There are multiple differences between general and limited fiscal representation. With general fiscal representation (GFR), the representative will handle all the foreign business’s local tax obligations and VAT compliance, therefore allowing both B2B and B2C sales. The company will have its own Dutch VAT registration and VAT number, meaning that all transactions can be included in one VAT return. As a result, the representative only has limited liability for the VAT.

Limited fiscal representation (LFR) only applies to specific import and onward wholesale (B2B) transactions. The company doesn’t need a VAT registration or VAT number in the Netherlands, which means they will operate under the VAT number and license of the representative. Therefore, the import and onward transactions have to be included in the VAT return of the representative, meaning that the representative has unlimited liability for the VAT.