Following Brexit, UK companies will have to appoint a tax representative in most EU countries where they are currently VAT registered. The UK will become a non-EU country once a no-deal Brexit becomes effective. Hence, some additional administrative obligations will apply. These will include VAT refunds in the EU, customs formalities as well as tax representation.

If the UK signs the agreement, we should look at the transitional provisions to assess whether a tax representative is actually needed. A gradual transition is unlikely, so UK companies should start transforming their direct VAT registrations into tax representative assistance registration. Any changes may take up to 2 months, so we encourage you to start the procedures now.

Who is a tax representative?

A tax representative is a person who acts on behalf of a company and represents the company before the local tax authorities.

This person or entity will be your representative for all tax obligations, which means they will file returns, make payments, receive correspondence and handle tax audits on your behalf.

More importantly, your tax representative is jointly and severally liable for your tax debts. So if you do not pay VAT in the country concerned, the tax representative will have to pay it for you with the corresponding penalties. Very often your tax advisor will require a bank guarantee or some sort of security to cover the joint liability of acting as a tax representative. 

When do i need a tax representative to comply with VAT?

You will need a tax representative if you are a non-EU company and need a VAT number in a specific country. Not all countries require non-EU companies to appoint a tax representative. Below we present a table that shows which country requires representation for companies from countries outside the EU:

You will not need a tax representative if you are trading through a local entity or branch in your country. Only if you are a non-EU company and have VAT registration without being physically present in the country.

How to appoint a tax representative?

Appointing a tax representative is a simple process when starting the VAT registration procedure. You will need a signed PoA authorizing a representative to act on your behalf. Depending on the country where you register for VAT, you will need to sign additional forms, provide and translate supporting documents, and disclose information about your activities. The Tick company has a dedicated team for VAT registration, which will guide you through the entire process with one dedicated agent for all VAT registrations in Europe.

The process is more complex if you run a UK business that is already VAT registered in several European countries and need to appoint a tax representative due to Brexit.

Some Member States will require your UK business to cancel your VAT registration and apply for a new VAT number under the tax representation scheme. The tax office responsible for your application may also change, and more importantly, your VAT number will also change. However, other countries have created a special process that allows UK companies currently VAT registered to transfer their direct VAT number to a tax representative. In such cases, you will be able to keep your old VAT number.

Changing a foreign VAT number entails a number of complications, such as the need to inform all suppliers and customers, update the ERP, adjust the billing system or submit an application for a new VIES registration.

Who can be my tax representative?

The tax representative may be a legal person or a natural person residing in the country where the representative is needed.

If you do not have any local presence in the country where you do business, you will usually appoint a tax advisor to act as your company’s tax representative. However, if your company is part of a larger group of entities within a multinational company, it is possible to designate a local entity that is part of the group as the tax representative.

The problem of many representatives and our solution

The problem with appointing a tax advisor is that you will have to contact different people all over Europe about all your VAT obligations. Each representative will require reporting data in a different format, with different fee structures for each vendor and administrative work required in each country.

If you need help with the VAT registration process, please feel free to contact us, we will be happy to help.