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IVA 7% & IRPF?
Thread poster: Sarah Pedersen

Sarah Pedersen  Identity Verified
Spain
Local time: 16:04
Member (2008)
English to Danish
+ ...
Nov 27, 2008

Hi all,

Could anyone help me on this?
I have just registered as an "autónomo" in Hacienda.

I was told at Hacienda that I should apply 7% VAT to my invoices during the first two years as an "autónomo". They could not inform me about IRPF and said that I should not worry about it! So reading the post (below) from Monica, leaves me with the question:

Can I apply 7% VAT and deduct 7% IRPF?

I refer only to the invoices for my Spanish clients.

Thanks very much for any help on this.
Sarah

Post by Monica (for reference):
In Spain yopu have to add to your invoces 16%VAT tax and deduct 15% of IRPF (Impuesto sobre la Renta de las Personas Físicas), so your invoice, for example, looks like this:

base imponible: 100 EUR
+ IVA 16%: 16 EUR
- IRPF 15%: 15 EUR

Total: 101 EUR

The IRPF value you deduct in your invoices is 15% or 7% (during the rest of your first tax year as a freelancer and following two years). So if you will start as a freelancer this month, you can deduct only 7% IRPF until December 2010.


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Florence Gagne  Identity Verified
France
Local time: 16:04
English to French
+ ...
IVA & IRPF Nov 27, 2008

Hello Monica,

I have also registered as "autonoma" at the beginning of the year and I think there has been a confusion here. You should apply 16% VAT for your clients in Spain, and declare 7% IRPF during the first 2 years (15% afterwards).

I hope that this helps you,

Have a nice day,

Florence


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Paula James  Identity Verified
Spain
Local time: 16:04
French to English
+ ...
7% for IRPF Nov 27, 2008

The people at Hacienda often seem unsure of the answers to things, but they should have been able to tell you this. The 7% applies to IRPF deducted from your invoices (i.e. the client doesn't pay you that 7% of your invoice value, but sends it straight to Hacienda) - so you subtract it from the invoice value. I believe this is for the first two years as autonomo.

IVA is at the rate of 16%, and is added to the invoices - this means that you will actually be invoicing for more than the basic value of your invoice, but then you have to pay the IVA to the Hacienda every quarter, it's not your money to spend!

Is that what you needed to know? I hope it's clear - the system is quite confusing, and they don't seem to have answers sometimes.


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Sarah Pedersen  Identity Verified
Spain
Local time: 16:04
Member (2008)
English to Danish
+ ...
TOPIC STARTER
declaración de la renta or IVA quarterly to Hacienda? Nov 27, 2008

Thanks so much for your answer, Paula.

Just to make sure I understand it right, then my invoice should be like this:

base imponible: 100 EUR
+ IVA 16%: 16 EUR
- IRPF 7%: 7 EUR

Total: 109 EUR

I was told that I should just make "declaración de la renta" every year, but nothing about paying IVA to Hacienda every quarter. Im confused...


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Paula James  Identity Verified
Spain
Local time: 16:04
French to English
+ ...
quarterly IVA declaration Nov 27, 2008

Yes, that's right for the invoice. IRPF and IVA are pretty much separate from the Hacienda's point of view. Personally, as most of my work is from outside Spain, I also have to declare my taxes every quarter, but if most of your work is within Spain then it will just be once a year I think.
IVA however, I think is quarterly for everyone, it's the modelo 300. You can also declare IVA you've spent on work-related purchases to offset it.


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Rod Brookes  Identity Verified
Spain
Local time: 16:04
Member (2008)
Spanish to English
My understanding of IVA/IRPF Nov 27, 2008

Hi Sarah,

As far as I understand it:

-7% IRPF for the first three years*;

always the rate is +16% IVA for translators**;

you file a quarterly IVA return for the previous quarter during a specified period in Jan, Apr, Jul, Sep;

you file an annual IVA return for the previous year during a specified period in the following Jan;

you file an annual IRPF return for the previous year in the following May-June;

any payments you need to make you make at the same time as filing the return, miss filing during the specified periods and you risk a fine.

there are a lot of work-related expenses that you can offset against both IVA and IRPF (ie telephones, internet, even hardware)

Obviously I'm happy to be corrected, but I'm pretty certain that is all correct.

I set myself the task of trying to find out as much as possible about the Spanish tax and social security system, and the more I found out the more I became convinced paying an asesor/asesora to deal with it all is a cost-effective investment!

Rod


* It's possible this doesn't apply to people involved in economic activity in Spain in the year before starting as a translator. This didn't apply to me so I didn't have to check.

