Working without VAT number for EU agencies?
Thread poster: Jan Sundström

Jan Sundström  Identity Verified
Sweden
Local time: 10:46
English to Swedish
+ ...
Apr 23, 2007

Hi all,

I've seen several postings on agencies within EU that claim that you need a VAT number to invoice them.

But I assume that there must be exceptions for pretty much every country within EU, where you can perform assignments without having to register for a VAT number.

For instance, I read that in UK, you just have to refer to some VAT exempt legislation:
http://www.proz.com/post/547098#547098

So I'd like to know if there are similar VAT exemption rules for all EU nations, if you don't have a registered company, and don't want one either?
Please reply with an example from your country!

TIA,

Jan


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Uldis Liepkalns  Identity Verified
Latvia
Local time: 11:46
Member (2003)
English to Latvian
+ ...
Sure, I can work with any translator/outsourcer Apr 23, 2007

not having a VAT No. However, our IRS asks from me from the foreign based not VAT registered freelancers this form- as originals in 4 stamped and signed copies:

www.fm.gov.lv/image/file/MK_178_starpt_liigum_nod_atviegl.doc (The bilingual form itself is is at the bottom of the long explanatory document in Latvian)

Or this TynyUrl, in case the long ling does not work:
http://tinyurl.com/ytumrv

Which is a kind of a nightmare. OTOH, I never have yet met EU outsourcer without a VAT No, so I cannot give much advise here.

Uldis,
EU VAT ID LV40003808732 , as all EU VAT Numbers can be verified at: http://europa.eu.int/comm/taxation_customs/vies/en/vieshome.htm

HTH,

Uldis


Jan Sundström wrote:

Hi all,

I've seen several postings on agencies within EU that claim that you need a VAT number to invoice them.

But I assume that there must be exceptions for pretty much every country within EU, where you can perform assignments without having to register for a VAT number.

For instance, I read that in UK, you just have to refer to some VAT exempt legislation:
http://www.proz.com/post/547098#547098

So I'd like to know if there are similar VAT exemption rules for all EU nations, if you don't have a registered company, and don't want one either?
Please reply with an example from your country!


[Rediģēts plkst. 2007-04-23 21:01]

[Rediģēts plkst. 2007-04-23 21:06]


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Heinrich Pesch  Identity Verified
Finland
Local time: 11:46
Member (2003)
Finnish to German
+ ...
Tax number Apr 24, 2007

Every person in the EU has a tax number, and businesses too. There is no VAT-number in Finland, but business numbers the tax authority has issued. The question is not, if the foreign customer pays VAT or not, the question is if it is a business or a private person.
The tax-number starts with the country sign, DE for Germany, FI for Finland, SE for Sweden etc. and after that come 8 digits. It does not concern me, if the customer pays VAT or not, and no client's concern if I pay VAT or not. The Finnish tax authority will take care of that.
My interpretation.
Heinrich


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Jenny Forbes  Identity Verified
Local time: 09:46
Member (2006)
French to English
+ ...
In the UK Apr 24, 2007

Heinrich Pesch wrote:

Every person in the EU has a tax number, and businesses too. There is no VAT-number in Finland, but business numbers the tax authority has issued. The question is not, if the foreign customer pays VAT or not, the question is if it is a business or a private person.
The tax-number starts with the country sign, DE for Germany, FI for Finland, SE for Sweden etc. and after that come 8 digits. It does not concern me, if the customer pays VAT or not, and no client's concern if I pay VAT or not. The Finnish tax authority will take care of that.
My interpretation.
Heinrich


In the UK it is not compulsory to register for VAT unless your turnover is over £60,000 a year, or something like that, so (I guess) most freelancers don't earn that amount and don't register, although they can if they wish, and therefore don't have a VAT number.
As Heinrich says, we all have an income tax reference number (or should!). I agree that it is not the concern of an agency in the UK or elsewhere whether or not their translators are registered for VAT and whether or not they pay their taxes. That is the translator's individual concern and responsibility.
Kind regards,
Jenny.


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Jan Sundström  Identity Verified
Sweden
Local time: 10:46
English to Swedish
+ ...
TOPIC STARTER
VAT numbers in Finland too. Apr 24, 2007

Heinrich Pesch wrote:
Every person in the EU has a tax number, and businesses too. There is no VAT-number in Finland, but business numbers the tax authority has issued. The question is not, if the foreign customer pays VAT or not, the question is if it is a business or a private person.
The tax-number starts with the country sign, DE for Germany, FI for Finland, SE for Sweden etc. and after that come 8 digits.


