Tax Representative – Responsibilities and Liability of a Tax Representative

A complex tax system leads to an increasing number of companies opting to use the services of a tax representative. Who is a tax representative and what are his duties? What is a tax representative responsible for? Find answers to these questions in our article!

Who is a Tax Representative?

A tax representative is someone authorized to act on behalf of a taxpayer regarding their tax obligations. Additionally, if specified in the agreement, a tax representative can perform other activities. Especially related to Value Added Tax (VAT). The following entities may act as tax representatives:

• Accountant
• Tax advisor
• Another person with relevant knowledge and experience

Who Can Become a Tax Representative?

According to Art. 18b(1) of the VAT Act, a tax representative can be any entity that meets the following conditions:

1. Has a business presence within the country (including another EU member state).
2. Is registered as an active VAT taxpayer.
3. Has a right to:
   • Professionally provide tax advisory services in accordance with tax advisory regulations.
   • Provide bookkeeping services according to accounting regulations.
   • Conduct business related to intermediation in trading goods within the country.

Duties of a Tax Representative

The legislator specifies the scope of duties of a tax representative. While acting on behalf of and for the taxpayer for whom he has been appointed, tax representative performs tasks such as:

1. VAT-related obligations, including:
   • Preparing tax returns and summary information.
   • Maintaining and storing documentation, including records necessary for accounting purposes.
2. Other activities:
   • Performing other actions arising from VAT regulations, if stipulated in the agreement with the taxpayer.

How does the right to act as a tax representative arise?

The authority for a tax representative to act on behalf of a taxpayer starts with signing an agreement. It should include:

• Names of the Parties. The full company names of both the taxpayer and the tax representative.
• Address of the registered office of the parties to the agreement. In the case of a foreign taxpayer, the address of his permanent place of business in Poland.
• Identification Data. Tax Identification Number of the parties. In the case of foreign taxpayers, their VAT identification number should also be included.
• Activities provided for in the VAT Act;
• Statement of Consent of a Tax Representative. A statement from the tax representative agreeing to perform duties and activities on behalf of the foreign entity in their own name and on behalf of the taxpayer.

When Does the Obligation to Appoint a Tax Representative Arise?

The VAT Act requires certain taxpayers to appoint a tax representative. This applies to:

• Taxpayers who do not have a headquarters or a permanent place of business in Poland (or another EU member state).
• Taxpayers who are not registered as active VAT payers.

When Does the Optional Obligation to Appoint a Tax Representative Arise?

In certain situations, the appointment of a tax representative is optional. This applies when the taxpayer’s business is based in another EU member state. In such cases, appointing a representative is voluntary. Yet, it can make interactions with Polish tax authorities easier.

Liability of a Tax Representative

Tax representatives are liable for the taxpayer’s obligations incurred during their service term. They share joint and several liability with the taxpayer for these obligations. This means that tax authorities can demand the full or partial settlement of tax debts from either party.

This results from the provisions of the Civil Code on joint liability. Hence:

• The Head of the Tax Office can pursue receivables from both parties together or from each party separately.
• Payment of the debt by one party discharges the other from the obligation.
• If the tax representative settles the tax debt, he can seek reimbursement from the taxpayer based on civil law provisions.

The liability begins on the date of the agreement with the tax representative. It covers tax obligations incurred from that date. The liability continues even after the termination of the agreement. Then it covers obligations incurred when the agreement was valid.

Tax Representative vs. Tax Attorney

A tax representative and a tax attorney are two distinct functions. They have different responsibilities and scopes of liability. The differences are presented below:

VAT Refund Rules and Appointment of a Tax Representative

According to Art. 87(6) of the VAT Act, the refund of the excess VAT is granted to the taxpayer and transferred to his bank account. A tax representative is not authorized to receive VAT refunds on behalf of the taxpayer.

This means that even if there are such provisions in the agreement, tax authorities cannot process the payment.

Summary

The role of a tax representative is crucial. Such services can save time and reduce stress related to dealing with the tax office. Before entering into an agreement with a tax representative, it is advisable to verify his experience, qualifications, and references.

Our experts offer comprehensive legal advice on tax representatives. Contact us for more information!

FAQ – Questions and Answers about Tax Representatives