How does fiscal representation work for companies not based in Germany?

The Fiscal representation is a process that allows foreign companies without a registered office in Germany makes it possible, fulfill VAT obligations without having to register in Germany. It is often used by companies that want to import goods into the EU and resell them there.

1 What is a fiscal representation?

The Fiscal representation is a service in which a Company based in Germany (the fiscal representative) assumes the VAT obligations for a foreign company.

Important functions of fiscal representation:
Allows tax-free import of goods into Germany
-Takes over the VAT return for the foreign company
-Reduces administrative hurdles for companies outside the EU
-Enables the use of the reverse charge procedure in the EU

2 Who needs fiscal representation?

Fiscal representation is for Companies not domiciled in Germany/EU interesting, the:
Importing goods to Germany and selling them there
Distribute goods via a German warehouse or an Amazon fulfillment center
Do not want to be registered for VAT yourself

3. advantages of fiscal representation

No separate VAT registration required in Germany
Tax-free import of goods into Germany (when using the reverse charge procedure)
Simple administration and reduction of administrative workload
Professional handling of tax obligations by the fiscal representative

Attention:

• The fiscal representative takes over the Responsibility for correct processing the sales tax.
• Companies without fiscal representation must register themselves for VAT with the German tax office.

4 How does fiscal representation work in practice?

Step-by-step process:

Import to Germany via the fiscal representative

• The fiscal representative imports the goods and declares them to customs.
• The import takes place tax-freeas VAT is not due until the sale.

Resale of the goods within the EU

• If the goods are sold to companies within the EU, the Reverse charge procedure are applied (no German VAT).

VAT settlement by the fiscal representative

• The fiscal representative leads the VAT registration and payment through.
• He handles communication with the German tax authorities.

5. requirements for fiscal representation

The company has no company headquarters in Germany
The fiscal representative must be a Company registered in Germany be
A Contract between the foreign company and the fiscal representative must exist
The company must have all necessary documents Provide for import (invoices, goods documents)

6. example of the use of fiscal representation

A US companies imports goods to Germany to sell them in the EU.
- Without fiscal representation, Germany would have to register for sales tax.
- With fiscal representation, the company can Avoiding import sales tax and benefits from the Reverse charge procedure for intra-Community supplies.