Not a registered entrepreneur = no pay?
Thread poster: Anna Katikhina

Anna Katikhina  Identity Verified
United States
Local time: 09:26
Member (2008)
English to Russian
+ ...
Apr 8, 2010

A few weeks ago I started working with a Dutch company as a freelance translator (I am Russian).

We signed an agreement and I made a 10 000 word translation which they liked and asked for an invoice. After I issued the invoice, I was asked to send documentation that would prove I am "acting independent and self-employed" (it was mentioned in the agreement: "The Parties enter into the Agreement upon the condition precedent that Freelancer will provide Booking in a timely manner with valid documentation in order to confirm he/she is acting independent and self-employed (in Dutch: “VAR”).") Somehow I missed this point when reading the agreement (my bad, I know).

Unfortunately I act as a private individual, as I am not a registered individual entrepreneur (which I guess means I am not considered as "self-employed").

I understand that this is my mistake in the first place, I shouldn't have missed this. But I also realize that I didn't pay much attention at that because I've worked with a few dozens of foreign customers, and none of them required this sort of documentation. Since they deal with an independent foreign service provider, they do not pay taxes for me, and I take care of income taxes myself (i've got my VAT). As far as I know there is no law that would prohibit this.

So... What I wanted to know is if there is something that I can do in this situation to make sure I get paid for the job I've already done after all. Or... all that's left for me in this situation is to let them have my translation for free (and be more careful in the future)?

Thanks..

[Edited at 2010-04-08 21:26 GMT]


 

Neil Coffey  Identity Verified
United Kingdom
Local time: 17:26
French to English
+ ...
What do they actually need...? Apr 8, 2010

Anna Katikhina wrote:
the agreement: "The Parties enter into the Agreement upon the condition precedent that Freelancer will provide Booking in a timely manner with valid documentation in order to confirm he/she is acting independent and self-employed (in Dutch: “VAR”).")


Maybe you can discuss with them what the purpose of this clause actually is and what the thing is that they actually *need*? It sounds like they essentially want to avoid being accused of condoning illegal work/nonpayment of taxes (which is usual in such a contract, but usually the clause simply says something to the effect that the contractor agrees to pay their taxes), and they've invented as a way of doing that something that applies specifically to Dutch law. So wen they say "self-employed", what they're probably getting at is basically that you're working legally rather than any specific status (what legally notions like "self-employed" actualy mean varies from country to country anyway).

So... is there *some* publicly-disclosable documentation you can give them to essentially demonstrate you're working legally? You mention you're VAT-registered -- do you have a registration certificate for example? Or can you point them to the registry where they can verify your VAT number?


 

Anna Katikhina  Identity Verified
United States
Local time: 09:26
Member (2008)
English to Russian
+ ...
TOPIC STARTER
so it's not hopeless Apr 8, 2010

Neil,

Well, that is the thing, what documentation can a private individual have that would prove he/she has the right to work independently? I do have a VAT certificate, though. Hopefully they will accept it, because other than that I cannot even think of anything. And since they mention my VAT when they send the payment, it already implies that I will take care of all taxes.

Thank you anyway, this gives me hopeicon_smile.gif


 

Neil Coffey  Identity Verified
United Kingdom
Local time: 17:26
French to English
+ ...
Many would be in the same position... Apr 8, 2010

Anna Katikhina wrote:
Well, that is the thing, what documentation can a private individual have that would prove he/she has the right to work independently?


Well, potentially nothing. For example, for freelancers in the UK-- and I imagine many other countries-- there's really no publicly-disclosable document of the type they're asking for. But that's exactly why I think you should be able to negociate with them about what document, if any, to provide.


 

avsie (X)  Identity Verified
Local time: 18:26
English to French
+ ...
See the link below Apr 9, 2010

The VAR is not the same as the VAT. See the explanation on this page: http://www.expatax.nl/Workingwithfreelancers.htm

This is a quite standard procedure in the Netherlands. But IMO, this only applies to freelancers residing in the Netherlands and subject to Dutch income taxes, not freelancers living abroad.

