Article updated on 09/09/2021
Persons subject to VAT and established outside the European Union in a State which has not concluded an agreement with France for assistance in the recovery of tax debts are required to appoint in France a taxable representative established in France.
It is important not to confuse the tax representative and the tax agent. Both act on behalf of the foreign company. However, if the agent acts on behalf of the foreign company, the tax representative acts in his own name, which is why he engages personally with the tax administration and must be approved beforehand.
The appointment of a tax agent is never compulsory. However, French, European or non-European companies wishing to provide tailor-made support in fulfilling their tax obligations can call on the services of an agent. As chartered accountants, we can of course fulfill this function.
In return, the designation of a tax representative is mandatory and we will thus see in which cases.
I – When should we appoint a tax representative?
Companies established outside the European Union
a/ Common law regime: Article 289 A of the CGI requires the appointment of a tax representative when a company not established in the European Union is liable for VAT or must fulfill declaratory obligations in France, without being liable for tax there.
Consequently, foreign companies established outside the EU in a State which has not concluded an agreement with France for assistance in the recovery of tax debts must appoint a tax representative who undertakes to fulfill the reporting obligations incumbent on them, and to pay the VAT due when they carry out operations:
- Taxed (in particular, delivery of goods with assembly or installation, distance selling of tangible movable goods, resale of goods acquired in France, rental of means of transport used in France);
- Or services located in France for the benefit of non-taxable persons and for which VAT is due in France;
- Or exempt (intra-community acquisitions or deliveries), or an import followed by an intra-community delivery exempt from VAT.
b/ Specific representation regime: taxable persons established outside the European Union may appoint a one-off representative only when he carries out the transactions referred to in article 289 A-III of the CGI for which no tax is, in principle, payable. This concerns the following operations:
- Exit of the goods from a community customs regime or from a suspensive or tax warehouse regime for which the payment of VAT is not required, when the goods are exported or delivered intra-community (CGI, art. 277 A-II-4) (cf. BOI-TVA-CHAMP-40-10-30- IV and BOI-TVA-CHAMP-40-20-50 IV § 170);
- Exempt import of goods, when the goods are the subject of an intra-community delivery.
In addition, in the event of the sale of real estate in France, the levy provided for by Article 244 bis A of the General Tax Code (CGI) is paid when the deed is registered or, failing of registration, within one month of the assignment. The cedants, legal persons or bodies domiciled, established or constituted outside an EU Member State or another State party to the EEA Agreement have the obligation, in all cases, to appoint a tax representative.
The ad hoc representative is appointed for a specific operation. Consequently, a taxable person established outside the European Union who is not established in France and who carries out there several transactions referred to above, may appoint a different representative for each of the transactions, for example when they are carried out in different places (port and airport).
c) Exemption from designation: the following are exempt from appointing a representative:
- Persons established in a non-EU member state with which France has a legal instrument relating to mutual assistance in the recovery of tax debts and administrative cooperation and the fight against fraud in the field of VAT;
- People not established in the EU who carry out operations in suspension of payment of VAT (CGI art. 277 A, I), that is to say operations relating to goods placed under suspensive customs or tax regime (CGI art. 289 A, I.2 °);
- People who deliver natural gas, electricity, heat or cold, the tax on these operations to be paid by the purchaser established in France (reverse charge);
- Taxable persons established outside the EU who provide services electronically to non-taxable persons residing in the EU (possibility in this case of using the one-stop-shop);
- Taxable persons not established in France who subcontract real estate work in France for the benefit of a taxable client identified in France (this is a case of reverse charge by the client).
Individuals residing in a state outside the European Union
When selling real estate, if the seller is an individual who is not resident in France or an EU Member State or another State party to the EEA Agreement, the designation of a tax representative is compulsory when:
- The sale price is greater than € 150,000;
- And the property has been held for less than 30 years.
The designation must be made regardless of the amount of the capital gain, and even in the event of a capital loss.
