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VAT/no withholdings phrase for UK invoices issued to Italian clients
Thread poster: John Mifsud

John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
Oct 20, 2008

Hi all

This is my first post. My question relates to a topic much discussed on this forum but I can't seem to find the answer to my specific question.

I've recently moved to the UK but most of my translation clients are in Italy. Due to my turnover, I'm not under any obligation to register for VAT in the UK. I am now tax resident in the UK and do all my work from here.

When I issue my invoices, I usually do so in Italian and English, the English copy being for revenue authorities here in the UK should they need to see it.

I would like to put some wording in the Italian version of my invoices to cover the following:

1. the fact that I'm not registered for VAT as under UK law I'm not required to be. I've seen the following wording suggested on this forum that could be put in the English version of the invoice:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargeable as total annual turnover is below the minimum UK threshold for VAT registration."

But can anyone suggest any wording they use in Italian?

2. the fact that I live and work in the UK, with no fixed base in Italy, and that therefore no income tax or social security contributions (Inps) should be deducted in Italy (ie the invoice amount should be paid gross to me)

I'd really appreciate some help with the above.

Thanks
John

[Edited at 2008-10-20 19:59]


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 14:59
English to Dutch
+ ...
Necessary? Oct 21, 2008

I don't think you need any waiver as to the VAT, since within the EC, companies aren't obliged to charge each other VAT anyway (unless in the same country, of course).
I'm in the Netherlands, and I'm not even allowed to mention VAT in my invoices to my clients in Belgium, Germany, UK, Ireland and Austria.


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Marie-Hélène Hayles  Identity Verified
Local time: 14:59
Italian to English
+ ...
Are you sure... Oct 21, 2008

...that your first question is relevant? Even if you were VAT-registered you wouldn't be applying it on invoices to your Italian clients anyway, due to the various agreements in place. I have an Italian VAT no. and I don't apply VAT to my UK customers - these invoices are "Operazione fuori campo IVA secondo art. 7, comma 4, lett. D, DPR 633, 20/10/1972".

Anyway, I suggest you try asking in the Italian forum - there are a couple of people who post there who live (or have lived) in the UK and will probably be able to help you.


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
very relevant Oct 21, 2008

Thank you for response Marie-Hélène, even if it wasn't a particularly warm welcome to the forum!

I'm not sure why you would consider my question not relevant. I would have thought that conducting one's business in compliance with the law, and ensuring that invoices are phrased in a manner that addresses any legal concerns on the part of clients, is relevant to all translators.

I do understand that I would not be charging VAT to Italian clients and that this would be the case even if I were registered for VAT in the UK (although the legal basis for not charging VAT in that case would be different - ie the reverse charge provisions).

Before posting my question, I had researched it on the forum and did come across your suggested wording "Operazione fuori campo IVA secondo art. 7, comma 4, lett. D, DPR 633, 20/10/1972".

However, I did not mention it in my post because I believed it was not relevant to my situation as it:

-refers to Italian statutory provisions and applies specifically to Italian-based translators invoicing clients elsewhere in the EU (I am not based in Italy)

-only applies if you are registered for VAT (I am not registered for VAT and indeed am not required to be)

I mentioned the following wording in my original posting (which does apply to my situation) and asked if there was an Italian equivalent that people use in their invoices:

"In accordance with Schedule 1 to the Value Added Tax Act 1994, in conjunction with the Value Added Tax (Increase of Registration Limits) Order 2007, no VAT is chargeable as total annual turnover is below the minimum UK threshold for VAT registration."

So my question still stands and I'd be grateful for the benefit of people's experience.


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
necessary, unfortunately Oct 21, 2008

Thanks for your response Jan

I wish your situation was the case with Italian clients, who constantly insist on specific legislative reference in invoices to justify non-application of VAT.

Reading other forum entries, it seems a similar culture persists in Spain and France.


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Marie-Hélène Hayles  Identity Verified
Local time: 14:59
Italian to English
+ ...
Sorry! Oct 21, 2008

I didn't intend to be unwelcoming!

By relevant I didn't mean relevant to the forum (of course it is!), I meant relevant to your situation. As I said, as VAT is not applied between EU member states anyway, I don't see why you need to add a statement saying you're not VAT-registered to your invoices for your Italian clients.
Sorry if I wasn't clear.

I'd agree that it's probably a good idea to add something about the non-applicability of VAT with reference to the relative UK or EU law (sorry, I don't know what that might be).


Re-reading I can see why you thought I was referring to relevance to the forums - as a newbie you probably haven't explored the site much. So, to be crystal clear,
1) Your question is absolutely relevant to this forum (and congratulations for getting it right first time)
2) I suggested you post in the Italian-language forum simply because, well, that's where the Italian language translators mostly hang out! And I'm sure that someone in there will be able to answer your question more accurately (I can't, unfortunately, because I became a freelance translator on moving to Italy - I was a nine-to-fiver in the UK).

Is that better?

[Edited at 2008-10-21 10:31]


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
My question relates specifically to not being VAT registered Oct 21, 2008

No problem Marie-Hélène.

Again, let me clarify that I'm not exempt from charging VAT because it's not applicable between EU companies in different states.

The basis for my not charging VAT is that I am not required under UK law to register for VAT and, as a result, am not entitled to add VAT to any invoice (regardless of the EU directive on reverse charging which is enshrined in the art. 7, comma 4, lett. D, DPR 633, 20/10/1972 you refer to).

My VAT question specifically relates to that situation (of not being VAT-registered/not required to be VAT-registered) alone.

I would be happy not to bother putting a statement in my invoices. However, a number of my clients are Italian public institutions who will find any excuse to hold up payment and who will insist on me doing their legal legwork for them. Believe me, the question is relevant.

