number currently recognised for intra-EU transactions?

It does not show:

• stock transfers;
• invoices;
• VAT return entries;
• recapitulative statement entries;
• unpaid VAT;
• historical transaction data;
• whether the business is under investigation.

A valid VIES result is important, but it does not prove that the seller’s VAT filings are complete.

Similarly, an invalid result does not always mean the entire VAT registration has been cancelled. The number may still be awaiting intra-EU activation, additional documents may be required or the national database may be temporarily unavailable.

How DAC7 supports tax authority checks

DAC7 requires certain digital platform operators to collect and report information about sellers carrying out reportable activities, including the sale of goods.

According to the European Commission’s DAC7 guidance, information may include seller identification details, tax numbers, consideration received and the number of relevant activities.

DAC7 is not a direct warehouse-movement report. It does not necessarily tell the authority that a particular product moved from Germany to Poland.

Instead, it gives authorities another view of the seller’s marketplace activity.

For example, platform data may show substantial sales activity connected with several EU countries while the seller reports little or no activity through the VAT registrations linked to its fulfilment network.

This does not automatically prove that there was an undeclared stock movement. It may, however, give the authority a reason to examine the seller’s VAT returns, registrations and marketplace reports more closely.

How CESOP supports VAT enforcement

CESOP is the EU’s Central Electronic System of Payment information.

Certain payment service providers must report information about qualifying cross-border payments. The data is made available to Member States’ anti-fraud specialists and can be compared with other information.

The European Commission’s CESOP overview explains that the system is intended to help authorities identify possible VAT fraud in cross-border ecommerce.

CESOP does not usually prove that inventory moved between two warehouses. Instead, it can help identify:

• sellers receiving cross-border payments;
• countries connected with those payments;
• payment activity inconsistent with declared turnover;
• sellers without the expected VAT registration or filing footprint.

Once a seller is identified, the authority may request more specific evidence, including VAT returns, marketplace records and inventory reports.

Can tax authorities see Amazon stock movements?

Amazon and other fulfilment providers hold detailed inventory records.

Depending on the programme and report, these records may show:

• the departure country;
• the destination country;
• the movement date;
• the fulfilment centre;
• the product or SKU;
• the quantity transferred.

The seller is generally expected to retain records supporting its VAT returns. During an audit, the tax authority may ask the seller to provide marketplace transaction and inventory reports.

This is particularly relevant for Amazon Pan-European FBA and other programmes where inventory can be reallocated between warehouses.

A seller may not have manually requested the movement, but the VAT consequences can still arise because the seller’s goods physically changed country.

Our Amazon FBA VAT compliance guide explains how warehouse locations and fulfilment arrangements can create local VAT obligations.

What if neither side of the movement was reported?

An undeclared stock movement may be harder to identify where neither country received a VAT declaration.

For example:

• goods moved from Germany to Poland;
• no transfer was reported in Germany;
• no acquisition was reported in Poland;
• no recapitulative statement entry was submitted.

Because both VAT filings are silent, there may be no immediate one-sided mismatch.

However, the movement may still appear in:

• Amazon or 3PL inventory reports;
• transport records;
• logistics invoices;
• accounting records;
• ERP inventory data;
• Intrastat declarations, where applicable;
• marketplace information;
• records requested during an audit.

The authority may first identify a broader inconsistency through marketplace, payment or filing data. It can then request the seller’s underlying inventory records.

Once those records are reviewed, several historical movements may be found at the same time.

This is why “nobody noticed last year” is not a reliable VAT strategy. The data may already exist even if no enquiry has yet been opened.

Historical errors are usually easier to assess before a tax authority requests the records. Speak to hellotax to understand which countries and filing periods may need review.

Practical example: an Amazon Pan-EU seller

A non-EU seller imports goods into Germany and uses Amazon’s European fulfilment network.

Amazon later moves inventory:

• from Germany to Poland;
• from Poland to France;
• from France to Italy.

The seller reports its cross-border consumer sales through OSS and assumes that all EU VAT obligations are covered.

They are not.

OSS can simplify eligible cross-border B2C sales, but it does not generally cover transfers of the seller’s own goods between EU countries.

The seller may still need:

• VAT registrations in stock-storage countries;
• local VAT returns;
• recapitulative statements;
• reporting of acquisitions in destination countries;
• reconciliation of Amazon movement data.

Suppose the Germany-to-Poland transfer was reported in Germany but not in Poland. The missing acquisition may be identified through the information exchanged between the two countries.

Suppose neither side of the France-to-Italy movement was reported. The undeclared stock movement may still be visible in Amazon’s inventory reports and could be identified during a later review.

For more information on what OSS does and does not cover, see our VAT OSS guide.

How to check for undeclared stock movements

The safest approach is to start with your physical inventory data rather than your VAT returns.

