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Enterprise Europe Network
  • Success story article
  • 1 February 2015

Unclogging a tax problem

A French sanitation firm finds new business across the border, thanks to the Enterprise Europe Network's help in sorting out a tax issue.

The Richard family has spent the past two decades building a small sanitation business in Mexy, a town near Metz in northeastern France.

The SME wanted to take advantage of its border location and sell its sewer- and septic-tank maintenance services in Luxembourg, but expansion proved harder than expected. The Richards were caught off guard when the French authorities demanded value-added tax (VAT) on services provided in Luxembourg - even though the business still had its base in France.

Like many small firms, the Richards lacked the resources to handle the matter on their own, or hire an accountant or a tax lawyer.

For help, they turned to Tiphaine Rocton of the Conseil RĂ©gional de Lorraine, part of the Enterprise Europe Network, whom they met at a conference about doing business in Luxembourg. The Network's 3,000 experts regularly give small businesses advice on EU and cross-border law.

"This case turned out to be a misunderstanding about European legislation," says Rocton, a legal expert who informed the Richards that they were liable for VAT in Luxembourg rather than France. Later, she also helped the company complete all the formalities to provide services in Belgium, another market of interest.

Rocton explained the mistake in a letter to French authorities, who promptly dropped the case. She and Network partners in Germany and Luxembourg often collaborate on collecting information for companies with cross-border activities.

"We had a very quick and clear-sighted answer from the Network," says Estelle Richard, who continues to rely on Rocton for advice. In this case, the advice was particularly timely, coming at a crucial time in the company's development when Estelle Richard had just taken over the management. Had they not been able to sort things out with French authorities, it might have spelled disaster for the small firm.

Thanks to the Network, the Richards were able to solve the problem quickly - and without paying fees - and focus on the next steps for their company. Today, the SME does about a quarter of its business across the border, including in Belgium.