** again I think there are clients (educational etc) who may be IVA-exempt. Again it hasn't been an issue for me yet.


[Edited at 2008-11-27 18:05 GMT]


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RNAtranslator  Identity Verified
Local time: 16:04
English to Spanish
+ ...
IVA exemption Nov 27, 2008

Scientific, literary and artistic translations are exempted. If that were the case, you should state this in your invoice:

“Operación sujeta a IVA pero exenta por el artículo 20.1.26º de la ley del IVA 37/1992 de 28 de diciembre”


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Penelope Ausejo  Identity Verified
Spain
Local time: 16:04
English to Spanish
+ ...
Quarterly VAT return Nov 27, 2008

I also think that the VAT return is quarterly for everyone.

There are 4 VAT return quarters plus a yearly one.

I mostly work for foreign customers and still I have to fill my VAT returnn every quarter. Mine is almost always negative... that is, Hacienda always owns me money. In this case, I can ask for it at the end of the year on the yearly return.


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Virginia Navascues  Identity Verified
Local time: 16:04
Member (2008)
Spanish to English
+ ...
IVA & IRPF & quarterly declarations Nov 28, 2008

I've been working as an "autónoma" now for over 5 years in Spain. The first two years, I only had to declare 7% IRPF. After two years, this is rasied to 15% (what I currently declare). Translations are exempt from IVA. On my receipts, I write: "Exento de IVA por el Art. 20.1.28 Ley 37/1992." I put this sentence right after the amount for the bill.

Also, as of about 2 years ago, I was told by my financial agent (gestor) that I no longer had to make quarterly declarations, it's enough to make the final Declaración de Hacienda.

So, the first two years, your bills look like this:

Base imponible: ----- xx,xx €
IRPF 7% ------------- - x,xx
TOTAL------------------xx,xx€

Where the TOTAL is the result of subtracting the 7% IRPF from the base imponible.

After two years, you have to raise the IRPF to 15%, so the bills are exactly alike ecxcept for this detail. In that case, you raise your base imponible by 8%, before subtracting the 15%, at least that's what I did and nobody protested.

As I work for official institutions (universities), they take charge of retaining the IRPF, and they pay me the net amount and supposedly pay the IRPF to Hacienda. Right before the fiscal year ends, they send me a declaration of what they have paid me and what they have retained, and that's what I declare (though it doesn't always tally with my own accounts - don't ask me where the missing IRPF goes to. Who am I to ask?). So far, that's what my financial advisor has told me to do and I have had no problems either with clients or with Hacienda. Sometimes a client will insist I have to charge IVA, and then they check back with Hacienda and find out that, no, I do NOT have to charge IVA, as translations are exempt.

For what's it's worth, that's my experience. I don't know how it goes with private clients: that is, who retains the IRPF or who pays it to Hacienda. Probably you would have to do it yourself.

Cheers,

Virginia


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Paula James  Identity Verified
Spain
Local time: 16:04
French to English
+ ...
translations exempt from IVA? Nov 28, 2008

I am very surprised to read this, as I always charge IVA in Spain, and my clients (agencies mostly) expect me to - those that send model invoices always include it. I think maybe work for educational institutions is exempt, but not commercial translations.
And yes, for private clients you would pay the IRPF to Hacienda yourself, the same as for foreign clients, etc.
And I am fairly sure you need to make IVA declarations every quarter, maybe not in your case if you don't collect it from your clients.


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Sarah Pedersen  Identity Verified
Spain
Local time: 16:04
Member (2008)
English to Danish
+ ...
TOPIC STARTER
Hacienda informing incorrectly.... Nov 28, 2008

Thank you very much for all the replies!

Im just thinking that it is incredible if Hacienda is really giving out incorrect information....!

My case can not be compared with Virginias's, I think. As she works for official institutions she doesn't have to apply IVA, right?

I work for Spanish agencies so I will go with:
16% IVA & -7% IRPF.

Thanks again - very useful answers!


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Rod Brookes  Identity Verified
Spain
Local time: 16:04
Member (2008)
Spanish to English
IVA rate misinformation and exemption. Nov 28, 2008

Going back through the many threads on this subject I have read several accounts of translators being given misleading or even incorrect information by the hacienda. But to get the rate of IVA so wrong is indeed almost incredible! After all, isn't the minimum rate of value added tax for commercial services (exc food etc) that national governments can set fixed by the European Union: at 15% I believe.

Yes I believe Virginia's situation does not apply to most freelance translators in Spain in that she works exclusively for universities. As far as I understand it IVA-exempt activities include those related to public organisations like educational institutions, museums, arts organisation, etc. My clients so far have all been private and commercial so it hasn't yet been an issue for me and I have had to levy IVA.

So yes base imponible +16%IVA -7%IRPF is what I invoice.





[Edited at 2008-11-28 10:30 GMT]


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Lydia Foster  Identity Verified
Spain
Local time: 16:04
Spanish to English
+ ...
7% IRPF during first 2 years optional, but not obligatory Nov 28, 2008

Although most people starting out charge 7%, it's not compulsory.

