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New (EU) legislation that discriminate against no VAT registered?
Thread poster: Cecilia Coopman, M.A. in Translation

Cecilia Coopman, M.A. in Translation  Identity Verified
United Kingdom
Local time: 00:34
English to Spanish
+ ...
Oct 30, 2006

Hi,

I have received the following message from a translation agency I normally do jobs for:

"I would like to provide further details regarding my last email concerning the VAT issue. Indeed, it does seem like we are slowly moving towards a legislation which would put us in the obligation of working exclusively with suppliers holding a VAT/Tax ID number. "

Does anyone know or have heard of this new legislation? In my opinion, this new legislation would be descriminatory because we as freelances are not all VAT registered. At least, in the UK, you need to be VAT registered only if you earn more than £50,000 (approx - I don't remember the exact amount) and I don't think most freelances reach that amount - at least not me!

The translation agency in question is located in Belgium (a very burocratic country, let me say) - so I don't know if the legislation they are refering to only applies in Belgium or not.

What are your thoughts?

Perhaps this is a different subject but I would like to know if VAT registered freelancers in the UK without earning the threshold of let's say again £50,000 per year think that it is worth it to be VAT registered.


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xxxMarc P  Identity Verified
Local time: 01:34
German to English
+ ...
New (EU) legislation that discriminate against no VAT registered? Oct 30, 2006

Cecilia Coopman, M.A. in Translation wrote:

"I would like to provide further details regarding my last email concerning the VAT issue. Indeed, it does seem like we are slowly moving towards a legislation which would put us in the obligation of working exclusively with suppliers holding a VAT/Tax ID number. "


I think what they (your customer, or the "new" legislation, which may in fact be not all that new) are actually looking for is proof that you are a legitimate business. The international VAT ID is a convenient form of proof (which is why it is often assumed, incorrectly, to be the only form acceptable). But some other form of proof, such as a tax ID number by which your business status can be queried from your tax authority, may be equally valid.

Why not ask your customer for details of this new legislation?

Marc


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xxxCMJ_Trans
Local time: 01:34
French to English
+ ...
Belgium and VAT Oct 30, 2006

From my experience, when I was working in Brussels for a Belgian company and commissioning work from translators, agencies, printers, etc. on behalf of that company, the whole insistence on VAT is NOT new. I was told by my accounts department that I could only work with people who had a VAT number, otherwise there was no way they could be paid. If you submit a bill to a Belgian company, you also have to quote the client's VAT number. The absolute need to do this came in early this decade: I remember having to draft a letter to be sent to all this multinational's clients to that effect.

However, some of the translation work I farmed out went to people in other countries. One of these people was, for example, in France. Because of that person's status in France (perfectly official but I'll spare you the details), she was not VATable and, in her bills, always mentioned this fact by quoting "TVA non applicable, Article 293 B du Code Général des Impôts". And that was that.

For similar reasons, I have also received bills from the UK marked "VAT not required under UK legislation ( VAT authority leaflet 700/1)". These were also always paid without trouble.

The Belgians are therefore apparently very strict for themselves and their own on the VAT issue but if you can show that you are not liable in your country, it seems they do not make a fuss. I should add that the company paying all those bills at the time was state-owned......

In short, they would have to bring tax legislation into line in all EU countries before they could apply the VAT requirement on a blanket basis
HTH


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RobinB  Identity Verified
Germany
Local time: 01:34
German to English
Agree with Marc Oct 30, 2006

Some EU member state tax administrations try to make life easier for themselves by pretending that having an EU VAT ID No. is the only allowable criterion for establishing a supplier's business status. Not true. As Marc says, all you have to do is establish your status as a business.

But what I really, really don't understand here is why the Belgian agency is in the slightest bit bothered about the VAT status of its freelance suppliers. The agency has to charge VAT (and simultaneously reclaim it as input tax) on invoices received from outside Belgium (anywhere in the world) irrespective of the supplier's VAT status.

I do get the impression that many agencies are just as VAT-ignorant as many translators (sigh).

Robin


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Nikki Graham  Identity Verified
United Kingdom
Local time: 00:34
Partial member (2003)
Spanish to English
Certificate of Residency Oct 30, 2006

I have a certificate of residency from my local tax office, which is in both Spanish and English, and I send this to new clients in Spain along with the first invoice. It doesn't quote my Tax ID number, but it does have my national insurance number on it. It simply states: "The United Kingdom Tax Authorities certify that, to the best of their knowledge. Nikki Graham is a resident of the United Kingdom, within the meaning of the Spain / United Kingdom Tax Convention."

Having never worked for anyone in Belgium, I do not know if there is anything similar for that country, but if there is, would that give your client the peace of mind he needs?


I am not VAT registered and would not like to have to do this to continue working with my current clients, so I hope this will never become a requirement.


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John Jory  Identity Verified
Germany
Local time: 01:34
Member (2004)
English to German
+ ...
Things tightening up in Germany, too? Oct 30, 2006

I have been working for a Belgian company for several years, and all I put in my invoices is my 'normal' German tax. no.
However, a few weeks ago, my tax accountant informed me that I will have to include the following (German) statement on all my non-German invoices:
"Übergang der Steuerschuldnerschaft nach § 13b UStG".
(Transfer of tax debts in accordance with § 13b German VAT Act)

Apparently, the German text is required by our tax authorities, regardless of the invoice language.
It will be up to me, whether I add a translation of the statement in my invoice.


