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Thread poster: Carla Davidson
Intra-community VAT Number - is it necessary?

Carla Davidson  Identity Verified
United Kingdom
Local time: 03:29
Member (2009)
Spanish to English
+ ...
Jul 1, 2010

Dear all,

I am a freelance translator based in the UK. I work for companies in the UK and Spain in particular. One translation agency I work with that is based in Spain has asked me to provide them with an intra-community VAT number.

I called the HMRC on the special VAT helpline, and they know of no such VAT number. My client is adamant that I need this VAT number otherwise I will not be able to do any more work for them or for anyone else in Europe (outside of the UK,my country of residence, that is).

I am not sure where else to look and am not sure I really need to provide this intra-community VAT number. I understand that this Intra-community VAT number is perhaps your VAT number (if you are VAT registered) with your country of residence in front of it, so GB xxxxxxx. I am not VAT registered as my earnings are below £60,000 and I have been told by HMRC that VAT registration is voluntary if you earn below this amount.

My client has suggested I might have to register for VAT, in order to provide them with the intra-community VAT number but my earnings are such that I don't think registering for VAT is beneficial to me at this time.

I just wondered if any other translators based in the UK who are working for companies in Spain have been asked for this Intra-community VAT number? I have some other clients in Spain and they have not asked me for this number, or at least not yet anyway.

Any help would be most appreciated.

Thanks in advance,

Carla


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Sonia Atkinson  Identity Verified
Local time: 03:29
Member (2010)
Italian to English
+ ...
Similar thread Jul 1, 2010

Hi Carla,

There have been a few threads about this recently. This one might be helpful: http://www.proz.com/forum/money_matters/173296-vat_cant_issue_an_invoice_in_spain_without_vat_registration.html

I'm also based in the UK with no VAT number, and most of my clients are in Europe. I had a few queries recently about my lack of VAT number, but after further investigation they all came back to me saying that it was ok and we could continue as before. We are exempt under UK law and that is the important thing. I sent them a link to the HMRC website, where it says that the VAT threshold in the UK is £70,000 and I think that helped.

Sonia


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Sabine Braun  Identity Verified
United Kingdom
Local time: 03:29
Member (2006)
English to German
+ ...
Similar problem Jul 1, 2010

I have also been asked for my VAT no. by agencies outside the UK a few times. As they seem to need some kind of tax ref. I now state my UTR no. on my invoices instead and they have not complained since. I don't know if this is of any help to you, but it definitely works for my clients within the EU.

Good luck,
Sabine


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Alison Sabedoria  Identity Verified
France
Local time: 04:29
Partial member (2009)
French to English
+ ...
Are we in a Kafka novel? Jul 1, 2010

I'm based in France and have not yet had a problem with this, but I've been following discussions and articles on the topic for several months, in the hope of being adequately informed.

My own tax advisor here was surprised when I said that many translators are now being asked for an "intra-community" VAT number, even if registered as "Autoentrepreneur" (i.e. normally exempt as below the threshold), so she did some research of her own, just to be sure.

She now assures me that for anyone below the threshold it isn't necessary, and reckons that companies in the habit of dealing with "big fish" providers, all of whom are VAT-registered, find it difficult to treat the "tiddlers" differently. As the new regulations are as clear as mud - even tax inspectors and accountants are having trouble sorting their way through them - many companies are just asking for a number from everybody as a matter of course.

I hope she's right (she usually is). But we shall see...

Meanwhile, be thankful for the good old UK self-employment set-up. I registered as "Autoentrepreneur" in January, and am due to make my first turnover declaration this month, but have not yet received even an acknowledgement of my status, let alone my file number for the "simple" online log-in. Hey-ho!


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LuciaC
United Kingdom
Local time: 03:29
English to Italian
+ ...
A question of interpretation of the rule Jul 1, 2010

I think the 'eagles' at the EU who negotiated the new directive (Intrastat lists now compulsory for services as well as goods) FORGOT about those who are not registered for VAT but trade internationally.

There is now a lot of confusion around. The Spaniards, in particular, from what I've read here on Proz, seem to think that they have to fill in the lists with ALL the operations they have carried out during the month, otherwise they think they are going to be accused of evading tax or something.
So, no Vat, no business.

The Italian authorities have recently issued an explanation where they say that those who are not registered are exempt from such lists but are entitled to trade their services (if I understood correctly, since I've read it very quickly.)
So, no Vat, no lists. But ok business.

This is what I've managed to gather so far. I am not directly concerned because I only work with Switzerland and the UK but I do want to know.

The Brits, as usual, live on their island and don't have a clue about the rest of Europe. My accountant wasn't aware of any change relevant to my status and after I wrote back with a more detailed description of the situation he said that I would simply have to bite the bullet and register for Vat.

