Tax representative, what is it?
It is an administrative intermediary. He may also be jointly and severally liable for the non-resident’s tax debt. This appears in the European VAT regulation, mainly for non-residents, and specifically those established outside the European Union :
Article 143 (2) (a): exemptions
Article 197, 2) and 204, 1): liable for VAT purposes
Article 226: Content of invoices
In conclusion, unless the non-EU company carries out only under-customs or free-zone operations, it will be required to appoint a tax representative. Finally, some Member States exempt companies established in a State with which there are tools for administrative collaboration.
When no compulsory for companies whose head office is in the EU, it is called voluntary representation. We find among the providers who offer services around tax representation names such as tax agent, tax agent, VAT representative. In practice the majority of the tax representatives’ customers are based in Europe: they offer, in some Member States, a considerable comfort, starting with the fact of not having to move in person.
Tax representative, for what ?
Non-residents liable for periodic declarations
In concrete terms, the tasks of a tax representative are those of honoring the obligations of a company based in another country and being a local contact, already known to tax, statistical and customs administrations. The tax representative can thus take care of all the steps on behalf of a non-resident company:
- get a tax identification activate periodic returns and the right to deduct
- follow the refund requests
- submit VAT self-assessment declarations
- declare intrastat / DEB
- prepare the annual summary
- declare the ECSL / DES
- keep up-to-date and available to the authorities VAT journals, and exempt transactions
For Refunds of VAT applying to non-liable persons (13th Directive – 86/560 / EEC)
Each Member State sets its own substantive and formal conditions:
- deadline for the submission of the application
- attached documents format and conditions of validity of receipts
- minimum threshold for attaching certain supporting documents
- refund rates by category
Who can be a tax representative?
The non-resident company may freely designate its tax representative among the taxable persons established in the Member State (and therefore already duly identified as such by the tax authorities). This representative must also be specifically approved in certain Member States. Can therefore act as tax representative a local customer or supplier, a subsidiary of the foreign company, or a company specialized in this type of services.
Tax representative: appointment procedure
Once the non-resident decides to appoint a tax services provider, the designation must be filed in writing, BEFORE the first transactions.
It must be signed by a person who is qualified to act for the company (legal representative).
The following indications are mandatory:
- Name and address of the foreign company
- Name and address of the tax representative;
- Explicit acceptance of the designation by the representative with effective date;
- Representative’s commitment to complete the formalities for the foreign company
- Representative’s commitment to pay any VAT payable;
The request must be sent by the tax representative to the competent authority.
How to choose your tax representative?
- it must be able to prove that it has knowledge of the taxation of non-residents or at least have prior experience.
- it must have a computer tool to ensure ad hoc transaction accounting. The best service providers also have tools for automating and processing your data: extractions, verifications, declarations, comparisons, etc.
- In 2019, tax representatives must be able to provide access to the folders where the declarations are located, for example
- availability is important because it helps to avoid frustration: finance and treasury are strategic aspects of business
- the proposal of alternatives: an experienced tax representative beyond simple VAT can give you access to real simplifications (customs procedures, economic regimes, triangulations, release for free circulation in intra-community delivery.
- affinity: this point may seem superficial, but it is important because when the tax representative is an obligation, the latter is committed literally to the non-resident, well beyond a mere provision of service.
Transparency must be on both sides to allow for fluid exchanges and healthy collaboration over the long term.
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