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VAT in Spain
Thread poster: Manuela Junghans

Manuela Junghans  Identity Verified
United Kingdom
Local time: 14:50
Member (2004)
English to German
+ ...
Nov 3, 2005

Dear freelancers in Spain.
I´m planning to move to Spain in the next couple of months and managed to find answers to most of my "getting established in Spain" questions so far, except for this one. I know that you have to register for a VAT-no. in Spain. But are there certain thresholds up to which you don´t have to pay VAT (and thus not have to invoice it to your clients). I know that this regulation exists in Germany and in the UK. Here for example this threshold is high enough that a normal freelance translator will hardly ever reach ist. How does it work in Spain. Will I have to pay VAT from the first Euro I earn? Thank you very much for your help, Regards, Manuela


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Patricia Posadas  Identity Verified
Spain
Local time: 14:50
Member (2002)
English to Spanish
+ ...
NO THRESHOLD AS FAR AS I KNOW Nov 3, 2005

Hi Manuela,

I don't think such threshold exists, I had to register for VAT the very same day I started.

However, in Spain the same as in other countries VAT IS NOT SOMETHING YOU PAY.

You CHARGE VAT to your customer (provided he is in Spain too, if it is someone with a VAT number in other UE contries you declare the activity but no payment is made.)

Then, YOU RETURN to the Tax agency (Hacienda) this VAT you have charged .

If during the same 3-month period you have bought paper, ink, dictionaries, software, ahrdware or whatever for your job, the VAT you paid on those is deduced from the VAT you have to return and so VAT BECOMES A SOURCE OF REVENUE... Depending on how creative you are you can earn a little money on this, so it will make up for the time spent filling up forms:-) If it is not during the same term it is reported to the next one, I don't know the details because I have someone doing it for me, a "Gestoría", very useful and not really expensive...



[Edited at 2005-11-03 18:34]


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Parrot  Identity Verified
Spain
Local time: 15:50
Member (2002)
Spanish to English
+ ...
Amen Nov 3, 2005

Patricia Posadas wrote:

VAT IS NOT SOMETHING YOU PAY.


VAT is something you collect for the taxman.

Say, you earned 100 euro. That's all yours (subject to withholdings and tax return) but you add 16 eu to your invoice to pay the Administration. (It's a mental conditioning - resign yourself to the fact from the start that that was never yours in the first place).

Here's the advantage:

If during the same 3-month period you have bought paper, ink, dictionaries, software, hardware or whatever for your job, the VAT you paid on those is deduced from the VAT you have to return and so VAT BECOMES A SOURCE OF REVENUE... Depending on how creative you are you can earn a little money on this, so it will make up for the time spent filling up forms:-) If it is not during the same term it is carried over to the next one


Hence, VAT is another source of deductions.

VAT-registered clients paying VAT are thus never worried about the VAT you charge. It only lowers their quarterly quotas.

Declared VAT deductions on these bases are not challenged when they appear as deductions in your tax declaration (they only prove your figures add up).

Manuela Junghans wrote:

Will I have to pay VAT from the first Euro I earn?


If you want to keep up a steady business with corporate clients, yes.

There is also a new law by which your clients may require you to ask for a certificate that you are VAT-registered and current in your payments. They may be liable if they don't. (Not all ask for it).


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Williamson  Identity Verified
United Kingdom
Local time: 14:50
Flemish to English
+ ...
Mistake Nov 3, 2005

What happens if you make a mistake filling out your VAT-forms?
Yes, exactly (hefty) fines.... so, I prefer to opt out. It safes a lot of hassle with the VAT-administration and fines.
It may be that in some countries there is no treshold... however, I doubt it. On another site for translators there was a link to the VAT-regulations. If I remember correctly, most EU-Members have a treshold, but in some countries it is very low, say €5000 turnover per annum, whereas in others it is high, say €85000 turnover per annum (U.K).

[Edited at 2005-11-03 21:17]


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Anjo Sterringa  Identity Verified
Spain
Local time: 15:50
Member (2003)
English to Dutch
+ ...
No threshold in Spain Nov 4, 2005


It may be that in some countries there is no treshold... however, I doubt it.

