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Effective 1 July: EU-based members to be charged VAT; fee to be in EUR
Thread poster: ProZ.com Staff
ProZ.com Staff
Local time: 07:09
SITE STAFF
Jun 23, 2003

This posting is to notify EU-based site users that two factors, both effective 1 July, will affect the price of platinum membership.

First: The EU has recently approved new legislation requiring non-EU firms to charge VAT tax when delivering services to EU-based individuals (but not when serving businesses.)

This means ProZ.com will have to start charging VAT tax on platinum upgrades by members residing in the EU. The percentage will range by country, from 15% to 25%.

Second: Increased currency fluctuation, and existing and new euro-based expenses (such as the VAT tax payable in euros), make it difficult for ProZ.com to continue accepting only dollar-based payments. Therefore, after July 1, members in EU countries will be asked to pay for platinum membership in euros.

We will not begin charging in euros until July 1--the day we are required to begin collecting VAT from individuals.*

From now through June 30, platinum membership can be purchased at the current rate. Since the difference in price between this week and next may be as high as 48 euros, please consider upgrading or renewing now.

Here is how the platinum fees break down in detail:

=> Normal new-member fee, 1-yr: $120 (~103.45 euros now)
=> Normal renewal fee, 1-yr: $100 (~86.21 euros)
=> New-member fee w/ 4000 browniz: $80 (~68.97 euros)
=> *Renewal* fee w/ 4000 browniz: $70 (~60.34 euros)

Note:
- Renewals will be added at the end of your current year.
- It is possible to renew for multiple years by simply making multiple purchases.


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Roberta Anderson  Identity Verified
Italy
Local time: 16:09
Member (2001)
English to Italian
+ ...
no VAT for individuals with VAT number? Jun 23, 2003

Can you pls confirm that there will be no VAT charged to freelancers with a VAT number? (i.e. individuals registered as businesses)
Thanks,
Roberta


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Henry Dotterer
Local time: 10:09
SITE FOUNDER
Right - no VAT withheld for those with valid VAT numbers Jun 23, 2003

Right, Roberta--we will not be required to withhold VAT tax when members who upgrade supply verifiable VAT numbers.

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Ralf Lemster  Identity Verified
Germany
Local time: 16:09
English to German
+ ...
Include the VAT number in the profile Jun 23, 2003

Hi Henry,
Given the requirement to provide a VAT ID number, why don't you add a field to the profile?

Best regards, Ralf


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Marijke Mayer  Identity Verified
Netherlands
Local time: 16:09
Dutch to English
+ ...
agree wholeheartedly with Ralf Jun 23, 2003

Ralf Lemster wrote:

Hi Henry,
Given the requirement to provide a VAT ID number, why don't you add a field to the profile?

Best regards, Ralf


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Harry Bornemann  Identity Verified
Mexico
English to German
+ ...
VAT legislation Jun 23, 2003

Henry wrote:
The EU has recently approved new legislation requiring non-EU firms to charge VAT tax when delivering services to EU-based individuals
Where can I find comprehensive information how this is meant to be handled?
It means that non-EU firms will have to withhold VAT and deduce it to all the tax authorities of all the EU countries where they have clients.
And in the EU you charge the VAT rate of your country, not of the clients country. This all looks like the typical chaotic EU legislation.
Ralf Lemster wrote:
..why don't you add a field to the profile?..
Good idea


[Edited at 2003-06-23 06:55]


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Henry Dotterer
Local time: 10:09
SITE FOUNDER
The EU Online ( http://europa.eu.int ) has preliminary info Jun 23, 2003

Some info on the new requirements can be found here:

http://europa.eu.int/comm/taxation_customs/taxation/ecommerce/vat_en.htm

Regarding reporting and payments, we have been told that under something called the "Special Scheme" it will be possible to elect just one EU country to which you will report (and remit) VAT payments. That country will in turn square up with the other EU nations.

That is the idea. But not all of the information that will be required in practice has yet been published.


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Patricia Posadas  Identity Verified
Spain
Local time: 15:09
Member (2002)
English to Spanish
+ ...
VAT on profile page Jun 23, 2003

I fully agree with Ralf's suggestion. I think that having VAT on our profiles would be a good thing, often a guarantee for potential customers too.

I would attach most importance to this as a way to verify both identity and legal status.

Also, those colleagues not having a valid VAT number could be asked to mention why they are exempted, as there exist legal exemptions depending on countries.


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Klaus Herrmann  Identity Verified
Germany
Local time: 16:09
Member (2002)
English to German
+ ...
2 Questions, and in support of VAT-ID in profile Jun 23, 2003

Adding a field for the VAT-ID is an excellent idea IMHO.

My two questions are: If I use a credit card, I can choose to pay in USD. Why would this incur a surcharge?

Second question: €120 is about $140 after conversion, so where exactly is the problem that mandates a surcharge on payment in EUR?

Don't get me wrong. I really enjoy this site and I'm happy to contribute to it by paying a membership fee but I don't understand why payments made in USD would become more expensive.


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Henry Dotterer
Local time: 10:09
SITE FOUNDER
We're going to euro-based fees due to euro-based expenses Jun 23, 2003

Klaus Herrmann wrote:
My two questions are: If I use a credit card, I can choose to pay in USD. Why would this incur a surcharge?


