The impact of the mutual assistance agreement between France and the UK

1st January 2021 marked the end of the transition period (February 1 – December 31, 2020) during which EU law continued to apply in the UK.

As of this date, the United Kingdom becomes a third-tier country (or non-mmber) to the European Union. This means that purchases will no longer be considered as intra-Community acquisitions, but as imports. Similarly, sales to the UK will become exports instead of EU deliveries.

The EU prohibits the requirement for other member states to appoint a fiscal representative.

Before 27th February  2021, the United Kingdom was not part of the list of non-EU countries having concluded a mutual assistance agreement with France, the consequence being that France required companies located in the United Kingdom to appoint a tax representative.

However, on 16th February 2021, a change was made to the ruling of May 15, 2003 which established the list of non-EU countries with which France has a legal instrument on mutual assistance. This decree came into force on February 27, 2021, and from now on, the companies on this list are no longer required to appoint a tax representative, but only a tax agent.

 

The companies concerned:

Taxable persons established in a non-EU country and carrying out transactions for which they are liable for VAT in France or must comply with reporting obligations there.

Article 289 A of the General Tax Code provides for the removal of the requirement to appoint a tax representative for taxable persons established in a non-EU country with which a legal instrument of mutual assistance exists.

The list is updated, and adds the following states: Antigua and Barbuda, Armenia, Bosnia and Herzegovina, Cape Verde, Dominica, Ecuador, Grenada, the Cook Islands, Jamaica, Kenya, Kuwait, Nauru, Niue, Northern Macedonia, Pakistan, the United Kingdom of Great Britain and Northern Ireland, Turkey and Vanuatu.

As a result, companies established in these countries are exempt from appointing a tax representative in France.

 

Attention: Both the tax representative and the tax agent act on behalf of the foreign company. However, while the agent acts on behalf of the foreign company, the tax representative acts in his own name, and is therefore personally liable to the tax authorities and must be accredited beforehand.

Thus, unlike the tax agent, the accredited tax representative is generally jointly and severally liable for the VAT due by the represented company.

Now, in case of default of the company, the tax authorities can recover the money directly from the company.

 

Why appoint a fiscal agent?

VAT formalities, tax obligations and tax audits must be carried out in the local language and through specific forms and within specific deadlines. It is extremely complicated for a non-resident company to deal with these difficulties alone.

This is why calling upon a tax agent specialized in VAT matters in the Member State concerned is essential to secure the operations that are subject to VAT that are carried out there.

Indeed, errors can have very significant financial consequences: tax audits, loss of the right to VAT refund, questioning of exemptions, additional taxes, penalties, interest on arrears, etc…

Our team will be happy to offer you these services to assist your companies in their VAT formalities and tax obligations.

 

For more informations please contact our team [email protected]

We’ll be more than happy to help you!