Joint liability: the foundation of the guarantee
When a foreign company appoints a VAT tax representative in France, that representative accepts significant legal responsibility: it becomes jointly and severally liable for the VAT owed by the company it represents. In practice, if the foreign company fails to meet its French tax obligations, the administration can turn directly to the representative to recover the amounts owed.
This joint and several liability is set out in Article 289 A of the French General Tax Code (CGI). It justifies the requirement that the tax administration — before granting accreditation — ensures the representative has genuine financial capacity to assume this risk. The bank guarantee is the primary instrument that gives substance to this capacity.
How the bank guarantee works
The bank guarantee generally takes the form of a guarantee letter issued by an approved French banking institution, in favour of the French Public Finance Directorate (DGFiP). It is provided to the competent French Tax Office (SIE) during the tax representative's accreditation procedure.
This guarantee may cover all of a tax representative's clients or be contracted on a client-by-client basis, depending on the institution's practices and the tax authority's requirements. In practice, large specialist firms — which represent dozens or hundreds of foreign companies — hold global bank guarantees that allow them to operate without multiplying individual applications.
- Form: irrevocable first-demand bank guarantee letter
- Beneficiary: the French Treasury (DGFiP)
- Duration: generally annual with tacit renewal
- Trigger: upon non-payment of VAT noted by the administration
Amount and conditions of the guarantee
There is no legally fixed amount for the bank guarantee. It is assessed on a case-by-case basis by the French Tax Office, taking into account the volume of taxable transactions of the foreign company and the financial standing of the representative. For a small company with a moderate turnover in France, the guarantee may be limited to a few tens of thousands of euros. For large operators, it can reach several hundred thousand euros.
| Profile of the represented company | Indicative guarantee |
|---|---|
| Small structure, limited transactions | €10,000 – €50,000 |
| SME, regular activity in France | €50,000 – €200,000 |
| Large company, significant volume | €200,000 and above |
Some tax representatives may be exempt from a specific bank guarantee if their own financial standing — attested by certified accounts — is deemed sufficient. This is typically the case for large audit and advisory groups that carry out this activity on an ancillary basis.
Impact on the representative's fees
The bank guarantee has a real cost for the tax representative: it must mobilise funds or pay an annual bank premium. This cost is invariably passed on, in whole or in part, in the fees charged to the foreign company. It is a cost item to analyse when negotiating the representation mandate.
To find a tax representative with transparent pricing and solid accreditation, consult our list of DGFiP-accredited tax representatives. You can compare their specialisms and fees before committing.