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Customer in Italy requires statement by German tax authority that I'm resident in Germany
Thread poster: Jan Born
Jan Born
English to German
Jun 25, 2008

Hi everyone,

I've recently completed a translation job for a company registered in Italy. The amount was rather small, less than EUR 100, and has already been paid.

I've now received an e-mail by the customer, several weeks after they've paid the invoice, that they need me to send them

a) a statement by myself that I have rendered my services in Germany
b) a statement by my local tax authority stating that I am resident in Germany for tax purposes.

Apparently they need this to avoid "the double imposition of the withholding tax of 30%".

I've worked for customers in Italy before and have never had this request.

Does anybody have any idea

a) what they are talking about
b) if they actually need these statements

???

I'm glad for any helpful advice.


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Uldis Liepkalns  Identity Verified
Latvia
Local time: 01:35
Member (2003)
English to Latvian
+ ...
Yes, we in Latvia too need such Jun 25, 2008

Tax residency statement once a year from all our foreign based freelancers.
Our Tax says it's EU requirement.

Here you can see Lithuanian example of such a form:

http://www.vmi.lt/formos/PDF/FR0254.pdf

Uldis

Jan Born wrote:
b) if they actually need these statements


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Niels Stephan  Identity Verified
Germany
Local time: 00:35
Member (2009)
English to German
Happened to me to Jun 25, 2008

I was asked for this by a Spanish agency as well. You can get it from the Finanzamt. It can be a struggly though, to make them understand what you mean. It worked out for me with this desription, once I found the right person.
If they really need it? Dunno. If they say "Send it or don't get payed" you believe, that they need it.

Good luck!


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xxxBrandis
Local time: 00:35
English to German
+ ...
Anmeldebescheinigung... Jun 25, 2008

Hi! They are talking about a proof of your stay which your district authority issues and it contains a clearing stamp. That is it? Brandis

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Williamson  Identity Verified
United Kingdom
Local time: 23:35
Flemish to English
+ ...
Guideline Jun 25, 2008

Uldis Liepkalns wrote:

Tax residency statement once a year from all our foreign based freelancers.
Our Tax says it's EU requirement.

Here you can see Lithuanian example of such a form:

http://www.vmi.lt/formos/PDF/FR0254.pdf

Uldis

Jan Born wrote:
b) if they actually need these statements


Based upon which guideline?


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Uldis Liepkalns  Identity Verified
Latvia
Local time: 01:35
Member (2003)
English to Latvian
+ ...
In our case based on threats Jun 25, 2008

that we will have to pay taxes for all our foreign freelancers as for Latvian residents in case we do not present them these papers. I don't know on what guideline, but anyway, to start arguing with our tax authorities on such issues is not the very best idea here- even if you will prove them wrong on this not very important point (it's not a money matter after all, just a formality), you might get full depth audit as return- and that will paralyze your job for a few months and increase amount of your gray hairs considerably.

BTW, they indeed do recheck these Tax Residency papers- as far as I know, most of EU countries has a common online database now. Which of course leads to question why they ask for these hard copies then... But so it goes.

Uldis

Ach, yes, there were Regulations of Latvian Cabinet of Ministers, requiring this. They are somewhere on my computer, bet can't find them right now and so look on what they are based.

Added- yes, found it:
Regulations No. 178 issued by the Cabinet of Ministers of the Republic of Latvia on 30.04.2001.

Order of Application of Tax Exemptions Stipulated by International Agreements on Prevention of Double Taxation and Tax Evasion
Issued in accordance with Paragraph 3 of Article 7 of the Law “On Taxes and Duties”
================
3. If the Payer makes respective payments to the Payment Recipient and the Tax Agreement provides for taxation (tax collection) of these payments by a reduced rate or full exemption from taxation (tax collection) in the Republic of Latvia, the Payment Recipient, prior to making the payments, submits to the Payer a filled-out resident’s certificate application of a standard type for application of tax exemption (hereinafter – Exemption Certificate) (Annex 1).
4. Exemption Certificate is filled out in four copies. Three copies are given to the Payer; the fourth copy is left to the Payment Recipient.
5. The Payer submits the received copies of Exemption Certificate to the territorial office of the State Revenue Service at the place of registration (residence). The territorial office of the State Revenue Service examines the received Exemption Certificate and, within the term of no more than 30 days from receiving, verifies it by filling out Part IV of all three copies of the Exemption Certificate and sends two verified copies of the Exemption Certificate to the Payer or issues a written motivated refusal to verify the Exemption Certificate. After receiving the verified Exemption Certificate, the Payer withholds taxes from the payments according to the Tax Agreement, applying a reduced tax rate or full exemption.
6. State Revenue Service does not verify the Exemption Certificate in following cases:
6.1. if the Payment Recipient is not entitled to benefit from exemptions stipulated in the specific Tax Agreement (e.g. the Payment Recipient, in accordance with respective Tax Agreement, may not be considered a resident of the other country of the Agreement, or the exemptions stipulated in the Tax Agreement may not be applied on the grounds of stipulations on limitations of benefits contained in the Tax Agreement, or other stipulations of the Tax Agreement);
6.2. if the information provided by the Payment Recipient must be verified by carrying out exchange of information or mutual co-ordination procedure with competent authorities of the other country of the Agreement.
7. According to the received filled-out Exemption Certificate, the Payer, when determining its own taxable income in regard to the payments paid to the Payment Recipient from which taxes have been withheld according to the Tax Agreement, does not enhance the taxable income in accordance with the order set by Clause 4 of the first paragraph of Article 6 of the Law “On the Income Tax of Enterprises”.
8. The Payer attaches one of the received copies of the Exemption Certificate to its income tax declaration and submits it to the State Revenue Service.
9. If the Payer has applied tax exemptions stipulated in the Tax Agreement, while the Payment Recipient has not been entitled to benefit from the exemptions (e.g. the Payment Recipient has not submitted to the Payer a certified Exemption Certificate or the Payment Recipient at the moment of receiving the payment may not be considered a resident of the other country of the Agreement in accordance with respective Tax Agreement), the tax for the payments, determined as the difference between the sum of tax calculated by applying tax rates laid down by the law of the Republic of Latvia, and the sum of tax calculated by applying tax rates set by respective Tax Agreement, is paid by the Payer. In this case, the Payer pays in the state treasury also the principal debt increase interest and overdue interest set by the Law “On Taxes and Duties", and does not increase the taxable income in accordance with the order set by Clause 4 of the first paragraph of Article 6 of the Law “On the Income Tax of Enterprises”.
===============================


U.

Williamson wrote:
Based upon which guideline?


[Rediģēts plkst. 2008-06-25 15:35]

[Rediģēts plkst. 2008-06-25 16:03]

[Rediģēts plkst. 2008-06-25 16:34]


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Monica Sandor  Identity Verified
United Kingdom
Local time: 23:35
English
+ ...
Tax residency status Jun 16, 2013

Interesting - till now I have only been asked for this sort of tax residency form by a Spanish client (Spain wants to make sure that Spanish residents pay their taxes on freelance income by obliging payers (clients) to deduct the withholding tax directly. They of course don't care about foreign residents.

But I recently came across the opposite - a German client said that if I an NOT resident in Germany THEN they have to withhold 15% but if I were a German resident they would not.

But this applies apparently only to translation, which his considered "intellectual work" with attendant intellectual property rights, whereas editing or proofreading work would not have to have tax withdrawn from it. Has anyone else encountered this before?


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