What is Limited Fiscal Representation (LFR)?

Limited Fiscal Representation (LFR) allows importers who are bringing goods into one EU member state but selling those goods in another EU member state to import without paying VAT (Value Added Tax) at the time of import.

What's the benefit of LFR?

LFR improves the importer’s liquidity. Instead of the importer paying VAT upon entry into the EU and being refunded at a later date, VAT responsibility is passed to a limited fiscal representative before being passed to the buyer of the goods. Note that LFR can only be applied at ports in Belgium and the Netherlands.

How does LFR work?

Upon import at the EU border, a customs broker with the authorization as a limited fiscal representative will assume responsibility of the VAT. All other standard customs procedures will be followed and any import duties or customs fees will be paid as normal. At the end of the month, the customs broker and the buyer in the other EU member state will both report the transaction to their respective tax authorities. Both tax authorities will submit the transaction information to the VAT information exchange system (VIES), and if the information submitted by each party matches, the customs broker passes responsibility of the VAT to the buyer.

For example:

If a U.S. company is importing into the EU through Belgium but selling those goods to a company based in Germany, a customs broker can assume responsibility of the VAT upon import. Once the matching transaction information has been submitted to VIES, the customs broker can pass VAT responsibility to the German buyer. The U.S. company importing the goods did not have to pay VAT upon import and wait to be refunded.