Italy, Belgium and Cyprus are among the EU countries that have confirmed that UK companies will not need a fiscal representative for VAT registration.
UK businesses will welcome the news. Clarity on VAT registration and compliance requirements makes it much easier to plan ahead.
The source of uncertainty
Many EU states require businesses based outside of the EU to appoint a fiscal representative. Such businesses do not have the option of direct registration. Following Brexit, the UK is classified as a third country in relation to the EU. Therefore there was some uncertainty about whether UK companies now have an obligation to appoint a fiscal representative to manage VAT in some or all EU states.
The UK exception: fiscal representatives in Italy
Regulations pertaining to UK companies operating in the EU are largely determined by how local authorities interpret the EU-UK trade deal.
For example, consider the reasoning of the Agenzia delle Entrate, the Italian tax authority.
The Italian tax authority’s resolution 7 clarifies that UK businesses can continue to opt for direct VAT registration. Italian tax authorities have conceded that the EU-UK trade deal is sufficiently comparable to regulations governing EU states. Therefore, UK businesses may choose the direct registration option.
In general, direct VAT registration in Italy is only available to taxable persons based in EU member states. Businesses based in the EU have the option of either direct registration or appointing a fiscal representative. By contrast, businesses based in other countries are required in all cases to appoint a fiscal representative.
What if I’ve already appointed a fiscal representative?
Given the prevailing uncertainty, some UK businesses may have elected to terminate their existing direct VAT registration and appoint a fiscal representative.
Any company that has done so now has to decide on the appropriate course of action going forward. Specifically, they could choose to reinstate their direct VAT registration or continue to use a fiscal representative.
Businesses should consult with VAT experts to understand the full implications of either course of action.
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