A tax agent, which is a compulsory position in some EU countries, is subject to certain requirements. Find out the conditions which have to be met to exercise this function.
Appointing a tax agent is a legal obligation imposed by certain Member States of the European Union on companies not established in the European Union. This involves appointing an operator who will oversee the formalities of the company liable for value-added tax (VAT).
This means that the accredited agent appointed by the foreign company performs all the tax and VAT reporting obligations of the non-EU resident taxable person.
Several conditions must be met to be a tax agent. To find out more, read our article on tax representation.
Furthermore, the information provided in this article is general. For information specific to one of the Member States, do not hesitate to ask our experts.
How do you appoint a tax agent?
A tax agent must be appointed before performing any operations in the territory concerned. A company established in a country outside the EU must send a duly signed power of attorney to its tax office.
As such, a written request for a representation mandate must be submitted by the company’s legal representative and sent to the tax authorities. The tax office must provide the following information:
- The name and address of the company represented
- The name and address of the tax agent
- The appointment of the agent by the non-EU resident business
- The agent’s acceptance of the appointment
- The agent’s commitment to fulfil its obligations
- The effective date of the mandate.
Taxable persons will receive a written response informing them that their request has been accepted or refused.
Conversely, the non-resident company can only appoint a single agent for all the services provided.
Why appoint a tax agent?
Appointing a tax agent is a legal obligation imposed by several Member States of the EU on non-EU resident companies and which are established in a country without a mutual assistance clause for the recovery of tax liabilities and carrying out, in said territory of the EU, operations on which said companies must pay VAT.
Not just a legal obligation, this also allows companies not established in one of the EU Member States to benefit from a simple and cost-effective alternative to physically setting up.
Indeed, appointing a tax agent gives non-EU resident companies the option to penetrate the European market without creating a subsidiary. This allows the company to eliminate the costs and constraints associated with establishing an office.
As a transparent intermediary, the tax agent is responsible for fulfilling all VAT obligations with the tax authorities. As such, all of the company’s business activity is managed from abroad.
Moreover, a foreign company which has appointed a tax agent in a Member State of the European Union and does not have a permanent establishment for the purposes of corporation tax will not have to pay tax on the profits of that Member State.
What are the tax agent’s responsibilities?
The tax agent acts on behalf of a company established outside the EU carrying out taxable operations. They ensure that their clients comply and the company’s tax and accounting operations are respected.
The tax agent is therefore specifically responsible on behalf of their client for:
- VAT registration with the local tax authorities
- Managing VAT refund requests
- Checking documents and operations carried out
- Paying VAT
- Liaising with the local tax authorities
- Providing assistance with any tax audits.
How does your tax agent act?
Tax agents offer comprehensive support to their clients. They help them with all VAT-related problems.
Indeed, tax agents are involved in:
- Analysing business activity. The agent will check your business activity to ensure you are complying with the local rules in force.
- Checking the conformity of invoices. Before filing a refund request, the tax agent checks the conformity of the invoices issued and received to limit the risk of adjustment and avoid any problems during the recovery of VAT.
- Regulatory monitoring. The tax agent performs regulatory monitoring and informs their client regularly about tax reforms and changes.
- Assistance with any audits. The tax agent supports their client in the event of a tax audit and defends their interests to the best of their ability.
When do you need to appoint a tax agent?
When a business established outside the European Union is liable for VAT in one of the EU Member States, a tax agent accredited in that Member State needs to be appointed.
As such, companies not established in Europe carrying out one of the following operations in particular must appoint a tax agent in the Member State where the operation is carried out:
- The import of goods from a country outside the EU to an EU Member State for which VAT is compulsorily and automatically self-assessed in the VAT return
- An export from one of the EU Member States to a non-EU country
- The intra-Community acquisition of goods in an EU Member State to another EU Member State
- Intra-Community supplies of goods from one EU Member State to a taxable person established and identified for VAT purposes in another EU Member State
- The local sale of goods on which the supplier has to pay VAT.
Moreover, failure to appoint a tax agent when the Member State requires one to be appointed gives rise to penalties. Penalties and late payment interest may be applied which may affect the recovery of deductible VAT.
Reminder: companies established in a non-EU country which have signed a mutual assistance clause for the recovery of tax liabilities with the EU are exempt from the requirement to appoint a tax agent. However, VAT registration is still required for it to fulfil its obligations.
What are the tax agent’s obligations?
The tax agent ensures compliance with VAT-related accounting and tax obligations for operations in the territory of the EU where they work as a tax agent.
The tax agent must therefore:
- Keep their client’s accounts for the operations carried out on European territory at the tax agent’s expense
- File periodic VAT returns based on the information provided by their client and pay the VAT owed by their client
- Submit Declarations of Exchange of Goods (DEB) and European Declarations of Services (DES).
Why choose ASD Group?
As experts in assisting companies carrying out intra-Community operations, we use our experience to serve and help you in your day-to-day life and secure your activity. If you choose ASD Group, you benefit from:
- A team of tax specialists distributed around the world. Our experts support you every step of the way and take care of all your VAT formalities
- Constant regulatory monitoring to identify regulatory tax changes, thereby ensuring your business is compliant
- Specific tools to control your flows and thresholds to secure your operations.
For further information on appointing a tax agent, contact our team of experts.
