Mandate contract

What it means

A mandate contract is a commercial-law agreement under which the mandatary undertakes to handle a particular business matter for the mandator, using its own expertise and acting in the mandator’s name. Accounting firms keep the books, run payroll and file returns on this basis.

It differs from a contract for work in that the subject is an activity performed with professional care, not a tangible result. It differs from employment in the provider’s independence and its own responsibility for how the work is done.

The mandate contract belongs to the Commercial Code and is concluded between businesses in the course of their business. When the services are ordered by an individual who does not run a business, for example only for a return on rental income, a similar relationship is governed by a contract of agency under the Civil Code, with somewhat different rules.

How it works in practice

A sound contract defines scope (what is covered and what is not), document deadlines, how communication happens, the price and how it changes, professional indemnity insurance, and termination including handing back the data.

It comes with a power of attorney for dealing with the authorities, and an SLA where response times matter. Where it follows another provider, the handover procedure is attached.

It is worth writing into the contract the work that falls outside the regular monthly routine: representation during a tax audit, corrections of past periods left by the previous provider or extraordinary financial statements. When it is clear in advance how such work is billed, the invoice does not surprise the client and the scope is not negotiated under pressure just before a deadline.

What to watch out for

Responsibility for the content of a filing stays with the managing director even under outsourcing - the contract allocates tasks, not statutory liability. That is why it states by when the client supplies documents: late documents mean the provider cannot guarantee the filing date.

When the relationship ends, people often forget to cancel the representation with the tax administrator and the access to the electronic mailbox. Documents keep going to the former provider, the new one does not see them and deadlines run without anyone knowing. Revoking authorisations therefore belongs on the same checklist as handing over the data.