[PS a clarification to your statement that VAT is not applicable between EU member states. It actually is when the client is a private individual and not a company.]


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Marie-Hélène Hayles  Identity Verified
Local time: 14:59
Italian to English
+ ...
Phew! Oct 21, 2008

John Mifsud wrote:

No problem Marie-Hélène.



I'm a nice person really, honest!


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Lori Cirefice  Identity Verified
France
Local time: 14:59
French to English
relevancy Oct 21, 2008

Marie-Hélène Hayles wrote:

As I said, as VAT is not applied between EU member states anyway, I don't see why you need to add a statement saying you're not VAT-registered to your invoices for your Italian clients.


Actually, it really is relevant - although John wouldn't charge VAT to an Italian company in any case, he still has to put his valid VAT registration number ON the invoice itself, that is a requirement as both EU companies are supposed to verify their respective VAT numbers.

In this case, John doesn't have a valid VAT registration number, so the mention on the invoice about not being subject to VAT is essential for the Italian company to be able to pay him in a legal way.

Hope that makes sense, and sorry for not being of any help for the Italian wording ...


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
VAT registration no. requirement Oct 21, 2008

Thanks Lori

What you say regarding the VAT registration no. reflects my understanding. I've gathered from other entries in this forum that people who aren't registered for VAT tend to quote their UK National insurance no. or tax ref. no. when pressed by clients.

Anyone with any helpful Italian wording? Not just for the VAT issue, but also the "no withholdings" issue raised in my original post.


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Wilmer Brouwer
Netherlands
Local time: 14:59
Member (2006)
English to Dutch
+ ...
Are you sure? Oct 21, 2008

Jan Willem van Dormolen wrote:
I'm in the Netherlands, and I'm not even allowed to mention VAT in my invoices to my clients in Belgium, Germany, UK, Ireland and Austria.


I'm also in The Netherlands. The tax office told me to always ask other companies in the EU for their VAT number. Only if they have this I can shift the VAT, but I still have to mention it on the invoice. If they do not have a VAT number they told me I must charge VAT. I am quite sure the website of the Dutch tax office says the same thing.
I previously worked in the UK and in the UK I didn't have to charge VAT at all. This was a lot easier.



[Edited at 2008-10-21 12:17]

[Edited at 2008-10-21 12:18]


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Nikki Graham  Identity Verified
United Kingdom
Local time: 13:59
Member (2003)
Spanish to English
This is what I use in my invoices to Spain Oct 22, 2008

I'm in the UK and I add this to my invoices. Sorry, don't speak Italian, but maybe this will give you an idea of what to put:

Factura exenta de IVA al tratarse de una operación intracomunitaria


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
Not registered for VAT - how to phrase this in Italian on invoices Oct 22, 2008

Nikki

Thanks for taking the time to respond. Much appreciated.

Once again, however, it doesn't answer my specific case. VAT is not added to my invoices not because its between two EU countries, but because I'm not registered for VAT.

In other words, VAT would not be added regardless of whether they are companies or individuals, and whether they are in or outside the EU - simply because being unregistered I'm entitled to charge VAT.

As most of my clients in Italy, I need to convey this to my clients on my invoices (since they will often ask why no VAT has been added) and was hoping someone here on proz.com would have some standard wording they use in Italian.

[Edited at 2008-10-22 08:45]


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Nikki Graham  Identity Verified
United Kingdom
Local time: 13:59
Member (2003)
Spanish to English
Informing about lack of VAT registration is irrelevant Oct 22, 2008

John Mifsud wrote:

Once again, however, it doesn't answer my specific case. VAT is not added to my invoices not because its between two EU countries, but because I'm not registered for VAT.

In other words, VAT would not be added regardless of whether they are companies or individuals, and whether they are in or outside the EU - simply because being unregistered I'm entitled to charge VAT.

As most of my clients in Italy, I need to convey this to my clients on my invoices (since they will often ask why no VAT has been added) and was hoping someone here on proz.com would have some standard wording they use in Italian.


Well, I am actually in the same boat as you, so-to-speak, because I'm not VAT registered either, but if I send an invoice to a client in Spain, they don't need to know that, they just need to know that no VAT is applicable. Why should you tell them you are or are not VAT registered? It's irrelevant.


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John Mifsud  Identity Verified
Malta
Local time: 14:59
Italian to English
+ ...
TOPIC STARTER
It's an unfortunate reality that it is highly relevant Oct 22, 2008

The reality Nikki is that I often come across clients in Italy who expect other countries to operate like Italy - in other words, for people to be required to register for VAT after earning €5000 (I understand the situation is similar in France and Spain).

At that point, it becomes necessary to issue (or rather re-issue, if it's not done from the outset) the invoice with some wording which quotes legislative chapter and verse for what I'm claiming. The Italian tax authorities are quite aggressive in this regard and clients (rightfully, I think) want to be handed an invoice which stands up to inquiry by tax officials.

Whilst the wording you suggest would be a neat solution, in reality it does not reflect the real legal reason for why I'm not charging VAT and would not stand up to investigation by authorities (particularly if the client is a private individual not a company, as such transactions are not exempt from VAT just because they're intra-European). You'll find a lot of material in this forum regarding this last point.

In fact, Nikki, it sounds to me like the wording you use does not really cover your situation either (which seems comparable to mine) - it is really for people who are registered for VAT and need to indicate why VAT is not being applied to the particular invoice.

I think I will take up Marie-Hélène's suggestion and also post this question on the Italian forum. I'm getting a sense that the complexity of this area of law is not being addressed properly by a lot of translators who aren't registered for VAT. The position seems much clearer for those who are VAT registered.


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