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Murat SEÇKİN
Customs Consultant
Consignment sales can be defined as giving the goods to the person who receives them on consignment, without transferring the ownership of the goods, in other words, provided that the ownership of the goods sent remains with the seller. Consignment process is the process of a business sending goods to another business to be sold at a predetermined price or according to current conditions.
In the consignment goods sales system, there is a tripartite relationship, the seller of the consignment goods (consignor), the buyer of the consignment goods (consignment), and the goods sent (consignment).
Consignment goods sales; It can be defined as a sales system that involves the payment of the price when a seller sells his goods to another seller (distributor or broker) at a determined price, without receiving any fee. In other words, it is possible to define goods offered for sale on consignment as goods sent to customers to be sold at prices determined by the sender and to be returned if not sold.
Today, when market shares are rapidly shrinking and competition is rapidly increasing; Manufacturers, importers, sellers and buyers are adopting the consignment sales system in order to expand their market shares, not to lose their current market shares and to make their goods a national brand.
If you are a strong manufacturer and want to contact weaker retailers in order to find customers in a wide area, you can send your product to them on consignment. When the seller sells the product, he deducts his profit and sends the remaining amount later. This is also a marketing tactic. Therefore, consignment sales emerged for this reason. Consignment export is also a form of export designed to sell goods internationally using this method
It is possible to list the commercial advantages that buyer companies that adopt the consignment goods sales system will have as follows; Firstly, companies experience relief in terms of cash flow and enable managers to make decisions in a stress-free environment. Secondly, companies have the opportunity to provide more product groups with less capital. In addition, problems in meeting the needs of customers are minimized. Third, companies are obliged to pay sellers only for the goods they sell. Fourth, when the company sells the goods, it is liable for Value Added Tax only in proportion to its profit.
On the other hand; If sellers adopt the consignment sales system, the commercial advantages they will have can be listed as follows; Firstly, it enables the protection of current market shares and increase in market shares and also increases the production capacity as a reflection of this, secondly, it leads to a decrease in fixed expenses, in other words, warehouse and similar expenses, and thirdly, the seller creates a portfolio of loyal buyers and thus prevents future economic crises to the minimum extent. It allows him to avoid damage.
In paragraph (h) of Article 4 of the Export Regulation published in the Official Gazette dated 06.06.2006 and numbered 26190, consignment export is defined as "exports made by sending goods to buyers abroad, brokers, branches and representatives of the exporter abroad for final sale later”.
According to Article 9 of the Export Regulation; Consignment export applications are made to the General Secretariat of the relevant Exporters' Associations. Consignment export requests for goods within the scope of regulations that may be introduced by the Ministry of Commerce in terms of article and/or country policy are finalized after the opinion of the Ministry is obtained, and requests for goods other than these are concluded directly by the General Secretariat of Exporters' Associations. Customs declarations approved as consignment exports by the General Secretariat of Exporters' Associations must be submitted to the customs authorities within thirty days. Exporters are obliged to notify the General Secretariat of the Exporters' Associations, which issued the permit, within thirty days after the final sale of the goods sent on consignment, together with the final sales invoice or sample issued by them and other necessary documents.
The goods sent on consignment must be sold definitively within one year from the date of export. This period may be extended for another two years by the General Secretariat of the Exporters' Associations, which issued the permit, if an application is made based on justified and compelling reasons. If the goods sent on consignment cannot be sold within the consignment export permit period, the goods must be brought to the country within the framework of customs legislation.
In the circular numbered 2013/31 of the General Directorate of Customs, it is stated that when the consignment export declaration is registered, the payment method must be selected as cash for goods and the transaction must be carried out by writing the phrase "Consignment is export" in column number 44 of the declaration.
The items sent abroad within the scope of consignment export are made in accordance with consignment export. However, in accordance with Article 449 of the Customs Regulation, all supporting information regarding the identification of identity must be added to the customs declaration, taking into account the possibility that the goods exported by consignment sale may not be sold at the place where they were sent but may return. If the goods going abroad for export cannot be sold, the goods transactions that fall under Article 448 of the Regulation are carried out by red line inspection.
As stated in Article 10/d of the VAT Law and explained in VAT Communiqué No. 1, in sales made through brokers or by consignment, the event that gives rise to tax is not at the moment when the goods are given by the seller to the broker or to those who sell goods by consignment (consignment), but when the goods are sold. It will occur at the time of delivery to the buyer by the broker or those who sell goods by consignment (consignment). As explained above, in consignment sales, the actual sale takes place not during the shipment of the goods, but when the goods are sold to final consumers or third parties by the intermediary (consignment). The delivery of the goods to the intermediary in consignment position is more like an escrow transaction than a sale. Therefore, the ownership of the goods remains with the consignor until it is sold by the consignor. As a natural result of this, the goods in question will be among the concierge's stocks until their final sale. Thus, since the sale has not been finalized yet, VAT refund will not be available with the consignment export declaration. However, VAT exemption will be benefited from the export of goods in accordance with Articles 11 and 12 of the VAT Law within the scope of full exemption on the date of final sale.
On the other hand; It is defined in Article 229 of the Tax Procedure Law No. 213 as "An invoice is a commercial document given to the customer by the merchant who sells the commodity or performs the work, in order to show the amount owed by the customer in return for the commodity sold or the work performed." In consignment sales, when the goods are given to those who sell goods on consignment, an invoice will not be issued as there is no final sale yet. In the aforementioned transactions, the invoice for the goods will be issued when the goods are sold to third parties by the consignee. In Article 231/5 of the Tax Procedure Law; "The invoice is issued within a maximum of 7 days from the date of delivery of the goods or service. Invoices not issued within this period are deemed not to have been issued at all." Since the provision is included, care should be taken to issue an invoice to the consignor within 7 days following the sale of the consigned goods to third parties. Likewise, for exports made on consignment, following the final sale, the above-mentioned export procedures must be completed on time.
SOURCE:
Customs Regulation
Export Regulations
Circular numbered 2013/31 of the General Directorate of Customs
org.tr web address
QUESTIONS AND ANSWERS
Question 1. What is consignment export?
Answer: It is a form of export defined as sending goods to buyers, brokers, or branches or representatives of the exporter abroad for final sale later.
Question 2. When is the final sale of goods sent on consignment made?
Answer: The goods sent on consignment must be sold definitively within one year from the date of export. This period may be extended for another two years by the General Secretariat of the Exporters' Associations, which issued the permit, if an application is made based on justified and compelling reasons.
Question 3. Where to apply for consignment exports?
Answer: Consignment export applications are made to the General Secretariat of the relevant Exporters' Associations.
Question 4. How should a consignment export declaration be made?
Answer: Based on the circular numbered 2013/31 of the General Directorate of Customs, when the consignment export declaration is registered, the payment method must be selected as cash against goods and the statement must be written "Consignment is export" in column number 44 of the declaration.
Question 5. How long and where should the notification of consignment export goods that have been finalized be made?
Answer: Exporters shall notify the General Secretariat of the Exporters' Associations, which issued the permit, within thirty days after the final sale of the goods sent on consignment, together with the final sales invoice or sample issued by them and other necessary documents.