You better believe it, there's no threshold in Spain. It is not so difficult to fill out the forms. I admit I also use a 'gestoría' (bookkeeper).;) If you work with VAT-registered customers in other countries things become a lot easier. If you are a freelancer in Spain with Spanish customers, you will also have to deduct IRPF on your invoices (taxation at the source for income tax). This is a bit of a hassle at the end of the year, collecting all the certificates from your customers. I know of colleagues who work around this by being registered as a provider of translation 'services' rather than as a freelancer. Another thing to consider.


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Sarah Brenchley  Identity Verified
Local time: 15:50
Spanish to English
+ ...
Scientific translations - no VAT Nov 4, 2005

As most of my work in Spain relates to scientific translation, I am registered as a "Traductor de textos ciéntificos" and scientific texts are VAT-exempt. I see from your profile that this is possibly your case as well.

Whenever I need to invoice a non-scientific translation, I put it through with the normal 16% VAT added. The only requirement is that your VAT-translations don't exceed a certain percentage of your turnover with scientific translations (possibly about 25%).
I use a gestor to deal with that side of things.
Best wishes,
Sarah.


[Edited at 2005-11-04 15:41]


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Manuela Junghans  Identity Verified
United Kingdom
Local time: 14:50
Member (2004)
English to German
+ ...
TOPIC STARTER
thank you. Nov 6, 2005

Dear All
thank you very much for all the useful information so far. Maybe to "pay" VAT was not quite the right wording but thanks for pointing that out to me. I will try and take all your tips and tricks into account once I "touch down" in Spain. But a "gestoria" as some of you have mentioned might be a practical investment (although some others think it´s a waste of money). I will figure it out and might come back to you at a later point with additional questions that will most certainly arise.
Thank you very much up to now, All the best, Manuela.


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Aquamarine76  Identity Verified
Ireland
Local time: 14:50
Member (2005)
English to Spanish
+ ...
Im Spanish and starting out in Holland! Help Nov 10, 2005

Hi, I'm Bea, Spanish and just moved tp the Netherlands, and I'm new here.

I have the same case though i have been working for the past 10 years in Spain but not as free-lance, as on-site employed and hired translator on the company's employee list. I have been in Holland now for a few weeks and making this my home and planned to work freelance. I have the same questions regarding the netherlands and also the fact that I am Spanish and wish to work for clients here, in the UK, Spain and anywhere. What is requiered of me to start my activity. I do not wish to set up a company, just do freelance translations and not go broke cause of payments left to right to tax, ministries etc. All I currently have is a private health insurance and thats it. What about private indemnity or liability insurance (what is this and can some of you recommend companies or insurance policies for this). What about being registered here, besides the VAT aspect which i believe will be the same as Spain or similar, do i have to pay anything monthly for being a freelance (in spain you do if you are an autonomo) because currently i am unemployed, with hardly no savings and with no projects. Hardly the best situation for making governments rich at moment at my expense. HELP!!!

Please could a kind soul help me on the way! I mostly do technical texts (military and defence) and legal and was hoping to also find clients now in addiition to embarking on subtitling after having done a course at university on this. Help!!!!!! SOS!


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moken  Identity Verified
Local time: 14:50
English to Spanish
+ ...
Canary Islands - special tax system Nov 15, 2005

Hi Manuela,

Working in the Canary Islands has special advantages, and I don't just mean year-round temperatures ranging 20-25ºC!

If you're still wondering about where to locate in Spain and tax is an important matter, the Canary Islands offer interesting advantages:

The C.I. are classified as an 'ultraperiheral region' (literal translation!) within the EU.

Instead of VAT, we pay a local tax - IGIC (Impuesto General de las Islas Canarias) - at a flat rate of 5%

Your first two years are tax-free as regards IGIC (not so income tax, which is the same as anywhere else in Spain) and thereafter there is a threshold of 30,000€, after which you must start paying/collecting IGIC.

So, if you're thinking of relocating in Spain and are still to make your mind up as to where, this is an interesting place.

Rgds,

Álvaro ))


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Manuela Junghans  Identity Verified
United Kingdom
Local time: 14:50
Member (2004)
English to German
+ ...
TOPIC STARTER
Canary Islands Nov 21, 2005

Dear Álvaro. thank you very much for your comment. This sounds very interesting. I didn´t know that the Canaries were treated differently than the rest of spain. To start of I will probably locate myself on the Spanish mainland but I will bear your suggestions in mind should I decide to move again. Thanks a lot. Greetings to...which island? Manuela

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