[Edited at 2006-10-30 17:45]


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Williamson  Identity Verified
United Kingdom
Local time: 00:34
Flemish to English
+ ...
Treshold Oct 30, 2006

As far as I know, there is no New (EU)legislation.
The Member-States determine the treshold themselves.
In the UK, the treshold currently is £61,000 or € 85,000 turnover. On your invoices, you have to mention the above-mentioned notice.
I wonder, why some Belgian agencies accept invoices with a line : "prestation occasionnelle, TVA non-applicable", whereas others insist on their suppliers having a VAT-number.


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RobinB  Identity Verified
Germany
Local time: 01:34
German to English
13b Hinweis Oct 30, 2006

John Jory wrote:However, a few weeks ago, my tax accountant informed me that I will have to include the following (German) statement on all my non-German invoices:
"Übergang der Steuerschuldnerschaft nach § 13b UStG".
(Transfer of tax debts in accordance with § 13b German VAT Act)

Apparently, the German text is required by our tax authorities, regardless of the invoice language.
It will be up to me, whether I add a translation of the statement in my invoice.


[Edited at 2006-10-30 17:45]


John,

This isn't new at all and your StB is rather slow off the mark. In fact, it's been a requirement since 2003. The standard notice is:

"Auf die Steuerschuldnerschaft des Leistungsempfängers gem. § 13b Umsatzsteuergesetz wird hingewiesen."

and in English:

"Attention is drawn to the VAT liability of the recipient of these services in accordance with section 13b of the Umsatzsteuergesetz (German VAT Act)."

This notice (in either German or English) also has to appear on invoices for translation services provided to German-domiciled clients by translators outside Germany, but not a lot of people seem to have cottoned onto that, either. It's nothing to do with "tightening up", though, and applies to translation providers outside German irrespective of whether they're VAT-registered or not.

Robin


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Cecilia Coopman, M.A. in Translation  Identity Verified
United Kingdom
Local time: 00:34
English to Spanish
+ ...
TOPIC STARTER
Thanks Oct 30, 2006

Hello to everyone,

Thank you very much for all your comments. I am also of the opinion that some Belgian companies have the idea that we all need to have VAT otherwise they can not pay the translators. They don't see it as a identity proof issue or if the business is legitimate. They always say "we want to avoid problems with the tax man". As I work for a few Belgian companies, this issue has come across so many times and so far, (after several e-mails and explanations), they have accepted my invoices with the knowledge that VAT registration is not a must in the UK. However, I will make use of one of the suggestions (writing in the invoice - "VAT not required under UK legislation ( VAT authority leaflet 700/1)".

They might still continue paying my invoices; however I fear that they will choose translators based on the fact that if they are VAT registered or not. I sincerely hope this is not the case.

An example of how difficult Belgian agencies are when dealing with taxation/invoices in general: I reside in the UK, but I have an Euro bank account in Belgium (I am Belgian as well). But some of them, refuse to pay me directly into my Belgian bank account and instead they transfer the money from Belgian to my UK bank account in sterlings. The reason again: to avoid problems with the tax man. To be honest, this really doesn't bother me so much because I do regular work for them. However the issue of only dealing with VAT registered concerns me and I personally find it unfair. It is not my fault that the UK system is different to the system available in most EU countries in the mainland.

I will ask this particular agency for more info in this "new" legislation. Thanks for your opinions!

Cecilia

PS Nikki : I once asked a Belgian agency if I could provide them with a proof in form of a certificate issued by the Inland Revenue but the idea was not accepted. =(


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Patricia Posadas  Identity Verified
Spain
Local time: 00:34
Member (2002)
English to Spanish
+ ...
about VAT registration Oct 30, 2006

I used to do work for a French colleague in a 'micro-entreprise' who decided not to be VAT-registered (this is a possibility). I submitted my invoices to her and included them in my VAT declaration under a section I found appropriate some 3 or 4 years ago and some time later I got a polite letter from my tax administration saying that if this person was not VAT registered I had to charge VAT to her (shehad no intra-communitary VAT number, this has been discussed over and over in these forums). This was very bad for her since she could not 'recover' this 16% on my invoice through their non-existing VAT declaration. This means my work cost her 16% more than if she had been VAT registered!!

Well, it is the same when you buy office supplies etc. if you are not VAT registered VAT is an extra expense to you. I save quite a few euros every trimester thanks to VAT declaration... I 'recover' VAT on anything I buy and I declare as an expense... my lunch at a bar (who knows whether I had to go to a alibrary to look up a dictionary??), some of my car's fuel , printer ink and paper (not only mine but my kids' too, please dont give me away!), PC, laptop, mobile phone, internet and phone invoices in general, all the usual things... plus some imaginative ones (some house-cleaning products, also recently I learned that my work as an interpreter allowed me to include some clothes in the lot...)

So I see no reason for worrying if laws ever change... VAT is somehting everybody pays and when you declare VAT you can get some of you money back... that's all. Well, 2 or 3 forms to fill up, ok...



[Editado a las 2006-10-30 22:14]


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