Fiscal representation in EU

International trading is the norm of the day and it’s because of cross border transactions that buyers get the lowest price of goods and services and suppliers find new markets for their products and services. This is because trade leads to healthy competition. Many American based companies engage in business with European countries and exports and imports are common. But the problem arises because each country has its own different laws, rules and regulations in the area of taxation and customs. This complicates the business a lot and acts as a hindrance especially when the language of the business and the language of the laws of one country cannot be understood by the entrepreneurs from the other country. In this case when entrepreneurs from one country and another want to do business together but do not understand the tax laws in each other’s country and the language becomes a problem then the entrepreneurs can appoint a fiscal representative to act on behalf of their company. Fiscal representation solves all problems.

The fiscal representative must act as a local representative of the company and handle the company’s queries and filing obligations and also handle all the communication of the company with the relevant tax authorities. In a few cases the  fiscal representative will be jointly liable for all VAT payments of the company. A fiscal representative is regarded as a local agent of the foreign trader by the tax authorities and the representative takes care of all the compliance obligations that arise out of the transaction. In case the company who has hired the representative reneges of any liability then the industry practice which requires a security or bank guarantee in favor of the fiscal representative comes into play. This is because the representative is jointly liable for taxes paid by the trader

Let us conclude with a summary of how fiscal representation can help. First way in which fiscal representation helps is because the representative would be aware of the various VAT related laws in Europe and will ensure all compliance that you are supposed to undertake and then it won’t matter that you are not aware of these laws. When you are not aware of the law then obviously you won’t be able to fulfill your duties prescribed under the law and therefore appointing a fiscal representative becomes a must. The role of a fiscal representative begins even before registration infact it is fiscal representatives who help you register for VAT in the country where you are obliged to be VAT registered. The representatives help you file VAT returns and make sure that the correct rate of VAT is applied. Last but not the least the VAT representative would make sure that the VAT payments are properly processed. Appointing a fiscal representative ensures smooth sailing for your business and you won’t ever have to worry about getting on the wrong side of the tax authorities and on the wrong side of law. There are many companies and individuals who act as fiscal representatives and finding one would be simple.