II – Appointment of the representative
Choice of representative
Except in the case of specific representation, the taxable person established outside the EU can only designate one representative for all the transactions he carries out in France.
Full freedom is left to the taxable person in the choice of his representative. However, the representative must be a VAT taxable person established in France, duly known as such by the General Directorate of Public Finances. In practice, he must be known to the administration as liable for VAT and regularly submit turnover declarations.
The taxable representative established in France must be accredited by the corporate tax service to which he is responsible. The representative must send a written request to the tax service of the companies to which he is personally responsible, accompanied by his designation by the taxable person established outside the European Union, accompanied by his acceptance. The business tax service notifies the representative in writing of the granting or refusal of accreditation.
Duration of appointment
In principle, the designation cannot have retroactive effect. However, the Directorate of Public Finance may, in duly justified cases, accept such a designation, provided that, on the one hand, the taxable person established outside the European Union expresses his intention to regularize his situation, on the other hand, that the representative undertakes expressly to represent this taxable person since the beginning of the period to be regularized.
The designation may be limited to a specific period.
The designation remains valid as long as the administration is not informed of its denunciation. Consequently, the taxable person who no longer carries out taxable transactions in France must denounce the designation of the representative. The latter immediately informs the competent corporate tax service in writing by sending it the denunciation of the designation by the taxable person.
In the event where the tax representative no longer wishes to carry out transactions on behalf of the company established outside the European Union, he may terminate the tax representation contract. He must inform both the taxable person established outside the European Union and the competent business tax service in writing.
III – Obligations of the tax representative
The representative is responsible, for the duration of the validity of his designation by the foreign taxable person, for compliance with tax obligations, in terms of VAT, relating to all the transactions carried out in France by this taxable person, including those for which he did not have knowledge. He must complete the legal and regulatory formalities and pay, where applicable, the tax payable.
- Issuance of invoices. When preparing invoices, the representative must expressly indicate that he is acting as the representative of the foreign taxable person. Invoices can be issued by the foreign taxable person, but they must always specify the contact details and the VAT identification number of the tax representative.
- Bookkeeping. The tax representative must keep the accounts of all transactions carried out in France by the foreign taxable person or, failing this, be able to present the accounting books and supporting documents relating to the transactions carried out.
- Reporting obligations. The corresponding turnover declarations must indicate taxable transactions as well as non-taxable transactions (including intra-Community deliveries and exports). They must also indicate the deductible tax.
- Note: Any natural or legal person who has appointed a tax representative in France is required to sign the declaration of exchange of goods (DEB).
Specific tax representative
The ad hoc representative is responsible only for the operations for which he must fulfill the reporting obligations.
- Keeping of a quarterly statement. The ad hoc representative must subscribe to the tax service a quarterly statement indicating his name or denomination, his address as well as his intra-community VAT number under which the transactions are carried out.
- Assignment of an identification number. The ad hoc representative has two VAT identification numbers: the one specific to the company, for its main activity, and the specific one for all operations carried out as a one-time representative.
We could not, through this article, make an exhaustive list of the cases where the appointment of a fiscal representative is required as they are numerous and varied. However, in order for you to better understand the scope of intervention of a fiscal representative in Europe, we reproduce below the terms used by a fiscal representation company to define the scope of its mission:
“In a number of EU Member States, the appointment of a tax representative is a legal requirement for all companies established outside the EU that carry out taxable operations on European territory:
- Imports into an EU Member State of goods from a country outside the EU
- Exports from an EU Member State to a country outside the EU
- Purchases of goods delivered to an EU Member State from another EU Member State
- BtoB sales of goods from an EU Member State to another EU Member State
- BtoC sales of goods and services to European individuals, including through a Marketplace
The failure to appoint a fiscal representative is very heavily sanctioned by the European tax authorities and prevents any VAT recovery.”
It is important to specify that any claim for VAT refund paid in a European country by a company whose headquarters are outside the EEC (this includes British companies since Brexit) requires the appointment of a tax representative.
Obviously, you can contact us in order we help you with that!
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