Check all stock countries

Identify every EU country where goods were:

• stored;
• dispatched;
• received from another warehouse;
• returned;
• transferred by Amazon or a 3PL.

Do not rely only on the countries where you actively sell.

Check your VAT registrations

For each stock country, confirm:

• whether a local VAT registration was required;
• whether the registration was effective before the first movement;
• whether the correct VAT number was used;
• whether the number was active for intra-EU transactions.

Match both sides of each movement

For every cross-border transfer, compare:

• departure country;
• destination country;
• movement date;
• transferred value;
• VAT numbers used;
• departure-country VAT return;
• arrival-country VAT return;
• recapitulative statement;
• marketplace or logistics record.

Starting from the inventory report is important. Comparing VAT returns alone may not reveal an undeclared stock movement that was omitted in both countries.

Common stock-movement reporting mistakes

Assuming OSS covers stock transfers

OSS covers certain supplies to consumers. It does not replace local reporting for stock storage, domestic sales, imports or transfers of own goods.

Reviewing customer sales but not inventory movements

A sales report may not show warehouse-to-warehouse transfers. Amazon FBA and 3PL users should review dedicated inventory-movement reports.

Reporting only one side

The accountant in the destination country may report the acquisition while the accountant in the departure country receives no information about the movement.

This is particularly common when different providers manage different VAT registrations.

Using the wrong or inactive VAT number

The VAT number may be valid domestically but not yet active for intra-EU transactions.

The VAT status should be checked before stock begins moving.

Ignoring small transfers

A low stock value does not automatically remove the VAT reporting obligation. Repeated small omissions may also show that the seller’s reporting process is incomplete.

Correcting only one country

Correcting the arrival-country return without reviewing the departure-country filing may create a new mismatch.

Corrections should normally be coordinated across both VAT registrations.

What should you do after finding an undeclared stock movement?

Do not amend returns before confirming what happened.

First:

1. Confirm the physical movement.
2. Identify the departure and destination countries.
3. Check the correct VAT treatment.
4. Confirm which VAT numbers should have been used.
5. Review the returns and recapitulative statements in both countries.
6. Check whether similar movements were also missed.
7. Review the local correction procedures.
8. Coordinate any amendments across the affected registrations.

Correction procedures, penalties and voluntary-disclosure rules differ between Member States. Local guidance may therefore be needed before corrections are filed.

How hellotax can help

Cross-border stock reporting becomes difficult when marketplace data, accounting systems and local VAT registrations are managed separately.

hellotax can support the wider compliance process by helping you:

• map your EU stock locations;
• review the VAT registrations connected with those locations;
• compare fulfilment activity with VAT filings;
• identify possible gaps between departure and destination reporting;
• understand which VAT returns or statements may require review;
• coordinate ongoing filings across several EU countries.

We can also help you understand where OSS may simplify your reporting and where local VAT obligations continue because goods are stored or moved between countries.

Summary: an undeclared stock movement leaves a data trail

An undeclared stock movement is not necessarily invisible because no tax authority has contacted you yet.

Where one side of the movement is reported, authorities may identify a mismatch between the departure-country recapitulative statement and the destination-country acquisition.

Where neither side is reported, Amazon reports, logistics data, accounting records and warehouse information may still show that the goods moved.

DAC7 and CESOP add further information about marketplace and payment activity. They do not directly prove every stock transfer, but they can help authorities identify sellers whose reported VAT activity does not match their wider ecommerce footprint.

The best approach is to reconcile your stock movements before the tax authority does.

Frequently asked questions

How can a tax authority detect an undeclared stock movement?

Tax authorities can compare recapitulative statements, VAT returns and VAT numbers across EU Member States. They may also review marketplace inventory reports, logistics records, Intrastat declarations and accounting data.

Does VIES show stock movements?

No. VIES only confirms whether a VAT number is currently recognised for intra-EU transactions. It does not show stock movements, invoices or VAT return entries.

Are stock movements reported through OSS?

Generally, no. OSS covers eligible supplies to consumers. Transfers of the seller’s own goods normally remain subject to local VAT reporting.

Does DAC7 report every Amazon stock transfer?

No. DAC7 reports specified information about sellers and reportable platform activity. It can support risk analysis, but it is not a direct warehouse-movement report.

Can CESOP identify an undeclared stock movement?

CESOP focuses on qualifying cross-border payment information. It may help authorities identify VAT risks, but payment data alone does not normally prove that stock moved between warehouses.

What should I do after discovering an undeclared stock movement?

Confirm the movement, identify the affected countries and periods, review both sides of the VAT reporting and check the local correction procedures before submitting amendments.

Have your goods moved between EU warehouses? Contact hellotax to review your stock locations, VAT registrations and reporting setup before an undeclared stock movement becomes a tax authority issue.