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What is Limited Fiscal Representation (LFR)


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Limited Fiscal Representation (LFR) in the EU's VAT System

Under the EU's VAT system, importers can use Limited Fiscal Representation (LFR) to bring goods into one EU member state and sell them in another without paying VAT at the time of import.

Benefits of LFR

  • LFR improves importer's liquidity by deferring VAT payment until goods are sold in the destination member state.
  • Simplifies VAT compliance for businesses.

Process of LFR

  1. Importer brings goods into an EU member state and appoints a fiscal representative there.
  2. The fiscal representative handles VAT responsibilities during import.
  3. Goods are sold to a buyer in another EU member state.
  4. Tax authorities in both member states receive transaction information.
  5. VAT responsibility shifts to the buyer in the destination member state.

Customs Representation

Direct and Indirect Representation

Customs representation comes in two forms:

  • Direct representation: The stakeholder is the declarant and responsible for the customs declaration.
  • Indirect representation: The customs agent is the declarant and responsible for the declaration, often used when stakeholders are based outside the importing country.

Fiscal Representation

Fiscal representation involves the appointment of a tax representative in an importing country to handle a foreign entity's business with the tax and customs administrations.

Types of Fiscal Representation

  • General fiscal representation: The representative handles all tax matters, including VAT.
  • Limited fiscal representation: The representative focuses on VAT matters.

Deferment and Postponed VAT Accounting

Deferment or postponed VAT accounting allows businesses to delay VAT payment on imports.


In the Netherlands, businesses can use deferred VAT by obtaining an Article 23 permit.


Businesses in the UK can utilize postponed VAT accounting by registering for VAT.

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