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User
Thread poster: Paul Carmichael
VAT nonsense
Laurent KRAULAND  Identity Verified
France
Local time: 01:17
French to German
+ ...
@ Giles... Jan 9, 2012

My point is that any foreign customer within the European Union who cannot provide me with their VAT number will have to pay French VAT (19.6 %) on the invoices I send them.

I'd be breaking the law if I acted in any other way.

PS @ Giuliana: and yes, the VAT numbers are checked for existence and accuracy.

[Edited at 2012-01-09 20:05 GMT]


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Giles Watson  Identity Verified
Italy
Local time: 01:17
Member
Italian to English
@ Laurent Jan 9, 2012


Laurent KRAULAND wrote:

My point is that any foreign customer within the European Union who cannot provide me with their VAT number will have to pay French VAT (19.6 %) on the invoices I send them.



Obviously, but we're talking about the invoices you receive, Laurent.

And my point is that if I buy services from a non-VAT-registered supplier in the EU, I can apply the reverse charge mechanism to bring the transaction within the scope of Italian VAT (at 21%) and the Fisco will be happy.

The Hacienda's position is objectively vexatious.


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RobinB  Identity Verified
Local time: 01:17
German to English
I know the Directive already Jan 9, 2012




Pretty well, in fact. As well as all its predecessors. I'm afraid that tax (direct/indirect) is one of my specialist areas.

What I can't find in the EU VAT Directive, though, is any provision that requires a cross-border supplier of services to have a VAT ID no. Maybe I've been misreading the directive and you can help me find the appropriate provision.


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RobinB  Identity Verified
Local time: 01:17
German to English
Ignorance or laziness Jan 9, 2012


Charlie Bavington wrote: 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


I'd hazard ignorance or laziness. Or possibly institutional stupidity. What I don't understand is, why don't businesses in Spain formally complain about this nonsense. After all, the Spanish government can't impose VAT-related requirements over and above what's set out in the relevant EU legislation (there's an EU term for this but I can't remember at the moment what it's called).


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Tomás Cano Binder, CT  Identity Verified
Spain
Local time: 01:17
Member (2005)
English to Spanish
+ ...
Not at all Jan 9, 2012


RobinB wrote:
I'd hazard ignorance or laziness. Or possibly institutional stupidity.

None of these. My view is that Spanish tax authorities can't bear the idea that anybody can do business without their absolute control and supervision. They probably misinterpreted the legislation on purpose.


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Alex Lago  Identity Verified
Spain
Local time: 01:17
Member (2009)
English to Spanish
+ ...
What? Jan 9, 2012


Tom in London wrote:


Alex Lago wrote:

People blame the Spanish agencies but it is not them you should blame, it is Spanish tax law.


UK residents are not subject to Spanish tax law. We are subject to UK tax law.


That is a short sighted answer, do you have clients in the US? have you had to fill out a W-8 form?, if you deal with other countries you have to put up with their tax laws in whatever manner they affect you, you can't say you aren't subject to them, because the people you work with are and they have to follow them in their dealings with you.


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Alex Lago  Identity Verified
Spain
Local time: 01:17
Member (2009)
English to Spanish
+ ...
Does article 214 not cover this? Jan 9, 2012


RobinB wrote:




Pretty well, in fact. As well as all its predecessors. I'm afraid that tax (direct/indirect) is one of my specialist areas.

What I can't find in the EU VAT Directive, though, is any provision that requires a cross-border supplier of services to have a VAT ID no. Maybe I've been misreading the directive and you can help me find the appropriate provision.


I'm not an expert but doesn't article 214 state that the Member States should ensure certain people should be identified by an individual identification number? and I don't think translations are covered by any of the exemptions to this, but I may be wrong.


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Cristóbal del Río Faura  Identity Verified
Local time: 01:17
Member
English to Spanish
+ ...
EU VAT number Jan 9, 2012

http://ec.europa.eu/taxation_customs/taxation/vat/traders/vat_number/index_en.htm

..."Under the new VAT system intra-Community supplies of goods [from 1 January 2010, intra-Community supplies of services too] are exempt from VAT in the Member State of despatch when they are made to a taxable person in another Member State who will account for the VAT on arrival. Therefore any taxable person making such supplies must be able to check quickly and easily that their customers in another Member State are taxable persons and do hold a valid VAT identification number. For that purpose, inter alia, each tax administration maintains an electronic database containing the VAT registration data of its traders. Such information includes the VAT identification number, the date of issue, the trader's name, the trader's address and, where applicable, the date of cessation of validity of a VAT number.

A computerised VAT Information Exchange System (V.I.E.S.) was set up to allow for the flow of the data held across the internal frontiers which:
enables companies to obtain rapidly confirmation of the VAT numbers of their trading partners
Enables VAT administrations to monitor and control the flow of intra-Community trade to detect all kinds of irregularities"...


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Cristóbal del Río Faura  Identity Verified
Local time: 01:17
Member
English to Spanish
+ ...
VAT number + Jan 9, 2012

http://ec.europa.eu/taxation_customs/taxation/vat/traders/invoicing_rules/article_1733_en.htm#item_1.4.1

"1.4.1 Obligatory information for all invoices

An invoice must contain the following information:
-the date of issue;
-a sequential number that uniquely identifies the invoice;
-***the supplier's VAT identification number;***
the customer's VAT identification number (only when the customer is liable to pay the tax on the supply);..."


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Jabberwock  Identity Verified
Poland
Local time: 01:17
Member (2004)
English to Polish
The change Jan 9, 2012


Neil Coffey wrote:
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).


