Fiscal representation for foreign companies

Do you own a foreign company and are you going to carry out commercial activities in Spain? It is likely that you will have to get registered in the Value Added Tax (VAT), and that you will have to appoint a VAT fiscal representative. In this post, we’ll tell you what a VAT fiscal representative is, which functions he/she performs and when she/he is needed.

What is a VAT fiscal representative?

A VAT fiscal representative is a natural or legal person who must be appointed when the non-EU company has to  be registered for VAT.

Appointing a VAT fiscal representative, in that case, is compulsory and it is stated in the article 164.1.7| of the VAT Law, which regulates the obligations of the taxpayers. It states the following: 

To appoint a representative for the purposes of compliance with the obligations imposed in this Law when it comes to a taxable subject that is not established in the Community, unless they are settled down in the Canary Islands, Ceuta or Melilla, or in a State in which exist mutual assistance instruments analogous to those instituted in the Community. 

Therefore, the VAT fiscal representative is optional for European Union companies and mandatory for non-EU companies. Unless the non-EU company carries out only customs or free zone operations, it must appoint a fiscal representative. This might not apply if there’s a regulation of fiscal and administrative collaboration between countries.

What does a fiscal representative do for VAT?

The services performed by the VAT fiscal representative are:

  • To ensure compliance with all the VAT obligations in Spain. This involves obtaining a VAT number for the company, advising on the form of invoicing, applying the corresponding accounting procedure, filing VAT forms, paying the corresponding settlements, handling requests for VAT refunds, maintaining and updating VAT books, following up on deduction requests, preparing the annual summary, etc.
  • To advise the company in the event of a verification, investigation or inspection by the Spanish Tax Agency.
  • To answer alongside the foreign company for all VAT obligations.

Who can be a VAT fiscal representative and how is he/she appointed?

A foreign company that needs to appoint a VAT fiscal representative will be free to choose whoever it wants for this purpose. Therefore, it can appoint a client, a supplier, its own subsidiary in Spain or a company specialized in tax representation services. In this way, LEIALTA offers the service of legal and fiscal representation to help those companies that wish to establish themselves in Spain and carry out activities in our country.

In order to appoint a VAT fiscal representative it is necessary to consider the following:

  • The appointment must be made prior to the start of the operations of the foreign company.
  • The appointment must be made in writing and it must be signed by a legal representative of the foreign company.
  • The appointment must contain the following:
    • Name and address of the foreign company.
    • Name and address of the tax representative.
    • Express acceptance of the appointment of the tax representative selected and the date from which the appointment will be effective.
    • Commitment of the representative to comply with all the foreign company’s VAT tax obligations (such as filing and payment of the tax).
    • The appointment must be communicated to the Spanish Tax Agency.

What should be considered when choosing a VAT fiscal representative in Spain?

Choosing the right professional to act as a VAT fiscal representative in Spain is essential in order to ensure that all tax obligations are met. One should consider:

  • That the person or the entity appointed has a thorough knowledge of the VAT regulations applicable in Spain, and has experience in advising non-resident entrepreneurs.
  • That they have the necessary technology to automate the tasks related to VAT and to do them without errors.
  • That it involves a multidisciplinary team available to answer any questions the client might have.
  • That they know how to provide solutions and alternatives to reduce the tax burden of the company, instead of just preparing and submitting VAT forms.
  • That the VAT fiscal representative is transparent so that the client knows at all times the operations that are being carried out and why. In this way, total confidence will be generated.

From Leialta we want to emphasize the importance of the relationship between the VAT fiscal representative and the foreign company, which will be long lasting and, therefore, good communication and mutual trust are essential for the service to be provided correctly.

 

Contributing Advisors