If a company provides goods or services in a foreign European country, a non-resident VAT trader registration may be required. The purpose of this article is to provide more information on fiscal representation, who needs it, and why.
MariaLast Updated on 28 October 2022
1. What is a Fiscal Representation?
The Fiscal Representatives are companies registered with the tax authorities who handle your administrative obligations, VAT affairs, and deal with tax authorities on your behalf. Tax Representation allows non-EU companies to trade in countries where Fiscal Representation is mandatory, as well as benefit from VAT and cash flow advantages in countries without it.
It is also necessary to meet strict requirements in order to qualify for a license as a fiscal representative. The requirements might differ from country to country, but Fiscal Representatives must provide financial security and be based in the country in question.
2. When is a Fiscal Representation needed?
Fiscal representation can be voluntary or mandatory, depending on the circumstances.
Trade within the EU by non-European companies must be represented by a fiscal representative in the importing country. Companies from an EU country that do business in another EU country are not necessarily required to have fiscal representation there. However, the entrepreneur avoids linguistic complexities abroad and saves himself administrative effort. It is therefore recommended to appoint a representative on a voluntary basis, depending on the company model.
3. What does a Fiscal Representative do?
Foreign sellers and foreign companies appoint fiscal representatives who are responsible for all tax tasks in their country. Additionally, he has the same rights as a foreign entrepreneur, including the right to submit applications. Among the tasks are:
- Registration of the entrepreneur for VAT purposes
- Fulfillment of the declaration and reporting obligations
- Fulfillment of the record-keeping obligations
- VAT returns
- Recapitulative statement
To perform the tasks, the fiscal representative uses an additional VAT identification number. His role is to represent the foreign seller or foreign company to the relevant tax office. Fiscal representatives typically represent several companies at once.
4. Benefits of a Fiscal Representation
Fiscal representation has many advantages. To avoid penalties, companies outside the European Union should appoint a representative.
By using a representation, EU traders can save themselves some administrative work and costs. In addition to customs duties, import VAT must also be paid when importing. If the goods are not to be sold in the importing country but in another country, it may take several months for the taxes to be reimbursed, affecting the trader’s liquidity. Assisting with customs clearance, fiscal representatives handle the fastest processing of these processes.
Additionally, EU traders who don’t require assistance with imports and customs can benefit from the appointment of a fiscal representative. Goods stored in other EU countries and sold to end customers from the warehouses are subject to VAT duties in those countries. After registering for VAT in this country, the seller must submit regular VAT returns. Formalities and contact with tax authorities are usually only available in the national language. As a result of language barriers, foreign representation is usually necessary to handle these tasks.
5. Fiscal Representatives in different EU countries
It is possible to appoint a fiscal representative in all European countries. For non-EU companies, the appointment is mandatory, but for EU-based companies, it is voluntary.
Some countries, like Spain, require the appointment of a fiscal representative for many VAT-related activities, although it is not mandatory for EU companies.
If you are interested in finding out if you need Fiscal representation, please contact your account manager or, if you are not yet a client, contact our dedicated sales team.
When a seller operates across several European countries, it usually makes sense to hire a specialized company to act as their representative. The seller is also able to reduce administrative and financial costs since the local representatives communicate directly with one another within the company. One such company is hellotax. Our team of specialized tax advisors can take care of your VAT registration, filings and VAT payments in many European countries. Contact us today and simplify the handling of your VAT obligations.