UK trading with Europe: Understanding Fiscal Representation
A fiscal representative is a company appointed by a business to handle the payment of import VAT and duty on behalf of the customer. You may need to appoint one if you are exporting or responsible for paying import taxes.
The responsibility for paying VAT and duty taxes depends on the direction of the goods and the incoterm used. For exports from the UK to Europe, taxes are paid in the EU; for imports from Europe to the UK, taxes are paid in the UK.
Using incoterms like Free Carrier (FCA) or Delivered at Place (DAP), taxes are usually paid by the importer in the destination country.
If the exporter handles the entire process under Delivered Duty Paid (DDP), they will pay taxes in the importing country, simplifying the process for customers and making products more attractive.
Types of Fiscal Representation
General Fiscal Representation (GFR) handles all tax matters, including local taxes, duties, and VAT. Companies under GFR need VAT registration in the country they sell in.
Limited Fiscal Representation (LFR) focuses only on VAT obligations. It allows goods to enter one EU country and be sold in another without paying VAT at import, such as importing to the Netherlands and transporting to Italy.
LFR is available at ports in the UK, Netherlands, France, and Belgium, with specific regimes under Dutch Article 23 and French Regimes 40 or 42.
What is Fiscal Representation?
A fiscal representative must be appointed in the destination country’s customs territory. For example, shipments to Italy require a fiscal representative in the EU.
UK businesses are required to appoint a fiscal representative in certain EU countries, including Austria, Bulgaria, Croatia, Cyprus, Finland, France, Italy, Lithuania, Netherlands, Poland, Portugal, Spain, and Sweden.
Our experts at Baxter Freight can assist in arranging fiscal representation and guide you through the process.
Setting Up Limited Fiscal Representation in the UK
Non-UK companies should consult a Customs Specialist or Broker, like Gerlach, to establish fiscal representation, enabling delivery under DDP terms.
UK companies can register for fiscal representation to pay UK VAT, maintaining records of VAT registration, transactions, and payments for HMRC.
Many EU businesses opt not to pay VAT and duty in the UK, passing that responsibility to the UK buyer, with shipments under incoterms like FCA, EXW, or DAP. Your logistics partner can advise on options.
If your business imports to or exports from the UK, consult our Customs Specialists to choose the best fiscal representation strategy.
For importing into Europe, be aware of CBAM (Carbon Border Adjustment Mechanism), which is now in effect, and consider its implications for your business.
Expanding internationally is more accessible than ever, but cross-border logistics can be complex, especially for small to medium-sized businesses.
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