For non-EU companies operating in the European Union, VAT compliance increasingly involves more than simply registering for VAT and filing returns. In several EU countries, tax authorities now require foreign businesses to appoint a fiscal representative and provide a bank guarantee or other financial security. These guarantees protect the tax administration against unpaid VAT and ensure that the fiscal representative-who is jointly liable for your VAT obligations-can safely act on your behalf.
Whether you are seeking VAT registration, joining the VIES database for intra-EU transactions, or trading through a fiscal representative, understanding when and why a bank guarantee is required is essential to maintaining compliance and avoiding disruptions to your business.
At French Tax Online, we guide non-EU companies through these evolving requirements, helping you secure the right guarantees, meet local obligations, and manage VAT safely and efficiently across the EU.
Why Bank Guarantees Are Required
Bank guarantees exist because fiscal representatives assume a high level of responsibility when acting for non-EU companies. In many EU Member States, representatives are jointly and severally liable for any unpaid VAT, penalties, or interest owed by the businesses they represent. This shared liability exposes them-and indirectly, the tax authorities-to significant financial risk.
To manage this risk, tax administrations and fiscal representatives often require a financial guarantee, which may take the form of a bank guarantee, surety bond, or security deposit. The purpose of this guarantee is simple:
- Ensure that VAT debts can be recovered if the foreign business fails to meet its obligations.
- Protect the fiscal representative from bearing the full financial burden.
- Strengthen VAT compliance and reduce cross-border fraud.
Some countries impose these guarantees as a legal obligation, especially when non-EU businesses wish to perform intra-EU transactions or be listed in systems such as the VAT Information Exchange System (VIES). Others leave it to the fiscal representative to determine the level of financial security required, depending on the business’s risk profile, transaction volume, or trading history.
As a result, securing an appropriate bank guarantee is often a necessary step for non-EU businesses wanting to operate legally and safely within the EU VAT system. It provides reassurance to both tax authorities and representatives while enabling smooth cross-border trade.
VIES Registration & Bank Guarantee Requirements
For non-EU businesses, being listed in the VAT Information Exchange System (VIES) is essential to conduct tax-exempt intra-EU supplies of goods. Without VIES activation, suppliers cannot validate your VAT number, meaning your cross-border transactions may be automatically charged VAT – often non-recoverable for foreign traders.
Because of the fraud risks associated with intra-EU trade, several countries now impose stricter conditions for non-EU businesses, including the obligation to provide a bank guarantee when requesting VIES registration or renewal.
In practice, this means:
- A financial guarantee may be required before your VAT number can be activated in VIES.
Some countries, such as Italy, have introduced specific rules requiring non-EU businesses to submit a guarantee (often around €50,000 and valid for multiple years). - Existing non-EU traders may need to provide a guarantee to keep their VIES status.
Tax authorities can remove a VAT number from VIES if the required guarantee is not provided within the set deadline. - The guarantee must typically be issued by a recognised bank or insurer.
It must explicitly cover potential VAT debts arising from intra-Community transactions. - These obligations may evolve depending on legal challenges or updates in VAT legislation.
Temporary suspensions-like the recent pause of the Italian guarantee requirement-do not eliminate long-term compliance expectations. Companies should remain prepared to meet these obligations as soon as they are reinstated.
For non-EU traders, losing VIES access can have major consequences: suppliers may block shipments, VAT charges may increase, and cross-border operations can become unworkable.
Ensuring your VIES registration is backed by a proper guarantee is therefore essential for the continuity of your EU trade.
How French Tax Online Supports You
At French Tax Online, we help non-EU businesses navigate the growing complexity of VAT compliance across the EU – including situations where a bank guarantee is required. Our goal is to provide clarity, security and reliable support at every step, ensuring your operations remain compliant and uninterrupted.
We start by assessing your VAT obligations and confirming whether a bank guarantee is necessary based on your business model, trade flows and target countries. When VAT registration is required, we handle the entire process for you: preparing the application, coordinating with the tax authorities and ensuring that all documentation meets local legal standards.
If a bank guarantee is needed, we guide you through the process of securing the appropriate form of financial security. We explain the acceptable formats, help you understand the implications and work with your bank or insurer to ensure the guarantee is issued correctly and on time.
We also protect your VIES registration and intra-EU trading rights by managing all compliance conditions required for activation or ongoing eligibility. Should the tax authorities request information or initiate a review, we act as your accredited representative, handling communication, responding to queries and supporting you throughout audits or inspections.
Beyond these obligations, we ensure your long-term VAT compliance by managing your VAT returns, Intrastat filings, documentation requirements and ongoing monitoring of regulatory changes that may affect your business. With French Tax Online, you benefit from a partner dedicated to making EU VAT compliance clear, secure and efficient.
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