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Thread poster: Paul Carmichael
VAT nonsense

Tomás Cano Binder, CT  Identity Verified
Spain
Local time: 13:45
Member (2005)
English to Spanish
+ ...
Your decision! Jan 9, 2012


Paul Carmichael wrote:
"PS: ***Applicants within the EU and outside Spain MUST provide an INTRACOMMUNITARY VAT REG number. SPANISH LAW forces us to indicate this number in all our transactions before proceeding to any payment.***

The answer is simple here: do not work with these agencies. Other agencies may require that you like The Beatles or that you own an ice pick. If you are not able/ready to honour a requirement (which is in this case imposed by Spanish tax law), then do not work for them.


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Giles Watson  Identity Verified
Italy
Local time: 13:45
Member
Italian to English
Why only the Spanish? Jan 9, 2012

Why is it only the Hacienda that digs its heels in over this?

I'm fairly sure the Italian Fisco has no problem if an Italy-based purchaser applies the reverse charge mechanism in similar circumstances and I imagine the tax people in other EU countries will take an equally pragmatic line.


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Neil Coffey  Identity Verified
United Kingdom
Local time: 12:45
Member (2009)
French to English
+ ...
Thoughts... Jan 9, 2012


Tomás Cano Binder, CT wrote:
The answer is simple here: do not work with these agencies. Other agencies may require that you like The Beatles or that you own an ice pick. If you are not able/ready to honour a requirement (which is in this case imposed by Spanish tax law), then do not work for them.


I sort of agree, but it does seem in this case that the Spanish authorities just didn't think things through properly in inventing this requirement, and now it's the "little man" that has to pay the consequences for their poor decisions. It really only makes sense to demand a VAT number from entities that are actually VAT-registered and so measures need to be in place to deal with the case where an entity is not VAT-registered. After all, for providers outside Europe, they have to have such measures in place in any case.

Perhaps some day, some people in Spain will get "indignados" enough to write a sternly worded letter to their government representative about this.

On the other hand, I assume the issue is simply that the client/agency wants to avoid paying the VAT. That's understandable, but presumably in emergencies (e.g. if there's a UK-based translator that an agency really needs to work with for their particular skills on a one-off project) another solution would be for them to just pay the VAT.

[Edited at 2012-01-09 17:28 GMT]


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RobinB  Identity Verified
Local time: 13:45
German to English
Which EU law, exactly? Jan 9, 2012


Laurent KRAULAND wrote: Under EU law, there's an obligation to be VAT-registered - have a VAT ID number, nothing more - as soon as you do business abroad (outside of the United Kingdom of England, Wales and Northern Ireland


Exactly which EU law would this be? Perhaps you can quote the specific article of the directive or regulation that specifies this particular requirement.

And perhaps somebody can also cite the specific article of the EU directive or regulation that requires the Spanish tax authorities to demand a VAT ID number, but not e.g. the German tax authorities (who follow the letter of EU law and merely require evidence that the supplier in another member state is a business, not a private individual).


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Jabberwock  Identity Verified
Poland
Local time: 13:45
Member (2004)
English to Polish
VAT Jan 9, 2012


Neil Coffey wrote:
I sort of agree, but it does seem in this case that the Spanish authorities just didn't think things through properly in inventing this requirement, and now it's the "little man" that has to pay the consequences for their poor decisions. It really only makes sense to demand a VAT number from entities that are actually VAT-registered and that measures need to be in place to deal with the case where an entity is not VAT-registered. After all, for providers outside Europe, they have to have such measures in place in any case.


This is incorrect, I am afraid.

If I invoice a client within EU who does not have VAT number, I need to add the VAT (as he is, in view of the regulations, the "end client" or "consumer" - that's how VAT works). For clients outside Europe VAT is not applicable at all, so it is clearly different.

And yes, Spanish authorities are right and consistent with EU regulations (as far as I know the same remark is put on invoices in Poland, Hungary, etc.). The only shortcut that the EU authorities made was to use VAT registration as the proof of being "a business". But then creating a second European database for companies which, beside the non-VAT businesses, would be identical with the VAT one (which is necessary anyway), would be an even greater nonsense.


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Giles Watson  Identity Verified
Italy
Local time: 13:45
Member
Italian to English
It's a big only Jan 9, 2012


Jabberwock wrote:

The only shortcut that the EU authorities made was to use VAT registration as the proof of being "a business". But then creating a second European database for companies which, beside the non-VAT businesses, would be identical with the VAT one (which is necessary anyway), would be an even greater nonsense.



Thanks for confirming that there is no real logic to this.

What was wrong with setting up a single business database with a separate field for VAT registration right from the start?


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Neil Coffey  Identity Verified
United Kingdom
Local time: 12:45
Member (2009)
French to English
+ ...
Changed in other countries? Jan 9, 2012


Jabberwock wrote:
And yes, Spanish authorities are right and consistent with EU regulations (as far as I know the same remark is put on invoices in Poland, Hungary, etc.). The only shortcut


I wonder if the rules have changed recently in some other countries then? I've done work for clients in other EU countries (including Hungary) and a VAT number has never been a necessity, though occasionally other measures have (e.g. a statement from HMRC that I pay taxes in the UK or at least putting "VAT not applicable" on the invoice).


