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V.A.T. (EU) - just starting out
Thread poster: Sonia Rowland

Sonia Rowland
Local time: 18:55
German to English
+ ...
Jul 13, 2001

Just starting out, I\'m wondering how to handle the issue of V.A.T. (Value added Tax) when dealing with other EU states. When I make a quote, should it be incl. V.A.T or not?

Other bids I\'ve seen don\'t mention it - does that mean it\'s implied or what?

Thanks for any help offered.

Sonia.


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jgal  Identity Verified
Local time: 18:55
French to English
+ ...
Jul 17, 2001

Hello Sonia,



Whether or not you quote with VAT depends on whether you are VAT-registered or not. If you have just set up your own company (or sole trader activity), you will have had to register with the local tax authorities.



VAT obligations are dependent on the amount you earn (gross) per year. In France, if you earn over 200 000 FF (approx. £20,000) you have to become VAT registered, whilst in the UK the limit is much higher - £56,000 I think. You should find out what the limit is where you are, and if you do not expect to exceed it (at least for the current financial year), don\'t register, as it involves additional paperwork, accounting etc.



The only real advantage to being VAT-registered is if you are going to be making a lot of expensive purchases, as you can claim back any VAT you spend (professionally).



This is also why adverts never mention VAT! Because some translators are subject and not others, prices are always quoted before VAT. The outsourcer will be able to claim back any VAT spent, in any case.



I hope this information helps and good luck with your translation business.



Julia


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Nikki Scott-Despaigne  Identity Verified
Local time: 18:55
French to English
Jul 18, 2001

Quick note... according to my accountant, for prof libs in France the threshold is 175,000 FF

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xxxeurotransl
German to English
+ ...
Jul 18, 2001

As concerns VAT, you should definitely contact your local tax office or a tax advisor. These things can be very tricky, and you don\'t want to take any chances.



VAT (or whatever name may be used in different countries) certainly depends on your income. Your tax authorities may assess your VAT tax liability on the basis of your annual or even quarterly income.



Again, don\'t take any chances (especially not in Europe): if you work as a freelance and send out your invoices without a valid VAT number, your tax authorities may come back to you, audit you and slap some heavy penalties and back-taxes on you. So, contact your local tax office and/or a tax consultant TOMORROW!


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Nikki Scott-Despaigne  Identity Verified
Local time: 18:55
French to English
Jul 18, 2001

Hello Sonia,



As you live in Germany, the German rules apply (with European legislation playing a big part in it all too). I agree that it might be wise to go and see an accoutant. Together, you might decide that in the early stages it is not worth registering. Do be careful though as if you get half-way through the year, exceed the limit and discover that you ought to register, it may well be applicable from 1st January of the year in which you exceeded the limit. This means you may have to pay over the VAT you ought to have billed but did not add on to your bills when you sent them out. You can always seek to receover this from your clients - they deduct it anyway - but it may mean you have to pay \'upfront\", before you get the money in. Tough on the cashflow!


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Amanda Grey  Identity Verified
France
Local time: 18:55
French to English
Jul 24, 2001

Hi,



In France, for services provided and delivered within the EU, even if you are subject to VAT, VAT is NOT payable, as long as you quote both your and your client\'s VAT number on your invoice. Intercommunity dealings must be declared separately on the VAT return.
[addsig]


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Evert DELOOF-SYS  Identity Verified
Belgium
Local time: 18:55
Member
English to Dutch
+ ...
Jul 25, 2001

Quote:


On 2001-07-24 05:33, agrey wrote:

Hi,



In France, for services provided and delivered within the EU, even if you are subject to VAT, VAT is NOT payable, as long as you quote both your and your client\'s VAT number on your invoice. Intercommunity dealings must be declared separately on the VAT return.







Exactly the same over here in Belgium; for years I was supposed to charge VAT on translations for foreign clients within the EC until my VAT office (just recently) sent me the articles proving that I in fact didn\'t have to do so (just proving that they not always know their own laws themselves).

Art. 21. 7° d) from the \'BTW Wetboek\'.



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Hans-Bertil Karlsson
Sweden
Local time: 18:55
Norwegian to Swedish
+ ...
Aug 26, 2001

As far as I have been able to read (and hopefully understand..) the VAT-rules within EU are as follows:



1. For jobs within your own country, you must always add VAT

2. For export jobs within EU you MUST have a VAT-number to be allowed to invoice without VAT. It is ILLEGAL for your client to pay an invoice without VAT if you don\'t have a VAT-number!!

3. For jobs outside EU you will not add VAT.



The limit for having to register is different in different countries. However this does not mean that you don\'t have to add tax (or deduct it on your spendings). All transactions are subject to VAT, it is just a question of how you report them to the taxman:



A) If you pass the limit and have to register, than you will have to fill in a separate \"VAT-return\" every month, and pay the VAT accordingly.

B) If you don\'t pass this limit, you do the declaration of VAT on you normal tax-return every year.



However it might be cumbersome to obtain a VAT-number if you are new (there have been so much criminality with VAT). The taxman want proof that you are serious, but it can be difficult to proove this before you have been in business for a couple of years... \"Catch 22...\"



Hans


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Karin Walker  Identity Verified
Germany
Local time: 18:55
German to English
+ ...
Sep 10, 2001

Hi Sonia,



Seeing as you are in Germany, I might be able to offer some information. If you earn more than 32,500 DM a year, you have to VAT-register and also charge VAT (the current rate escapes me, I think it\'s around 16 or 17 percent). But you asked about charging VAT to clients in other countries. I am not sure about this - it all has to do with \"Doppelbesteuerung\" and if you do a search on google with the obvious context terms you will most certainly find something. Re: the posting before mine:



\"2. For export jobs within EU you MUST have a VAT-number to be allowed to invoice without VAT. It is ILLEGAL for your client to pay an invoice without VAT if you don\'t have a VAT-number!!\"



you should check your obligations with your tax consultant. I had a number of UK clients last year and the year before and did not charge VAT (I have a day translating job, though, and currently only freelance on the side - might make a difference) and when I filed my tax return I was not told that I had made a mistake (it was plainly obvious to the Finanzamt where the funds must have come from).



HTH

Karin



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Hans-Bertil Karlsson
Sweden
Local time: 18:55
Norwegian to Swedish
+ ...
Invoicing w/o VAT Oct 7, 2001

Quote:


.... and when I filed my tax return I was not told that I had made a mistake (it was plainly obvious to the Finanzamt where the funds must have come from).





Hi Karin,

The problem is actually not yours! If you import from another EU-country and the invoice is \"VAT-free\" you must fill a \"quarterly report\" for what in Sweden is called the Intrastat VAT-system. There you must state the VAT-number of the supplier.



I am not exactly sure what happens if you don\'t do this, but I am sure lots of people and companies don\'t do it / know about it. But I am sure that there is some kind of punishment from the taxman!!!



As always with tax - lots of mistakes are never found by the taxman, as they don\'t have time to check all your figures. But if they from some reason do take a closer look in \"your books\" you will certainly have problems if you don\'t follow the rules and/or make mistakes!



Regards

Hans
[addsig]

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