Do you mean why would it be taxed? The VAT requirement is based on where you live, not the currency you use.

If you mean something else, the answer is that there is no surcharge.

Second question: €120 is about $140 after conversion, so where exactly is the problem that mandates a surcharge on payment in EUR?

Don't get me wrong. I really enjoy this site and I'm happy to contribute to it by paying a membership fee but I don't understand why payments made in USD would become more expensive.


Thanks for your support, it is a good question.

ProZ.com has an increasing number of expenses payable in euros: one person's salary, the VAT tax (payable quarterly), European events (slated for the fall), and a European CAT tool to be sold starting in July.

Until now, ProZ.com (and its EU employee) have accepted the risk of currency fluctuation and gained/lost income as rates determined. This was acceptable to a point, but the combination of the rates being highly unfavorable, and a marked increase in the portion of our expenses that are in euro, make it impractical to continue bearing all the risk.

Therefore, it seems to me that the smartest and fairest thing to do is what most other businesses do: charge different currencies in different places.

It is true that EU members will lose the benefit they currently enjoy as a result of the dollar/euro rate shift--but it is also true that the risk of swings the other way will be removed. So everyone is on more solid ground.


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Patricia Gifford  Identity Verified
Local time: 16:09
English to German
+ ...
I think what Klaus means is the new transaction fee. Jun 23, 2003

5.5%, if you pay with credit card.

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Cecilia Coopman, M.A. in Translation  Identity Verified
United Kingdom
Local time: 15:09
English to Spanish
+ ...
Does this involve the UK? Jun 23, 2003

Hi,

I have a small question, does this new rule apply to UK translators without VAT? The UK is part of the EU but, as we all know, we still use pounds here.

Thanks.

Cecilia


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Marijke Singer  Identity Verified
United Kingdom
Local time: 15:09
Dutch to English
+ ...
VAT registration Jun 23, 2003

Cecilia Coopman, M.A. in Translation wrote:

Hi,

I have a small question, does this new rule apply to UK translators without VAT? The UK is part of the EU but, as we all know, we still use pounds here.

Thanks.

Cecilia


We do not have to register for VAT even when we are a small business as long as we do not earn more that approximately £ 50,000 per year.

I was wondering too what our situation will be!


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Ralf Lemster  Identity Verified
Germany
Local time: 16:09
English to German
+ ...
VAT-exempt cross-border purchases are only possible with a VAT registration Jun 23, 2003

Hi Marijke,
We do not have to register for VAT even when we are a small business as long as we do not earn more that approximately £ 50,000 per year.

I was wondering too what our situation will be!

Without knowing too many specifics about VAT being charged by non-EU suppliers, it's obvious to me that you will be charged VAT unless you are VAT-registered. Financially, there's no difference between buying software at your local shop in the UK or purchasing a service from a foreign supplier (ignoring the interest effect of having to pay VAT upfront locally): if you're not VAT-registered, the VAT you pay hits your bottom line. If you are, it's a deductible against VAT you collect on your sales. VAT exemption for cross-border purchases is an extension of this principle.

Best regards, Ralf


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LegalTrans D  Identity Verified
Turkey
Member (2003)
English to German
+ ...
EUR vs. $ - Are wo going to be paying in US$ again when the exchange rate goes up? Jun 24, 2003

I think this is a question very much on everybody's mind.

Not that it is a terribly big deal, but it irks me. The American agencies I work for won't pay me in Euros, because they argue that the $ is the legal tender in their country. So why shouldn't I pay an American corporation in their own legal tender without being penalized?

As I said, it is not a big deal, it is the attitude that bothers me a bit. Are we going to see a switch back to the US$ again when the exchange rate situation reverses? Or will then the membership fees go up for those who (are forced to) pay in Euros?

The US takes pride in being a free country where people have the freedom of choice. Apparently, when profits beckon, freedom of choice is but an empty phrase.

Just in case someone takes exception: I haven't paid any membership fees to ProZ, and it doesn't really matter to me whether that fee is $ 120.00 or 140.00. I will pay it when I think the time is right. It is the ATTITUDE that bothers me.

Let me illustrate this: While in Prague, I once went to a pub to have a beer. They had a sign on the wall in Czech, English and German saying 1/2 litre of beer = 20 crowns (= 66 Cent US at the time). Now any mug of Czech beer at 66 cents is a steal. But - the line below read (in Czech only): "Czech citizens pay half price".

I don't mind at all paying 66 cents for a beer. What I do mind is that I should pay double for the same thing because I am in a special situation. See the difference?

If Henry had come out and said, Folks, we have some expenses in Euros to cover, so please pay in Euros - and if he had given us an account number in the Eurozone so at least we wouldn't have all the charges for overseas transfers on top, that is what I would have called a fair deal. If he has Euro expenses, why not keep the account in the Euro zone? He can still do it, and I hope he will. I just hate to be FORCED under threat of penalty to do something that, if I had requested permission to do one or two years ago, would have been rejected within a split-second.

Keep up the good work, Henry, which we all appreciate immensely. We are grateful for ProZ. But don't pull something like this Euro deal on us again, please. It can be done differently - and if done differently, it won't make for bad blood.

Volkmar


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