The Intrastat lists are not an income tax document - so much so that they go to the Customs/Douanes authorities, not the tax authorities. You have to fill in all Vat tradings because they are trying to keep track of movements of goods and services due to high levels of Vat fraud. Non-Vat tradings will not appear in the lists, of course, but will still appear in your income/expenses returns.

If I got all this wrong, I'd be glad to be enlightened at last!



[Edited at 2010-07-01 12:10 GMT]


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Williamson  Identity Verified
United Kingdom
Local time: 03:29
Flemish to English
+ ...
The UK: If you can't beat them, join them. Jul 1, 2010

The UK still has a business-minded and gentleman/lady minded mentality.
A Customer-friendly Companies House and fiscal administration vs. the bureaucratic mindset of France, Belgium, Italy, Spain and the like (thank you, Napoleon Bonaparte, the founder of those bureaucracies).
Bureaucracies and not entrepreneurial-minded at all.
If Branson had started in those countries, he would long have been bust.


[Edited at 2010-07-01 13:35 GMT]


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Guillaume de Th
France
Local time: 03:29
How to check your VAT number Jul 1, 2010

Here's a site where you can chek your VAT number:
http://www.gbrdirect.co.uk/


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Setti Mulari  Identity Verified
United Kingdom
Local time: 03:29
Finnish to English
Disclaimer Jul 1, 2010

I've been through this same rodeo before. Now even Finnish companies want the VAT number or they can't pay me. However, I have a standard response with the link to HMRC website where it states that I don't have to register for VAT.

All queries stopped, however, when I added a short disclaimer at the bottom of my invoice template. It clearly states that as per British tax laws, I am exempt from VAT. Job done. Nobody's asked any questions or challenged it in any way.


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Michael Wetzel  Identity Verified
Germany
Local time: 04:29
German to English
The source of the problem Jul 2, 2010

Disclaimer: I am not an accountant, so I make no claims that the following is reliable information. I am an interested lay person who has a stake in the issue and got interested.

Business clients in other EU countries are responsible for reporting and "paying" (the state immediately refunds their money) VAT as though the services were rendered in their own country. This may sound silly, but it is a simple solution for a complex problem. If this were not the case, the Spanish company would have to get its VAT-refunds from each national government separately.

That means that it is irrelevant to a Spanish company, whether or not a translator based in Britain is VAT-exempt. If the Spanish company itself is not VAT-exempt, then it needs to pay Spanish VAT on your invoice as though it were included (for this reason your invoice needs to include a statement to the effect: Customer is responsible for reporting and paying VAT).

The source of the problem is that the Spanish companies need a VAT number from you in order to file their VAT forms correctly. The company's request and the system are perfectly legitimate.

If they stopped asking questions, I would guess that they are doing something wrong now. The only thing that I can think of is that by writing the wrong information on your invoice (exempt from British VAT, which is correct but irrelevant, because it is an inner-EU transaction and the customer is responsible for paying VAT in his or her own country), you becomes responsible for the "lost" VAT and it is not the customer's problem.

The problem is the implementation: I would estimate that in Germany, 50-90% of the officials in tax offices can't grasp the issue that you have here and will give you exactly the same misinformation, which you already received. That means that you have to call between 2 and 10 times until you find someone who can explain how to get a VAT-Number as a VAT-exempt professional. I can't imagine that the British government really failed to create a system to address this problem - it just got lost under the masses of information every public bureaucrat and private tax-consultant is supposed to process daily.

So keep calling and post the answer or take the easy way out and give up your VAT-exemption. It will take several hours the first time you file, but after that maybe 15 minutes a month if you generally keep adequate tax records. Unless you often work for private or other VAT-exempt clients or you never invest in your business, those few hours will bring you hundreds of GBP/EUR per year.


[Bearbeitet am 2010-07-02 10:45 GMT]


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Ramon Somoza  Identity Verified
Spain
Local time: 04:29
Member (2002)
Dutch to Spanish
+ ...
Might depend Jul 2, 2010

I am based in Spain, and I DO have a VAT number, in Spain it is mandatory no matter how much you earn.

In accordance with existing legislation, I MUST charge VAT to Spanish companies (since yesterday, 18%). I MUST also charge VAT to EU companies UNLESS they provide me with a legal VAT number, and I am obliged (since January this year) to report the VAT numbers and amounts of all EU companies with which I have worked and for which I did not charge VAT.

So VAT is mandatory. It might however be that in certain legislations -for example, if the professionals do not require a VAT number- then the company itself pays the VAT, but I could not confirm that, I've never had that problem myself.


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LuciaC
United Kingdom
Local time: 03:29
English to Italian
+ ...
Found this... Jul 4, 2010

on a freelancers' website:

http://www.freelanceuk.com/news/3520.shtml


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Carla Davidson  Identity Verified
United Kingdom
Local time: 03:29
Member (2009)
Spanish to English
+ ...
TOPIC STARTER
Thanks for all the advice. Jul 6, 2010

Hello,

I just wanted to say many thanks to you all for sending me the different links you found and telling me of your own experiences with Spanish companies. I really appreciate it.