Hi Heinrich and all,

The Finnish "tax-number" you refer to is in fact the VAT number. In Sweden it's called "momsregistreringsnummer", in Finland it might be called something else, but if you translate it to EU terminology it is the VAT number.
See these links:
http://www.bzst.de/003_menue_links/005_ustidnr/512_merkblatt/001_aufbaupdf.pdf
http://www.skatteverket.se/skatter/mervardesskattmoms/momsregistreringsnummer.4.18e1b10334ebe8bc80002649.html
http://sima-pc.com/nif.php

But it seems strange to me that every private person in Finland gets a"FI+8 digit" VAT number assigned (at the time of birth???). Is it really true?

In Sweden, you only get this number if you register a firm or company with the tax authority.

Uldis, thanks for your valuable feedback. Interesting to read about the IRS form. Off course all EU outsources/agencies have VAT numbers, but the core of my question is to know how private individuals in EU can take freelance assignments without having a VAT number.

More examples?

/Jan


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Gillian Searl  Identity Verified
United Kingdom
Local time: 09:46
Member (2004)
German to English
There are exceptions for low business turnover in all countries Apr 24, 2007

Businesses whose annual turnover does not reach a particular figure are exempted from VAT in every country. The only problem is that each country sets that particular figure. The UK has one of the highest exemption levels at around GBP 60,000 per year. In Germany the limit is €17,500 which is why more German freelancers than British ones have a VAT number. So you need to find out what the turnover limit is in the particular country and then you know whether you have to register for VAT or not.
Hope that helps
Gillian


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Christine Andersen  Identity Verified
Denmark
Local time: 10:46
Member (2003)
Danish to English
+ ...
VAT registration is an advantage in Denmark Apr 24, 2007

In Denmark registration is mandatory if you earn more than DKK 50,000 fom your business (per year).

Translating full time, you can earn that much in a couple of months.

The administrative procedures for a registered single-person business are not very complicated. Admittedly, I get someone else to do it, but for anyone who is familiar with accounting and tax etc. (and has a better head for figures than I have) it is no problem.

The advantage is that you can reclaim tax on dictionaries and resources, a new computer and software, printer, cassettes, paper etc.

Another advantage is that the Danish tax authorities leave you alone or can very easily see that your business is properly run. If they suspect tax dodging, they leave no stone unturned, which is fair enough, but very time consuming!

Apart from that, VAT is just a formality once it is entered on the invoices for Danish clients or the client's VAT registration number is entered on the invoice and in the tax return.
Danish VAT is 25%, which is quite a lot to add on to the rate I charge clients who are not VAT registered - and they have to pay!


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Jan Sundström  Identity Verified
Sweden
Local time: 10:46
English to Swedish
+ ...
TOPIC STARTER
VAT exemtion threshold for all EU countries Apr 24, 2007

Hi all,

Thanks a lot Gillian, Jenny, Christine for pointing me in the right direction!

I now found the official EU document stating the threshold levels:
http://ec.europa.eu/taxation_customs/resources/documents/vat_ec_pt-en.pdf

All countries range within €8.000-€13.000, with the big exception being UK and Ireland (€86.000 and €41.000).

But off course, as Christine put it, if you earn that much, you'd profit from registering for VAT anyway.

But for small-time translators earing less, I'm still interested if you can dodge the VAT number requirement from agencies just by referring to this document, or whether more paperwork is involved (like Uldis indicated)?

Best,

Jan


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Gillian Searl  Identity Verified
United Kingdom
Local time: 09:46
Member (2004)
German to English
You have to educate the outsourcers Apr 24, 2007

Often outsourcers will only know the rules for their own country or simply apply rules across the board. I frequently have to send an appropraite link to outsourcers who insist on a VAT number. On my invoices I insert my tax reference number - which is what the British tax authority knows me as.
Gillian


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megane_wang  Identity Verified
Spain
Local time: 10:46
English to Spanish
+ ...
A VAT ID is mandatory, at least in Spain. Why?? See... Apr 24, 2007

Hello --

There are a few common misunderstandings (urban legends) regarding VAT exceptions, invoicing and having a legally stablished productive activity, at least in SPAIN.

When invoicing In Spain:
----------------------------------

1. You must have a VAT ID to make an invoice. This VAT ID can be your personal one or a company one. Everyone has it. Foreigners who live in Spain and wish to get one to be able to invoice from here can do it very easily if they just have legal permission to stay in the country.

If you don't have a legally stablished commercial activity you are not legally allowed to make an invoice, because you are not legally a VAT-paying entity.

