UK Sellers selling into the EU – have you appointed a Fiscal Representative?

Important changes for your business coming with BREXIT

When the UK leaves the European Union’s economic structures – probably on 31 December 2020 – UK businesses who are already VAT registered in EU states will be required in many countries to appoint a local fiscal representative (“fiscal rep”).

Why is this necessary?

Most EU states require a fiscal rep to be appointed where the seller has no physical establishment within the EU. It stems from the fact that the tax authorities prefer to have someone local to contact in the event of non-payment of tax or other compliance problems which relate to the foreign seller.

This fiscal rep requirement is waived for EU-based entities but, as the UK will soon leave the economic structures of the EU, fiscal representation will be required in many EU states.

Notably the UK and Germany do not require fiscal reps but the important Amazon markets of France, Italy and Spain do.

In the Netherlands it is not a requirement to appoint a representative but there can be advantages of having one.

What does a fiscal rep do?

Three things:

1. The fiscal rep stands in the shoes of a seller in relation to the local tax authority

2. The fiscal rep often has joint responsibility for the seller’s VAT liabilities – so in effect the rep serves to assist with compliance helping to ensure VAT returns are submitted on time and any VAT due is paid in full

3. The fiscal rep may need to be involved in various compliance processes such as VAT registrations, VAT return submissions and sometimes VAT payments have to go through the fiscal rep but all of this varies by jurisdiction.

Historically, fiscal reps have also done the monthly or quarterly VAT calculations. They see that as an essential part of managing their risk but at Desucla we prefer to work with your advisers – we call them Compliance Providers – to control the quality of the VAT calculations and manage the compliance process. We would rather let your normal advisers get on with their work with as little interference from us as possible.

How is fiscal representation changing?

In the past not many companies required fiscal representation. Most large companies trading internationally set up local branches and then subsidiaries to do the selling for them. Where Fiscal Representation was needed it was offered through a disparate network of small local companies, often charging high fees and requiring bank guarantees and collateral to mitigate their risks. In an age of online markets however the world has changed and millions of merchants now require quick and cost-effective local fiscal representation for their cross-border selling activities.

Desucla has come into existence to meet this need. We have leveraged technology to streamline the fiscal representation process and to actively manage risk to mitigate the need for bank guarantees. We offer fiscal representation in over 38 countries and work with advisors, compliance providers and directly with sellers themselves.

What do I actually need to do?

If you do not have local offices or subsidiaries across Europe then historically you will most likely have acquired your European VAT numbers under your UK entity. When the UK leaves Europe at the end of the year however this VAT registration will no longer be compliant in many countries. This could mean that Amazon and other markets restrict your ability to trade and/or your customers and suppliers are impacted by an inability to recover VAT on the cost of goods sold to them from a non-compliant seller.

To ensure you remain compliant please speak to your compliance provider as you are likely to require fiscal representation if you are a UK business selling goods into Europe. Desucla offers a one stop-shop covering all key European markets for a single low annual charge per country. You can register directly with us or ask your compliance provider to set-up an account to leverage our products and network for your benefit. Learn more about Desucla at www.desucla.com