I e-mailed HMRC to try to get something in writing from them that I could pass on to my client to prove that I really don't need the IC VAT number but it could take up to 15 days for a response.

After reading all of your comments, I decided to keep my client calm by putting a disclaimer on my invoice and adding my UTR and Social Security Number too for good measure.

I got the disclaimer note from Gillian Searl's post on the same topic (http://www.proz.com/forum/money_matters/173296-vat_cant_issue_an_invoice_in_spain_without_vat_registration-page2.html). It makes reference to the Directives that exclude UK-based freelancers from needing to obtain the IC VAT number.

Thanks again,

Carla


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juvera  Identity Verified
Local time: 03:29
Member (2005)
English to Hungarian
+ ...
I can't immagine that they failed to recognise that problem Jul 8, 2010


Michael Wetzel wrote:

Business clients in other EU countries are responsible for reporting and "paying" (the state immediately refunds their money) VAT as though the services were rendered in their own country. This may sound silly, but it is a simple solution for a complex problem. If this were not the case, the Spanish company would have to get its VAT-refunds from each national government separately.*

*No, as you say: they have to "pay" VAT as though the services were rendered in their country, therefore they have to "claim" it back the same way; from their country.


The only thing that I can think of is that by writing the wrong information on your invoice (exempt from British VAT, which is correct but irrelevant, because it is an inner-EU transaction and the customer is responsible for paying VAT in his or her own country), you becomes responsible for the "lost" VAT and it is not the customer's problem.

No, it is not the wrong information, as you say, it is correct.



The problem is the implementation: I would estimate that in Germany, 50-90% of the officials in tax offices can't grasp the issue that you have here and will give you exactly the same misinformation, which you already received. That means that you have to call between 2 and 10 times until you find someone who can explain how to get a VAT-Number as a VAT-exempt professional. I can't imagine that the British government really failed to create a system to address this problem - it just got lost under the masses of information every public bureaucrat and private tax-consultant is supposed to process daily.

It is a German or Spanish or some other EU country's problem, and I can't immagine that their government, who created this problem, failed to create a system to address it. In Great Britain we simply put it on the invoice: VAT - £00.00



So keep calling and post the answer or take the easy way out and give up your VAT-exemption. It will take several hours the first time you file, but after that maybe 15 minutes a month if you generally keep adequate tax records. Unless you often work for private or other VAT-exempt clients or you never invest in your business, those few hours will bring you hundreds of GBP/EUR per year.

No, thank you. I take the easy way out and don't register for VAT.


Guillaume de Th wrote:
How to check your VAT number

Here's a site where you can chek your VAT number:
http://www.gbrdirect.co.uk/

Yes, if you are a company, but a lot of us are merely self-employed free-lancers.


Lucia C wrote:
Found this...
on a freelancers' website:

http://www.freelanceuk.com/news/3520.shtml


Thank you very much, good of you to find this explanation. It should help to clear the issue.
I repeated it, just to make sure nobody would overlook it when visiting this thread.


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Giovanni Guarnieri MITI, MIL  Identity Verified
United Kingdom
Local time: 03:29
Member (2004)
English to Italian
Same here... Jul 8, 2010

I was contacted by an Italian company I work for (first invoice for them) the other day asking for my VAT number (for Instrastat). I too explained that I don't need one and that they can use my tax number if the wish to do so. They haven't got back to me as yet... It's quite confusing for them, since they feel the need to tick every single box and don't understand why we are not obliged to be VAT registered here in the UK!

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Michael Wetzel  Identity Verified
Germany
Local time: 04:29
German to English
solution copied and pasted here Jul 14, 2010

Dear Juvera,
Sorry about the barbs against British separatism. I'll try to stick to the issue.

My first point quoted in your response was that the Spanish agency needs a VAT number from the translator, in order to claim their refund of Spanish VAT. The wonderful link in Carla's last entry makes clear that MY STATEMENT WAS INCORRECT and states what a UK VAT-exempt translator needs to write in an invoice so that a Spanish agency can get its refund.

Quoted from Carla's link:
In case, under your national law, you are not obligated to request a VAT number:
please, we ask you to indicate in all of your invoices these three notes:
o “VAT exempt invoice in application to the article 196 in Directive 2006/112/EC. This service is subject to the VAT reverse charge.”
o I do not have [sic] VAT number according to article 214.2 and article 272.1 and letter d of the Directive 2006/112/EC.
o [National legislation: HMRC Notice 700/1 (Apr 2010) Section 2 ff]

The fact that a translator is VAT-exempt in the UK really is irrelevant to the Spanish agency and tax collectors; the fact that the EU directive - in combination with UK law - states that no VAT-Number is needed for such inner-EU transactions is relevant.

So, the British government (as I assumed) did find a way to address the problem.

Sincerely,
Michael


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Intra-community VAT Number - is it necessary?







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