The term fiscal representative often appears in connection with import, export and customs. But fiscal representation can also be helpful in tax matters. Here we explain who can represent traders and sellers in matters of VAT and imports, how a fiscal representative is appointed and when a fiscal representation is worthwhile.
Dominik Larcher
Last Updated on 14 October 2021What is a fiscal representative?
Foreign companies that import and register goods in the EU and are therefore subject to import VAT can be represented by a European company in matters of tax law. The companies that are legally allowed to act as fiscal representatives include, depending on local legislation:
- Tax consultants, tax agents, tax consulting companies
- Lawyers, auditors, auditing companies, sworn accountants, auditing companies
- Forwarding companies, insofar as they provide assistance in matters of import duties
- Other commercial companies that provide assistance with import duty matters in connection with customs handling (e.g. customs clearance agents, warehouse keepers)
When do I need a fiscal representation?
In some cases fiscal representation is voluntary, in others it is compulsory. Companies that come from non-European countries and trade within the EU must at least be represented by a fiscal representative in the importing country.
For companies from an EU country that do business in another EU country, fiscal representation in another EU country is not necessarily mandatory. However, the entrepreneur saves himself the administrative effort and avoids linguistic complications abroad. Appointing a representative on a voluntary basis is therefore recommended, depending on the company model.
What does a fiscal representative do?
After the appointment of a fiscal representative by a foreign seller or a foreign company, he is responsible for all tax tasks in the respective country. He also has the same rights as the foreign entrepreneur and can, for example, also submit applications. The tasks include:
- Registration of the entrepreneur for VAT purposes
- Fulfillment of the declaration and reporting obligations
- Fulfillment of the record-keeping obligations
- VAT returns
- Recapitulative statement
The fiscal representative uses an additional VAT identification number to perform the tasks. With these, he acts as a representative for the foreign seller or the foreign company to the respective tax office.
Most fiscal representatives represent several companies at the same time. In this case, the tax bases are summarized in the VAT return and the tax bases of all represented companies are summarized in the recapitulative statement.
Benefits of a fiscal representation
There are many reasons in favor of fiscal representation. Companies from countries outside the European Union should appoint a representative to avoid penalties.
EU traders who import goods from a foreign third country to another EU country can save themselves some costs and administrative work through a representation. When importing, there are not only customs duties, but also import VAT to be paid. If the goods are not to be sold in the importing country but in another country, it may take a few months for the taxes to be reimbursed and this may affect the trader’s liquidity. Fiscal representatives take care of the fastest possible processing of these processes and also the necessary reporting and declaration obligations for customs clearance.
The appointment of a fiscal representative can also be worthwhile for EU traders who do not need any assistance with imports and customs. If goods are stored in other EU countries and sold to end customers from the warehouses, there are some VAT duties in the respective EU country. The seller must then register for VAT in this country and submit regular VAT returns. The respective formalities and contact with the tax authorities are usually only possible in the national language. A foreign representation to take care of these tasks is therefore usually essential due to language difficulties.
Consequences of a lack of fiscal representation
If necessary, a fiscal representative should be appointed to avoid two consequences. On the one hand, companies that have not appointed fiscal representation when they should have, are severely sanctioned by the local authorities. In addition to penalties that have been imposed, VAT that has already been paid cannot be refunded.
In addition, many European companies, such as suppliers, customers and marketplaces, refuse to do business with entrepreneurs who have failed to appoint a fiscal representative when they should have done so. This is because the lack of representation also represents a risk and complications in tax matters for them.
Fiscal representative in different countries of the EU
A fiscal representative can be appointed in all European countries. The following applies in principle: the appointment is mandatory for non-EU companies but for companies based in the EU this is done on a voluntary basis. However, local legislation and exceptions are always decisive.
These determine when a representative is needed, who is allowed to act as a fiscal representative and which duties he has to fulfill. In Spain, for example, a local identification number and thus a fiscal representative is necessary for many VAT-related tasks, although the appointment is generally not mandatory for EU companies.
You can find more information about the local specifics in terms of fiscal representation on the following country pages:
country | mandatory fiscal representation for non-EU companies and sellers |
Germany | yes |
Netherlands | yes |
Austria | yes |
Polen | yes |
Czech Republic | no |
Spain | yes |
Italy | yes |
France | yes |
For sellers who are active across the EU, it is usually worthwhile to hire a specialized company that can act as a representative in several European countries. Since the respective local representatives within the company communicate directly with one another, the administrative and financial costs for the seller are reduced further. 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.
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Frequently Asked Questions
A fiscal representative is a service provider who represents a company in tax matters before the lcoal authorities. Among other things, he takes care of VAT and customs matters.
A fiscal representative takes care of, among other things, the registration for VAT, advance VAT returns, tax returns, payment of VAT, contact with the authorities, wage and customs payment, and much more.
A fiscal representative is required if a foreign company carries out taxable sales in EU countries. All companies that do not have a permanent establishment in the EU are considered to be foreign companies. Many business transactions are counted as taxable. Most relevant, however, are sales to European private individuals.
Depending on local legislation, tax advisors, lawyers, and notaries may act as fiscal representatives. In addition, freight forwarders who provide assistance with incoming tax matters, i.e. during the customs process, can be appointed as representatives. It is ususally worthwhile for sellers to hire a specialized company that can act aas a representative in several European countries.