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[Interview] Fiscal representation, a game changer for your development in Europe!

24 February 2020

Do you want to expand within the European Union? Do you find VAT complex? Discover our solutions, the compliance, cash flow and global optimisation benefits they can bring to your supply chain.

Olivier Thouard, Head of Customs and Fiscal Representation answers our questions:

1. Since Fiscal Representation is not usually operated by a 3PL, can you simply explain to us what it consists of? 

Fiscal Representationis intended for companies not established in a Member State of the European Union and who wish to carry out an economic activity there (storage and sales).

In this case, companies have the obligation to register for VAT in the Member State in which they wish to operate and to file several fiscal and statistical declarations. This regulatory obligation is governed by each national tax administration and this is where the complexity and risks are high!

There are two solutions: 

  • To create a subsidiary, which often proves to be long, expensive and which supposes to control many parameters (legal, social, fiscal and accounting),
  • Appointing a fiscal representative for companies established outside the European Union (1) or a fiscal agent for companies established within the European Union (2)

As a fiscal representative or fiscal agent, GEFCO offer:

  • Regulatory watch and engineering services,
  • A fiscal analysis of the envisaged flow of goods,
  • The fiscal representation procedures management
  • The related VAT & Intrastats declarations.

We operate in the 27 EU countries as well as in the United Kingdom, Switzerland and Norway.

 

2.Why is this expertise crucial for companies? 

 It is crucial for 4 major reasons:

  • Speed of execution: we enable companies to operate quickly (on average 3 months) in countries where they are not established without having to create a subsidiary.
  • Guarantee of national regulatory compliance: we handle all VAT operations and guarantee their validity.  In this way, it is a formidable lever for development and risk management for our clients!
  • Possible optimisation of cash flow: our expertise can help companies' cash flow by offering, for example, fiscal representation solutions in countries where regulations are more favorable. In France, for example, there is now the reverse charge system for VAT on imports, which allows the client to avoid carrying VAT on imports (under conditions). As this system does not exist in all Member States, the choice of importing into France is a clear cash saving!
  • Optimisation of the supply chain: unlike other market players who only offer fiscal expertise, we can, as a logistics integrator, combine customs, fiscal and logistics engineering while guaranteeing operational excellence in the implementation and management of these solutions. Expertise that are unique in the market!

 

3. What human and technical resources do you have at your disposal and how do you guarantee the reliability of operations?

We have a centralised organisation that manages fiscal representation solutions on behalf of our clients in direct contact with the fiscal administrations of the 27 EU countries:

  • Customs and Fiscal Representation Engineering Department: in charge of regulatory watch, auditing and engineering of physical and invoicing flows, technical support.
  • 6 bilingual accountants who manage the administrative and accounting formalities via an "i-VAT" tool that guarantees the validity and security of data and the reliability of clients' VAT operations.

 

4. Can you give us an example of a solution implemented?

The engineering of transport, customs and fiscal representation flows enabled us to identify an optimised solution for an automotive supplier delivering components manufactured in China to a manufacturer based in Czech Republic.

It was advised to import these components via Germany rather than France and then to transport them in acustoms warehouse to the Czech Republic under thecustoms transit regime. This allowed the French OEM to avoid paying VAT on import into France.

To be able to sell the goods locally to the manufacturer, our teams previously handled the registration of the company for VAT in the Czech Republic.

Our expertise thus enabled the client to reduce the number of kilometers travelled by road by 1,200 km and to generate a financial gain of €60,000 per year.

Not to mention, of course, the advantage of benefiting from a single integrator to optimise and monitor a complex door-to-door solution!

(1) and in a country which has not concluded with the Member State concerned a convention on assistance for the recovery of tax claims

(2) or in a country outside the European Union which has concluded an agreement with the Member State concerned on assistance in the recovery of tax claims.

As a logistics integrator, we can combine customs, fiscal and logistics engineering while guaranteeing operational excellence in the implementation and monitoring of these solutions. These expertises are unique in the market.

Olivier Thouard

Head of Customs, Fiscal Representation and Brexit

 

GEFCO INFORM YOU 

4 simplification measures in respect of EU cross-border trade, or « VAT Quick fixes » are applicable from Jan 1st 2020.

In order to fight against VAT fraud and improve tax certainty, the EU has enacted four improvements measures to the Union VAT rules for cross-border transactions with regard to (1) the proof of transport and (ii) the role of the VAT identification number, in the context of the exemption for intra-Community supplies, (iii) call-off stock arrangements and (iv) chain transactions.

1. Harmonisation of the evidencing rules to benefit from the VAT-exemption of intra-Community supplies.

The seller of goods will have a full certainty (i.e. without any challenge by the tax authorities) of the intra-Community supply VAT-exemption, to the extent 2 or 3 non-contradictory documents can be obtained, depending on whether the supplier or the purchaser are transporting the goods.

These new rules are not replacing the actual rules but only supplement them, offering a greater tax certainty.

2. New substance conditions are introduced to benefit from the exemption of supplies:

  • The VAT number of the customer must be provided and checked before goods are dispatched,
  • And the intra-Community supplies must be fully reported in the monthly EC sales list (« DEB » in France).

3. An harmonised simplification regime for call-off stock arrangements is introduced in all the EU Member States :

VAT registration of the supplier in the other EU Member State where the goods are transported is not necessary to the extent the goods are supplied to the purchaser within 12 months after their arrival in this EU Member State.

Consigned stock arrangements are not covered by this measure.

4. Simplification of the Chain transactions (or successive supplies)

The VAT-exempt supply, to which the transport of the goods is attached, is the one performed by the intermediary operator (transporting the goods itself or through a third party acting on its behalf).

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