2. You must be registered as an independent worker in the INSS (autónomos)

If you are not registered, you cannot invoice anyone as an individual !! You can be a company associate, and your company can issue the corresponding invoices. At least 1 associate in a company MUST be a registered independent worker.

There's a first urban legend here, that says that if you are a "professional" and just make small invoices below some magical limit, you don't need to charge anything and you don't need to declare anything. That's absolutely FALSE. You must be registered as an economic activity (IAE registration), and must have a freelance INSS registration (autónomos).

3. To prepare an invoice for services (incl. translation):

--- Inside Spain:
As a Freelance: Add 16% VAT, deduce 15% IRPF
As a Company: Add 16% VAT

--- Outside Spain: No VAT, no IRPF to be taken into account.

4. What does it happen to the exceptions?

Depending on the IAE regime you choose, you will pay a fixed amount for the VAT you charge, which is a rough estimate (not recommended for a translator at all), or the precise VAT you charge (deducing some VAT from your professional expenses). In this second case, every 3 months you'll have to pay for that VAT. Exceptions will apply systemmatically if you just apply the existing rules (I've been a freelance for long and never saw them in action for low and high amounts, so that I assume that they don't exist).


A second legend is to be pointed out here: It does not matter for a company if your invoice is not complete with your VAT ID. Strictly, that's FALSE too.

5. To be able to account for an invoice:
It is mandatory that the invoice contains, for both parties (customer and provider)

- Full name / Company registration name
- Tax address (can be different from post address)
- VAT ID or equivalent if coming from another country

Without all this information, an invoice cannot be legally accounted.

Why the VAT ID or equivalent if no VAT is to be applied?
----------------------------------------------------------

1. Because the tax agency can request an audit of your accounts and VAT ID / XX is the only thing they trust as a proof of identity of the invoice issuer.

2. Because VAT is not the only tax a company pays related to their income (mostly through invoices)...

So if...
- ... You cannot justify that expense
- ... You cannot compute the right balance
Then... As far as outcome-related taxes are concerned, you cannot refer to that invoice as an expense and you will pay something you should not.

Of course, a company may or may not consider this important for a 20 Euro invoice, but at least it is good to know and try to understand the rules.

I told almost the same yesterday for a similar question. I hope this time someone reads it

Ruth @ MW

[Edited at 2007-04-24 14:41]


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lingomania
Local time: 18:46
Italian to English
Australian working in Italy Apr 24, 2007

I'm not sure, but many Italian agencies, by law, require freelance translators to register for a VAT number especially if they have a medium to big annual turnover, but I suppose that's the same for any other EU country....

Robert


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Jan Sundström  Identity Verified
Sweden
Local time: 10:46
English to Swedish
+ ...
TOPIC STARTER
What about small scale translators? Apr 25, 2007

Hi Ruth and all,

I did read your earlier postings, and I can follow the argument that you can only produce an invoice if you have a VAT number.

But what about small scale translators, that have minimal expenses and see no need to deduct any VAT on their own part?

According to Swedish tax authorities, there is a "middle way" defined as "utländsk uppdragstagare" (litterally meaning "foreign assignment-taker").
To be an assignment-taker, you can do jobs for agencies (Swedish, at least) without having a VAT number. Maybe, the invoice you send then is not strictly an invoice in the legal sense, but more a request that the agency should pay you renumeration (akin to some kind of salary).

Does this definition exist in any other EU country?!

Best,

Jan


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Alain P.
France
Local time: 10:46
English to French
+ ...
What about Translators outside EU working for EU agencies or customers? Dec 6, 2008

I have read all the posts about this very interesting topic that focused on EU translators working for EU agencies (or customers).

But what about non-EU (outside EU) translators working for EU agencies (or customers)?

Links to specific articles on EU or country rules reagrding this issue would be great.

Thanks.


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Krzysztof Pawliszak
Poland
Local time: 10:46
English to Polish
+ ...
They do not Jul 9, 2010

lingomania wrote:

I'm not sure, but many Italian agencies, by law, require freelance translators to register for a VAT number especially if they have a medium to big annual turnover, but I suppose that's the same for any other EU country....

Robert


I work for an Italian translation Agency. In the invoicing system there are multiple options: - freelancer (UE member) without VAT number / with VAT ; non UE freelancer and so on.

So far I had no problems with VAT number, but this month, I invoice for them for the first time; required me to put VAT number. I have no idea how to deal with it.


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LuciaC
United Kingdom
Local time: 09:46
English to Italian
+ ...
Link Jul 9, 2010

http://www.proz.com/forum/business_issues/174532-intra_community_vat_number_is_it_necessary.html

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