I started out about a year ago and I've charged 15% from day one.
That way, I'm guaranteed a "paga extra" in June next year! It's a handy way of saving although it does leave you with less cash flow but I'd rather that they had it, I'm the type of person who hates surprises!


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Parrot  Identity Verified
Spain
Local time: 16:04
Member (2002)
Spanish to English
+ ...
No such invoice Dec 2, 2008

RNAtranslator wrote:

Scientific, literary and artistic translations are exempted. If that were the case, you should state this in your invoice:

“Operación sujeta a IVA pero exenta por el artículo 20.1.26º de la ley del IVA 37/1992 de 28 de diciembre”


The letter of that article says: "Los servicios profesionales, incluidos aquellos cuya contraprestación consista en derechos de autor, prestados por artistas plásticos, escritores, colaboradores literarios, gráficos, compositores musicales, autores de obras teatrales y de argumento, adaptación, guión y diálogos de obras audiovisuales, traductores y adaptadores".

This refers to services covered by contract, such as may be signed by academics making a new translation of Plato, or translators of theatre works collaborating actively with theatre companies (even in rehearsals, adaptations and improvisations). The contract states the terms of payment and no invoice is needed (that is, no unit quantity is specified), since liquidation is paid by the entity practically as a salary supplement, for example in the case of faculty staff.

University and presumably not-for-profit publishers seeking translation services pay by the word or the hour, like translation agencies, furnish their CIFs (which usually begin with an odd letter like "U" or "Q") and rap you if you don't add VAT (it's in their budgets, which are strictly controlled. If the department hiring you doesn't mention it, ask them to check with the comptroller, who may just suspend the payment on that account).

[Edited at 2008-12-02 13:07 GMT]


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RNAtranslator  Identity Verified
Local time: 16:04
English to Spanish
+ ...
Rectificación: ley del IVA 37/1992 Dec 2, 2008

Paso al español, ya que la ley está en este idioma:

Me fie ciegamente de quienes me asesoraron, y leyendo el texto veo que hice mal. Pido disculpas por la metedura de pata.

El artículo 20.1.26º está redactado de forma harto farragosa, como no podía ser menos tratándose de una ley

"Los servicios profesionales, incluidos aquéllos cuya contraprestación consista en derechos de autor, prestados por artistas plásticos, escritores, colaboradores literarios, gráficos y fotográficos de periódicos y revistas, compositores musicales, autores de obras teatrales y de argumento, adaptación, guión y diálogos de las obras audiovisuales, traductores y adaptadores."

A mi entender, la frase dice: "Los servicios profesionales, incluidos aquéllos cuya contraprestación consista en derechos de autor, prestados por [lista_de_prestadores_de_servicios]". Entre los prestadores de servicios, tal y como está redactado, están los traductores, con lo que ninguna traducción estaría sujeta a IVA. Ni que decir tiene que sería una temeridad no gravar IVA, y el traductor que así lo hiciera debría estar dispuesto a ir a juicio para defender esta postura.

Entiendo que el incompetente que redactó esto, lo que quería decir es : "Los servicios profesionales, incluidos aquéllos cuya contraprestación consista en derechos de autor, prestados por artistas plásticos, escritores, colaboradores literarios, gráficos y fotográficos de periódicos y revistas, compositores musicales, autores de obras teatrales y de argumento, adaptación, guión y diálogos de las obras audiovisuales, sus traducciones y adaptaciones."

¿Sería alguien tan amable de enseñar a los legisladores españoles a redactar correctamente en castellano?

En cualquier caso, no hace referencia, como yo creía, a traducciones de textos científicos, lo que para mí es muy relevante.

Parrot wrote:

RNAtranslator wrote:

Scientific, literary and artistic translations are exempted. If that were the case, you should state this in your invoice:

“Operación sujeta a IVA pero exenta por el artículo 20.1.26º de la ley del IVA 37/1992 de 28 de diciembre”


The letter of that article says: "Los servicios profesionales, incluidos aquellos cuya contraprestación consista en derechos de autor, prestados por artistas plásticos, escritores, colaboradores literarios, gráficos, compositores musicales, autores de obras teatrales y de argumento, adaptación, guión y diálogos de obras audiovisuales, traductores y adaptadores".

This refers to services covered by contract, such as may be signed by academics making a new translation of Plato, or translators of theatre works collaborating actively with theatre companies (even in rehearsals, adaptations and improvisations). The contract states the terms of payment and no invoice is needed (that is, no unit quantity is specified), since liquidation is paid by the entity practically as a salary supplement, for example in the case of faculty staff.



¿En qué te basas para decir que se refiere a trabajos suplementarios realizados por asalariados? No tendría mucho sentido tratar en una ley exenciones del IVA de unos servicios prestados por los propios asalariados, que en todo caso no serían más que horas extraordinarias, que se tratarían en la legislación laboral.


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