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HMRC – Fiscal representative after Brexit

By December 24, 2020July 10th, 2021No Comments

As the UK prepares to leave the EU VAT regime on 31 December 2020, UK and EU e-commerce sellers may…

As the UK prepares to leave the EU VAT regime on 31 December 2020, UK and EU e-commerce sellers may have the obligation to appoint VAT Fiscal Representatives for their non-resident VAT returns.

EU-UK Free Trade Deal to remove Fiscal Rep requirement for UK businesses?

Which EU countries will require a Fiscal Rep of UK businesses? 19 of the EU27 states have some type of Fiscal Representation for non-EU businesses. The obligation post-Brexit on UK businesses will depend on the outcome of the ongoing UK-EU Free Trade Agreement which includes a ‘mutual assistance’ clause that would mean no Fiscal Rep obligation for UK businesses.

However, some EU countries are beginning to request UK companies to seek fiscal representation, including NetherlandsPoland and BelgiumItaly is requiring UK companies to deregister from their existing direct VAT registration and reapply for a new VAT number with fiscal representation. Poland has indicated that UK companies with a local foreign VAT registration will have to appoint a Fiscal Rep by 1 January 2021 or they will infringe local rules even on their last 2020 filings due in 2021.

UK businesses require EU Fiscal Representative after Brexit?

In the event of a no-trade deal by the end of the Transition Period on 31 December, UK companies would require a Fiscal Rep in the following countries. 

  1. Austria; 
  2. Belgium; 
  3. Croatia; 
  4. Cyprus; 
  5. Denmark; 
  6. Estonia; 
  7. Germany (agent only); 
  8. Greece; 
  9. Hungary; 
  10. Italy; 
  11. Lithuania; 
  12. Poland; 
  13. Portugal; 
  14. Romania; 
  15. Slovenia; 
  16. Spain; and 
  17. Sweden. 

Countries like the Netherlands would require a Fiscal Representative for special schemes such as import VAT deferment. 

NOTE: only France so far has confirmed UK businesses will not require a fiscal rep even if there is a no Brexit FTA[1]. Poland has indicated that it will oblige UK taxpayers to have a Fiscal Rep on 1 January 2021 or face not being able to file even their last 2020 VAT returns.

 

Do EU businesses need a UK Fiscal Representative after Brexit? 

No. The UK does not require EU or non-EU resident businesses to appoint a Fiscal Representative. The one caveat is that the UK’s HMRC can impose the obligation on a business with a poor VAT compliance record. This is sometime applied on e-commerce sellers who fail to VAT register or fully declare VAT due.

Role of a Fiscal Representative

A Fiscal Representative is a special type of VAT agent acting for foreign businesses with a VAT registration in another country. They are responsible for the correct calculation and reporting of VAT of their client, and are the first point of call for the local tax office in the case of questions or audits.

They are usually held jointly and severally liable for any unpaid or undeclared VAT of their non-resident clients. They therefore typically charge higher fees, and often require a bank guarantee or cash deposit to protect them against any client losses.

The above information was kindly provided by Richard Asquith from Avalara Europe Ltd (UK). For more information, please contact Richard directly at: richard.asquith@avalara.com.

 

[1] Although French law has not yet been amended in this respect