As far as I know, it changed from 1st January 2010.



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"...


The problem is not with the flag... To search the base, you have to have a number. Local registration numbers are useless for the purpose, as they are wildly inconsistent (and do not exist in some countries). But to get the number you do not have to be "VAT registered" - you just apply for the "VAT number" (which, presumably, does not mean: "identification number of a VAT payer" but "identification number which I can show to the Spanish guy who desperately needs to settle his VAT").


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Neil Coffey  Identity Verified
United Kingdom
Local time: 00:17
Member (2009)
French to English
+ ...
Databases Jan 10, 2012

(Sorry, I know this thread is starting to go OT, but I would hate anyone to be left with the impression that the current VAT situation is actually sensible...)


Jabberwock wrote:
The problem is not with the flag... To search the base, you have to have a number. Local registration numbers are useless for the purpose, as they are wildly inconsistent (and do not exist in some countries). But to get the number you do not have to be "VAT registered" - you just apply for the "VAT number" (which, presumably, does not mean:


So OK, I'd almost go along with that idea: (a) allocate a unique, standard-format number to every trading entity in the EU [which may well just mean mapping every local-format identifier to some standard format, as is done with international bank account numbers in some countries]; (b) for every business transaction in the EU, log the payer/recipient IDs in a big database; (c) make it 100% unequivocally clear to every trader what their unique trader number is, and under what precise circumstances it is to be supplied/filled in in what field of what report etc.

But:

- this isn't what has happened -- not all countries and traders have been left on an equal footing with this de facto VAT-number-is-your-mandatory-trader-ID scheme which seems to have arisen, and there is clearly confusion about when or whether a VAT number/registration is required and when it's not;
- in any case, on a given company's books, there will be transactions without VAT numbers/identifiers from outside the EU and other types of transactions whose verification doesn't simply involve looking up an entity by EU registration number, whereby spotting fraud will need to involve other checks -- or put another way, I'm not sure that having some purchases on the books from EU traders without a VAT number fundamentally alters the range of measures that need to be in place overall.


[Edited at 2012-01-10 05:37 GMT]


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Gillian Searl  Identity Verified
Local time: 00:17
Member (2004)
German to English
You might like to look at this thread: Jan 10, 2012

http://www.proz.com/forum/money_matters/173296-vat_cant_issue_an_invoice_in_spain_without_vat_registration.html

Eventually I registered for VAT.


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Giles Watson  Identity Verified
Italy
Local time: 01:17
Member
Italian to English
But in practice Jan 10, 2012


Jabberwock wrote:

As far as I know, it changed from 1st January 2010.



And AFAIK, the rules still don't make it compulsory for cross-border service providers to be VAT-registered. If you purchase such services, you may need to bring them within the scope of your local VAT. Spanish-based purchasers will have to do without, of course, in effect a deeply un-European restriction of trade.

The problem is a contingent one, in that the intention eventually to remove the income thresholds and require all businesses to acquire VAT IDs has been clear since the outset, but it still causes unnecessary inconvenience and confusion.


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Charlie Bavington  Identity Verified
Local time: 00:17
French to English
Easier said, etc. Jan 10, 2012


Neil Coffey wrote:

(a) allocate a unique, standard-format number to every trading entity in the EU [which may well just mean mapping every local-format identifier to some standard format, as is done with international bank account numbers in some countries]; (b) for every business transaction in the EU, log the payer/recipient IDs in a big database; (c) make it 100% unequivocally clear to every trader what their unique trader number is, and under what precise circumstances it is to be supplied/filled in in what field of what report etc.


You'd think a) might be quite easy. Ten years ago, I had the pleasure of working on a project which needed exactly that. The variety of national identifiers in Europe alone was mind-boggling even then. Bureaucracy being what it is, I can't imagine the situation has improved any. We ended up creating our own identifier, which was then linked to any number of domestic identifiers, inlcuding VAT numbers. Credit rating agencies did (and presumably still do) the same. The EU's use of VAT numbers is a massive compromise, really, but one that is almost understandable.

And quite honestly, since the UK is looking to scrape some extra cash from its hard-pressed citizens (while excusing large and wealthy firms from paying what they owe), and since we are so massively out of step with everyone else (quelle surprise), I don't really know why they don't just bring the VAT reg threshold down to £25-30k and be done with it.

How exactly would you see b) working ?


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Williamson  Identity Verified
United Kingdom
Local time: 00:17
Flemish to English
+ ...
Thresholds Jan 10, 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). Your IT, DE, NL etc. may accept the fact that you don't need to register for VAT.

Some clients (like those in Spain or maybe... France?) don't accept it as they take this EU regulation literally.


Yes, but each country in the EU has set a threshold. Even France. In some countries the threshold is low (Cyprus: 5000 euro turnover p.a.), in others, it is higher: in France 35000 euro p.a. turnover- Pour les entreprises dont le chiffre d'affaires est inférieur à 32 000 €, une exonération de TVA est possible. On appelle cela le régime en franchise de base : la TVA ne doit donc pas facturer sur les factures.), in others, it is high(er), Germany: 50.000 euro turnover and the UK has the highest threshold at 73.000 euros turnover p.a. Explain that to a Spanish company, when in Spain, there is no threshold and registration is obligatory.
British legislation applies for British companies, not French or Spanish legislation. Otherwise Hacienda would be able to levy taxes in the U.K. and HMRC in Spain.


[Edited at 2012-01-10 13:08 GMT]


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