What is a fiscal representative?
A fiscal representative is a locally appointed business or individual that is typically jointly liable for any VAT owed by the non-EU taxpayer.
Under certain circumstances, EU Member States will need a fiscal representative to be appointed in the intended country.
Fiscal representatives can be tax consultants or agents, auditors, lawyers or accountants. These representatives can support non-EU businesses importing into the EU.
Some countries offer two options for fiscal representation, a general or limited representation, which would generally impact the amount of liability and responsibilities involved.
General fiscal representative
With general authorisation, a fiscal representative:
- Acts on behalf of the non-EU business regarding VAT on the sale of goods and services. As well as any acquisitions made between EU Member States and imports.
- Is jointly liable for any VAT, import duties or extraneous fees. Included in the sale of goods/services by the non-EU business.
Non-EU businesses that use a general fiscal representative will need to be VAT registered in the country they intend to sell to.
When appointing a fiscal representative, a business would need to settle either a bank guarantee or pay a cash deposit. Depending on the Member State, the bank guarantee or deposit is cleared with the fiscal representative or with the authorities. The amount requested will depend on different factors such as the annual turnover of the business or the amount of invoices in a given period. Lastly, the amount may be negotiated in very specific cases.
Limited fiscal representative
With a limited authorisation, a fiscal representative:
- Acts on behalf of the non-EU business as the appointed VAT representative. This relates to the importation of goods, the supply of zero-rated goods and intra-EU acquisition of goods.
Non-EU companies using a limited fiscal representative may not need a VAT registration in the country they intend to sell to. The non-EU seller will assume the fiscal representatives VAT number for the purpose of importation/movement of goods.
What does a fiscal representative do?
Once a fiscal representative is appointed, they are equally liable for any VAT due on the sale of goods made by the non-EU business. This means that they will need to ensure all compliance requirements are met. A fiscal representative is obligated to:
- Ensure your business is fully registered with the relevant tax authority
- Maintain the compliancy of any invoices, VAT returns, VAT rate application and conversion rates
- Complete VAT returns and other necessary filings
- Keep ample records that abide by the specific EU Member State’s standards
- Handle any duties, fines or penalties associated with the importation of goods
Do I need a fiscal representative?
Appointing a fiscal representative can be voluntary. However, certain EU countries require non-EU traders to have a representative if they provide taxable goods or services within their borders.
EU-based businesses don’t usually require a fiscal representative in another EU country. It can minimise trading difficulties that come with language barriers and navigating a foreign tax authority.
What EU countries require a fiscal representative?
Below is the current list of EU countries and whether they require non-EU based businesses to use a Fiscal Representative.
Please note that businesses established in countries that have signed a tax mutual assistance agreement with the EU may not be required to appoint a fiscal representative when trading in certain EU Member States.
What happens if I don’t have a fiscal representative?
If you do not appoint a fiscal representative in the relevant EU country when required, penalties can be issued to you. If you have paid any VAT to that tax authority and are found to be trading without a fiscal representative, the VAT amount paid will not be refunded to you.
This can be detrimental to future trading prospects with the EU as a non-EU company. Many manufacturers, marketplaces and even customers will decline to engage in business activities with you if you are operating outside of the law. Not only does acting without a fiscal representative have compliance implications for you, but for them also.
Additionally, your VAT registration application is likely to be rejected as a whole if you are not appointing a fiscal representative when necessary. This means extra costs and extra delays in trading for your business.
Why is appointing a fiscal representative beneficial?
For non-EU traders, a fiscal representative can help you avoid penalties most importantly. Importing into the EU involves import VAT and customs processes which can create considerable administrative burden. Plus, if you intend to import goods into one country but sell to another, processes to reclaim import VAT can take significant time. Fiscal representatives in the EU are well able to quickly handle these tasks for you and ensure cash flow is unhindered.
In some EU Member States, appointing a fiscal representative locally can allow you to benefit from certain cashflow simplifications when importing goods by applying for specific import licenses.
Do I need a fiscal representative to register for IOSS?
The Import One Stop Shop is a scheme used to simplify EU VAT registration and returns for importing businesses. With IOSS, you can register in a single EU Member State and report all distance sales of imported goods to EU customers through a single monthly VAT return. To use IOSS, non-EU sellers are required to have an intermediary to declare and pay VAT on their behalf.
With SimplyVAT.com we act as an intermediary for all businesses using IOSS. We ensure your business is duly registered for IOSS and carry out all compliance tasks for you. With us you can continue selling to the EU and not have to worry about receiving any penalties or fines for non-compliance.