Certification Requirements for B2B Trading Companies and Retailer Groups Operating wholly owned B2C subsidiaries

GOTS received numerous requests from large certified B2B trading companies (“parent company”) which buy finished GOTS certified consumer goods and sell
these, for operational reasons, to (multiple) wholly owned subsidiaries which in turn sell them to retailers or other wholly owned subsidiaries of the parent company.According to GOTS requirements, such wholly owned subsidiaries must be certified (or registered according to their turnover).GOTS also received requests from large retail companies (“parent company”) which buy finished GOTS certified consumer goods and sell them to wholly owned (retail) subsidiaries. According to GOTS requirements, such parent companies are
considered B2B traders and therefore must be certified (or registered according to their turnover).Processors, manufacturers and traders of GOTS Goods must participate in the
GOTS certification procedure which is based on an on-site annual inspection cycle (including possible additional unannounced inspections based on a risk
assessment of the operations)…..….. Traders having an annual turnover with GOTS Goods less than 5000 € and retailers only selling to end consumers are exempt from the certification obligation; provide they do not (re-)package or (re-)label GOTS Goods. Traders with less than 5000€ annual turnover with GOTS Goods must register with an
Approved Certifier and must inform the same immediately after their annual turnover exceeds 5000€.The responsible certifier may decide to perform remote-inspections instead of on-site inspections for traders which do not have or subcontract any processing or manufacturing activities. On-site inspection must however be performed at least for the first year and every 3rd year of granted certification.GOTS was requested to find a suitable solution to relieve such mentioned companies of the organizational and cost burden of strict application of the mentioned GOTS rules.Thus, effective immediately, in order to promote the free flow of GOTS certified consumer goods on the market while maintaining the function and credibility of the GOTS traceability system, the following derogations shall apply:
Wholly owned subsidiaries of GOTS certified B2B trading companies
(“parent company”) to whom the parent company sells acquired GOTS certified
consumer goods and who sells those to retailers or other wholly owned
subsidiaries of the parent company, are exempted from the requirement of
being certified (respectively registered), provided they are:
• listed in the parent company’s Scope Certificate as facilities,
• located in low-risk countries, and
• not engaged in any production, repacking, relabelling or warehousing
Further, on-site inspections of such subsidiaries should be carried out once every
3 years (Y3, Y6, Y9….)
*******
Retail companies (“parent company”) which buy finished GOTS certified
consumer goods and sell them only to wholly owned (retail) subsidiaries are
exempt from GOTS certification provided they are:
• not engaged in repacking or relabelling of these finished goods, and
• Located in low-risk countries.

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