Fiscal Representation
What is Fiscal Representation?
Fiscal representation means companies not registered in the UK or EU, which want to carry out activities in the EU countries. It could be VAT purposes or any other tax purpose. The fiscal representative acts for the foreign company when it comes to the administration and declaration of VAT return. So, the non EU companies to find solutions to their VAT administrative problems by calling upon fiscal representation firms and their services.
Why do I need a Fiscal Representative?
There are two forms of fiscal representation: limited representation and general representation. Customs Support can offer both forms. Which form is suitable and which information is required depends on the activities the foreign company wants to perform in the EU countries. Non-EU countries like Switzerland or Iceland require a fiscal representative. After Brexit, UK does not need any fiscal representation for EU countries tax purpose. Norway has recently announced plans to waive the fiscal representative requirement for all EEA companies.
What are the responsibilities of a Fiscal Representative?
Non-EU business entity appoints a tax representative in the import country to handle their business with the Tax and Customs Administrations. There are two types of fiscal representation, General and limited.
The general fiscal representative will take over all VAT duties this kind of representation is for a logistics contract. The agreement between the representative and foreign supplier is a long term agreement. A VAT-number will be requested for the Foreign Supplier. All the VAT transactions will go through this license.
Some of the EU member countries (German, Netherlands or Czech Republic) Customs forwarding agents sometimes act as Limited Fiscal Representatives. The Limited Fiscal Representative can take care of completing VAT returns and can (where applicable) apply the reverse-charge mechanism on import or postponed VAT accounting.
What are the benefits of the Fiscal Representation?
Using a fiscal representative can give benefits. Financial advantage is that you do not need to finance VAT. You only have to inform customs 1 time after that you do not have to do it anymore. The foreign supplier can take the whole Tax administration and outsource it. But there are still some conditions to this. There has to be a company policy set and followed.
- Achieve a VAT solution in most cases
- Your EU VAT compliance obligations are taken care of
- No EU bank account required
- Avoid paying VAT on imports
- No cumbersome procedure for recovering VAT
