Mobile menu

Another query about putting tax on bills in Europe
Thread poster: Jenny Duthie

Jenny Duthie  Identity Verified
France
Local time: 14:04
French to English
Dec 15, 2006

Hello
I'm a UK national, freelancing in France, when I bill German clients how much VAT should I add, if any, I've been advised that I don't need to add any for Spanish clients, & I'm wondering it if is only with French clients that I should add tax, since I'm paying tax in France only; it is very confusing!!


Direct link Reply with quote
 

Williamson  Identity Verified
United Kingdom
Local time: 13:04
Flemish to English
+ ...
Export of levy Dec 15, 2006

With intra-european deliveries of goods and services, the notion "export of levy" is important.
What you are doing, is exporting a service to another EU-member-state.
In doing so, you also export the levy to that state.
If the entity to which your are exporting has a VAT-number and is registered as a trading entity, you do not need to calculate VAT.
Within the Member-State, you are registered, you have to add VAT, regardless of the fact that your customers is VAT-registered or not.
When exporting outside Europe: no VAT or other taxes


Direct link Reply with quote
 
RobinB  Identity Verified
Germany
Local time: 14:04
German to English
VAT? Dec 15, 2006

J Duthie wrote: I'm a UK national, freelancing in France, when I bill German clients how much VAT should I add, if any, I've been advised that I don't need to add any for Spanish clients, & I'm wondering it if is only with French clients that I should add tax, since I'm paying tax in France only; it is very confusing!!


I presume the tax you're referring to here is VAT, and that you're registered for VAT/TVA in France. This topic has surfaced so many times in ProZ I suggest you really do try to search for "VAT" in the forum database.

In short, though, you don't charge VAT on the face of the invoice if the German client is a business (doesn't have to have an EU VAT ID No., it just has to be a business). Your client will then add German VAT (currently 16%, rising to 19% for services rendered on or after 1 January 2007) to its VAT return, while simultaneously claiming the same amount as input tax. Note, though, that your German client should be expecting you to add a standard formula (in German or English) to your invoice that's required by the German tax authorities.

Once you've received payment from your German client, then you in turn calculate the French VAT/TVA on the invoice amount and add it to your VAT/TVA return as output tax owed in the normal way (i.e. as if you'd received it in the payment from a domestic French customer).

In case you're wondering, there are special cross-border VAT regimes for certain defined providers of professional services, including translators and interpreters, and the normal cross-border VAT rules don't apply.


Direct link Reply with quote
 

Jenny Duthie  Identity Verified
France
Local time: 14:04
French to English
TOPIC STARTER
thanks Dec 15, 2006

Thanks Robin that's very helpful, I will do another search as you suggested though

Jenny


Direct link Reply with quote
 

Katarina Andersson  Identity Verified
Local time: 14:04
Member (2006)
Italian to Swedish
+ ...
just a comment to this post... Dec 16, 2006

As you said one does not add VAT if the client is in another EU-country, but does one then need to pay the VAT anyway to the local tax authorities? Because if I don't charge VAT, I didn't think I then need to pay it either in the country where you are registered with your VAT...?

A stupid question perhaps...

Katarina.


Direct link Reply with quote
 
lexical  Identity Verified
Spain
Local time: 14:04
Portuguese to English
agree with Williamson Dec 16, 2006

Lampedus,
It certainly isn't my understanding that, having charged 0% VAT to a client in another EU country, one then has to recalculate the tax and pay it over to one's local tax authority as if one has received it, as RobinB seems to be suggesting. It definitely is not the case here in Spain, though I have read that different national tax authorities interpret the EU VAT Directive differently.
My understanding is that you 'export' the duty to account for VAT to your intracommunity client, and you don't have to do anything about it yourself. How can you pay over VAT to your local tax office if you haven't charged it or received it?
I gather it is different if you buy something from another EU country (e.g. another translator's services, Proz membership, software, etc). Then you have to account for the VAT as an input tax (at your local rate) and offset it against your output taxes (I think).
This is all so complicated that there are only 3 people in Spain who understand it: one is dead, the second has been driven mad and the third has forgotten the answer. Williamson sums it up very well - the only answer is to consult your local tax office and hope they are more clued up than they are here.


Direct link Reply with quote
 
RobinB  Identity Verified
Germany
Local time: 14:04
German to English
Need for specialist professional advice Dec 17, 2006

VAT rules aren't actually that complicated, it's just the exceptions - including for translators - that tend to confuse. If you provide cross-border translation services within the EU, you aren't actually exporting anything at all. That's because under the EU VAT rules, translations are assumed to be performed at the domicile of the recipient (client), not the provider (translator). In fact, this principle applies to all cross-border translations, whether within the EU or not. It's also worth recalling that there is no such thing as 0% VAT on translation services. Ever.

The upshot is that the transaction is VAT-neutral at the client end (client adds output tax, deducts input tax in the same amount). However, the principles that underly the VAT system mean that until the final stage in the VAT chain (i.e. the retail consumer), there must be an incremental VAT contribution from all B2B transactions.

In the case of cross-border translations, it's the translator who makes that contribution by adding the notional VAT amount (at his or her domestic VAT rate) to his or her output tax liability.

Ultimately, this is no different at all to payments received from clients outside the EU. Such payments are most certainly not exempt from VAT. If you receive a payment from a non-EU customer, for example in the United States, for a translation you have provided, you (as the translator) then have to add your local rate of VAT and declare that amount of output tax in your VAT return. This is essentially equivalent (i.e. the counterpart) to "import VAT" (more properly known in English as "acquisition tax").

In other words: in both cases (cross-border EU clients and non-EU clients), the translator has to add output tax to his or her VAT return, even though that amount has not actually been received in cash from the client. You might think that this is unfair, but it's not, really - it's just a logical consequence of the VAT system, one of whose principles is to prevent unfair competition by ensuring that even goods and services purchased from outside the EU are subject to VAT, effectively removing any tax advantage from outsourcing outside the EU.

That's the limit on what I'm prepared to say without running the risk of illegally providing personal tax advice.

I strongly advise all freelance translators in the EU who are registered for VAT to consult a tax adviser/lawyer/accountant about their personal VAT situation. They should choose a professional adviser who has substantial experience not only in VAT for the self-employed, but also in EU cross-border "exotic" transactions, i.e. the rules applicable to translation (and interpreting) services. Even in today's "not-quite-the-single-market-yet-but-sort-of-getting-there-slowly", only a relatively small number of VAT practitioners are likely to have that specialist knowledge.

[Edited at 2006-12-17 13:22]


Direct link Reply with quote
 


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

Another query about putting tax on bills in Europe

Advanced search


Translation news





Wordfast Pro
Translation Memory Software for Any Platform

Exclusive discount for ProZ.com users! Save over 13% when purchasing Wordfast Pro through ProZ.com. Wordfast is the world's #1 provider of platform-independent Translation Memory software. Consistently ranked the most user-friendly and highest value

More info »
PerfectIt consistency checker
Faster Checking, Greater Accuracy

PerfectIt helps deliver error-free documents. It improves consistency, ensures quality and helps to enforce style guides. It’s a powerful tool for pro users, and comes with the assurance of a 30-day money back guarantee.

More info »



All of ProZ.com
  • All of ProZ.com
  • Term search
  • Jobs