Does the commissionaire structure achieve its tax aim in the UK?
As already mentioned, commissionaire is a French word and has no direct English translation. A commissionaire is an arrangement recognised under the European civil law concept of agency. Under civil law, a commissionaire can enter into sales contracts in its own name, but on behalf of the principal. Under civil law the commissionaire does not usually bind the principal, and so in theory the customer cannot sue the principal – there is no contractual relationship between the principal and the customer. Civil law applies in a lot of European countries, such as France, Belgium and Germany. However in the UK, we have common law as opposed to civil law. Under the common law of agency, the nearest equivalent to commissionaire is an undisclosed agent. Under common law, when an undisclosed agent enters into a contract, he binds the principal, and in theory the customer could sue either the agent or the principal – there is a contractual relationship between the principal and the customer.