Jabberwock wrote:
business". But then creating a second European database for companies which, beside the non-VAT businesses, would be identical with the VAT one (which is necessary anyway), would be an even greater nonsense.


Ah you see, if only they'd consulted me, I would have shown them how to add a boolean flag to the database to indicate: "VAT registered: yes/no"...


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neilmac
Spain
Local time: 13:45
Member (2007)
Spanish to English
+ ...
Hacienda somos todos Jan 9, 2012


Laurent KRAULAND wrote:

The requirement for a VAT number -whether one pays VAT or not- has existed Europe-wide for some years.



Yes indeed, no mystery there.

One the basis of experience, I surmise that the reason, my dear colleagues, is that most Spanish people simply have (to put it more politely than I'd prefer) a bee in their bonnet about complying with tax rules and the dire consequences should they fail to do so. The bureaucracy and its intricacies and inconsistencies are notoriously maddening....

PS: Sorry, I had to laugh at this from my namesake: "...the Spanish authorities just didn't think things through properly..."

In fact, am still ROFL...



[Edited at 2012-01-09 18:27 GMT]

BTW, am not really sure what "VAT-registered" means. I bill some of my clients for VAT, which I declare every three months and have to pay to Hacienda. I don't remember ever "registering", but I have an agent who does all that sort of thing for me so I probably am. It's not a big issue within Spain.

PPS: AFAIK, translation of literary works and scientific research are still VAT-free in Spain, as noted on my bills:
"IVA exento según Artículo 20-1-9 de la Ley del IVA"

[Edited at 2012-01-09 18:39 GMT]


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Laurent KRAULAND  Identity Verified
France
Local time: 13:45
French to German
+ ...
Council Directive 2006/112/EC Jan 9, 2012

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:en:PDF

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neilmac
Spain
Local time: 13:45
Member (2007)
Spanish to English
+ ...
Useful reference Jan 9, 2012




And also quite entertaining. I cant believe they still start things with: "Having regard to..."


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Giles Watson  Identity Verified
Italy
Local time: 13:45
Member
Italian to English
And your point is, Laurent? Jan 9, 2012

Exemption for enterprises whose turnover is below a threshold established by each member state is enshrined in the directive.
>
Article 286
Member States which, at 17 May 1977, exempted taxable persons whose annual turnover was equal to or higher than the equivalent in national currency of 5 000 European units of
account at the conversion rate on that date, may raise that ceiling in order to maintain the value of the exemption in real terms.
>
Subverting such thresholds by insisting on VAT registration is tantamount to unlawfully restricting the legitimate activities of small businesses. Only Spain seeks to do this.


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Giuliana
Local time: 12:45
English to Italian
+ ...
Pretend VAT number Jan 9, 2012

Hey, I know!
When asked for our non-existent VAT number, why don't we all give the Spanish agencies a pretend one, made up on the spot.
I bet nobody would ever notice!

Having had experience of this issue myself, the rare times I work with the Spaniards I tell them beforehand that I am not VAT-registered, they still give me the job, and when inevitably they come back asking for the VAT number, I resolutely refuse to accept that they need one from me and ... they say "OK then!"

There is however a certain amount of aggravation in the whole process.

Giuliana


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Charlie Bavington  Identity Verified
Local time: 12:45
French to English
Bloody translators Jan 9, 2012


neilmac wrote:
I cant believe they still start things with: "Having regard to..."


Doubtless where the blame lies.


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Charlie Bavington  Identity Verified
Local time: 12:45
French to English
Domestic issue? Jan 9, 2012


Giles Watson wrote:

Subverting such thresholds by insisting on VAT registration is tantamount to unlawfully restricting the legitimate activities of small businesses. Only Spain seeks to do this.


Apparently, if you ask real nice, hmrc will give you a VAT number without actually registering you for VAT. I'm VAT reg'd so it's hearsay & outside my personal experience.

I admit, I've only ever heard of this in relation to Spain (ever since 1 Jan 2010 was it?) and I've always assumed it was some kind of domestic issue they were seeking to resolve.

Either that, or their online tax return system just made VAT number a compulsory field 'cos, well, everyone just thought it would be and never thought to ask (see also: French computer systems' address formating, for example).


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Giles Watson  Identity Verified
Italy
Local time: 13:45
Member
Italian to English
The pretenders Jan 9, 2012


Charlie Bavington wrote:

Apparently, if you ask real nice, hmrc will give you a VAT number without actually registering you for VAT.



The more UK-based small businesses apply for phantom registrations (at the same time?), the more likely the VAT people are to twig there is a problem and address it. The pretend number would have to be visible on VIES, of course.


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VAT nonsense







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