Fiscal representation in Europe after Brexit. Get ready.
A fiscal representative needs to be appointed in several EU countries once a no-deal Brexit becomes effective. Marosa can help you with this new obligation.
6 October, 2020
After Brexit, UK businesses will need to appoint a fiscal representative in most EU countries where they are currently VAT registered. The UK will become a non-EU country once a no-deal Brexit becomes effective, so several additional administrative obligations will apply. These include, among others, EU VAT refunds, customs formalities, triangulation, and fiscal representation.
Should the UK finally sign an agreement with the EU, we should look at the transition rules to evaluate if a fiscal representative is finally required. When this post was published (4 October 2020) a harmonized and progressive transition was unlikely. Hence, UK businesses must start the transition of their direct VAT registrations into a fiscal representative registration. These changes can take up to 2 months, so we recommend starting immediately.
What is a fiscal representative?
A fiscal representative is someone who acts on your behalf towards the local tax authorities. This person or entity will be your representative for all tax related obligations, which means that he or she will submit returns, make payments, receive correspondence, and deal with tax audits on your behalf.
More importantly, your fiscal representative is jointly and severally liable for your tax debts. So if you do not pay VAT in a given country, the fiscal representative will need to pay it for you together with the corresponding penalties. Very often, your tax advisor will require a bank guarantee or some kind of security to cover for the shared liability of acting as fiscal representative. Marosa makes this process easy by not requiring any guarantee until a certain volume of transactions is reached.
When do I need a fiscal representative for VAT compliance?
You will need a fiscal representative when you are a non-EU business and you need a VAT number in a given country. Not all countries require non-EU businesses to appoint a fiscal representative. Check our overview of fiscal representative requirements to confirm if you will need to appoint a representative in a given country.
You will not require a fiscal representative if you are trading via a local entity or a branch in a given country. Only when you are a non-EU company holding a VAT registration without physical presence in the country.
It is important to note that this article only covers the VAT side of tax obligations in a given country. You may require a fiscal representative for other reasons outside the VAT world. Contact us if you need help understanding if you need a VAT number.
How do I appoint a fiscal representative?
Appointing a fiscal representative is a simple process when you are starting a VAT registration. You will need a signed PoA authorizing your representative to act on your behalf. Depending on which country you are registering for VAT, you will need additional forms to be signed, supporting documents to be provided and translated, and information on your activities to be disclosed. Marosa has a dedicated VAT registration team that will guide you through the entire process with one dedicated agent for all your VAT registrations in Europe.
The process is more complex if you are UK business that is already VAT registered in several European countries and you need to appoint a fiscal representative due to Brexit.
Some Member States will require your UK business to cancel your current VAT registration and apply for a new VAT number under the fiscal representation regime. The tax office responsible for your file may also change and, more importantly, your VAT number may change also. Other countries, however, created a dedicated process to allow UK businesses currently VAT registered to transition their direct VAT number to a fiscal representative. In these cases, you will be able to keep your old VAT number.
Changing a foreign VAT number triggers several complications such as having to inform all your suppliers and clients, updating your ERP, adapting your billing system, or applying for a new VIES registration in countries where a separate application is required.
Who can be my fiscal representative?
A fiscal representative can be a legal entity or private individual who is resident in the country where you need a representative.
If you do not have any local presence in the country where the activity takes place, you will normally appoint a tax advisor to act as fiscal representative for your business. If, however, your company is part of a larger group of entities within a multinational business, it is possible to appoint a local entity that is part of the group as your fiscal representative.
The problem of multiple representatives and our solution
The problem with appointing a local tax advisor is that you will need to deal with different people across Europe for all your VAT obligations. Each representative will require the reporting data in a different format, with different fee structures for each provider, and admin work required in each country.
However, with Marosa's pan-European solution on fiscal representation, you will only have one dedicated agent for all countries where you are registered. Our local entities in each country will provide the fiscal representation, but only one agent in our European compliance centre will be your point of contact in your local language.
Contact us now to get more information