Edit: after verification, the VAR declaration only applies to freelancers residing in the Netherlands. The outsourcer probably overlooked it. I know this outsourcer and I believe they mostly employ freelancers living here. Just contact them and remind them that this only applies to residents of the Netherlands. You can then discuss what other type of documents they might want from you.

[Edited at 2010-04-09 07:45 GMT]


 

Anna Katikhina  Identity Verified
United States
Local time: 09:26
Member (2008)
English to Russian
+ ...
TOPIC STARTER
hope this works Apr 9, 2010

Thank you, Marie-Claire, for your clarification. I have already asked them what sort of documents they want me to show them, but still haven't received a reply. I just want to be ready.

I mean, if this is really because they just want to make sure that it is me who bears responsibility for any possible income tax, stating my VAT number in payment details would do. None of my foreign clients have ever had a problem with that... But there's a first time for everything, i guess.


 

Krzysztof Kajetanowicz (X)  Identity Verified
Poland
Local time: 18:26
English to Polish
+ ...
VAT registration certificate? Apr 9, 2010

If they love paper so much, a VAT registration certificate (or a decision granting your VAT number, or whatever) might just do it.

And VAT absolutely guarantees that you're an independent contractor. An employee will never ever invoice an employer, will they. In fact, the invoice itself is proof enough, and a proof of VAT registration would only support the authenticity of the invoice.

[Edited at 2010-04-09 15:14 GMT]


 

Samuel Murray  Identity Verified
Netherlands
Local time: 18:26
Member (2006)
English to Afrikaans
+ ...
Surely... Apr 9, 2010

Anna Katikhina wrote:
(it was mentioned in the agreement: "The Parties enter into the Agreement upon the condition precedent that Freelancer will provide Booking in a timely manner with valid documentation in order to confirm he/she is acting independent and self-employed (in Dutch: “VAR”).")


Surely this clause does not apply to you. VAR is a *Dutch* thing that applies to *Dutch* translators (i.e. translators who live and pay tax in the Netherlands). The client probably just forgot that you're not Dutch (or perhaps the bookkeeper is unaware of it).

Does the contract also contain a clause saying that if one part of it is unenforceable, the rest of it remains in force?

If the client absolutely insists that you prove your status, tell them that you are not Dutch and therefore do not have a VAR, and ask them what kind of documentation they would require. If they say "VAR" again, then you know that they must be scammers, and you should write a Blue Board entry for them, because only Dutch translators can get a VAR.


 

Anna Katikhina  Identity Verified
United States
Local time: 09:26
Member (2008)
English to Russian
+ ...
TOPIC STARTER
wow! vat accepted Apr 9, 2010

Thank you all! My client has just agreed to accept my VAT registration.

This discussion has clarified a few things for me anyway. Like that after all you don't really have to be registered as an entrepreneur to work with foreigners.


 

Narasimhan Raghavan  Identity Verified
Local time: 21:56
English to Tamil
+ ...
It will always be better to get things clarified even before starting the first work Apr 11, 2010

The moment you see a text in the form:

""The Parties enter into the Agreement upon the condition precedent that Freelancer will provide Booking in a timely manner with valid documentation in order to confirm he/she is acting independent and self-employed (in Dutch: “VAR”).")",

it will be prudent to establish as the first priority that you are what they want. In case they reject you on that score, at least you are spared of having done a big assignment with the threat of non-payment.

I know, such clients are always in a tearing hurry to get the translation done at the earliest, (preferably yesterday), but you should not allow that to influence your action.

It is good that in your case they accepted your proof, but it would have gone the other way as well.

Regards,
N. Raghavan


 

Anna Katikhina  Identity Verified
United States
Local time: 09:26
Member (2008)
English to Russian
+ ...
TOPIC STARTER
everyone makes mistakes Apr 11, 2010

Thanks, Narasimhan. I know it was my mistake to overlook that point. And it is especially shameful since I've always prided myself on reading all agreements thoroughly. We are all human, and I am no exception.

 


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