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Survey: which countries ask for certificates of fiscal residence?
Thread poster: 2G Trad

2G Trad  Identity Verified
Italy
Local time: 01:00
Member (2000)
English to Italian
+ ...
Aug 6, 2015

Hi,

in the past few years I have read several posts from translators looking for information about certificates of fiscal residence.

These certificates were requested by agencies/clients in order for them to comply with alleged domestic tax laws against double taxation, or else they would have withheld a certain percentage of money as a withholding tax on the amount to be paid to the translator.

Some countries also ask to fill forms for that purpose.

Strangely this seems to happen only with some agencies and not all the agencies in the same country.
Consequently, different entities in the same country seem to apply different rules.

I'm trying to write a list of countries which these agencies/clients are from.
The results could be useful for the whole translators' community in order for us to know what is the paperwork (=time wasted) we could expect before starting a project and being paid.

I know this happened with some agencies from:
- Greece (certificate of fiscal residence)
- Poland (certificate of fiscal residence)
- Portugal (form)
- USA (form)

This could be also a mandatory field to be filled when an outsourcer posts a job on Proz.

Thank you for your time.

Cheers
Gianni


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Good idea Aug 6, 2015

I've heard Spain reported too, but a Spanish agency I work for has only requested an intra-community VAT number, nothing else.

US companies may require a completed W-8BEN form (individuals) or W-8BEN-E (entities) so as not to withhold 30 % US tax under the recent FATCA rules, but not all US agencies ask for these forms.

Why not include countries where local tax withholding is mandatory, forms or not? Taiwan is one such country.

Other countries that would be useful to know about are those with capital controls. Greece was there briefly. Bangladesh has also been reported.

And how about countries subject to various sanctions or embargoes or similar?

You may have opened a can of wormsicon_smile.gif


 

Sheila Wilson  Identity Verified
Spain
Local time: 00:00
Member (2007)
English
+ ...
What great timing! Aug 6, 2015

I'm just trying to obtain a certificate of fiscal residence from my tax authorities here in Spain. It's been requested by an agency I've just started working with in Romania.

It's the first time I've had dealings with Romania. I found some info on the web that made me believe that the country really does believe it has the right to take 20% in tax from people who have never set foot in the country, unless they provide such a certificate.

Romania is the 23rd country I've sent an invoice to since the beginning of 2012. This requirement to pay taxes in our clients' countries, if we don't/can't jump through hoops all the time, is going to do my head inicon_eek.gif! So far, in order to comply with this latest request, I've had to ring and visit my accountant several times; he's had to go to the island's capital twice, and I've had to visit the town hall and the bank and pay them about €3 and €7 respectively. And I still haven't got my certificate! I've had to tell my client not to pay my invoice yet - how crazy is thaticon_confused.gif?

I've had to complete a few W8-BENs in the past. But at least that was just between me and the client, who provided the form and told me what to fill in, where.


 

2G Trad  Identity Verified
Italy
Local time: 01:00
Member (2000)
English to Italian
+ ...
TOPIC STARTER
Update Aug 6, 2015

- Bangladesh (country under capital controls)
- Greece (certificate of fiscal residence)
- Poland (certificate of fiscal residence)
- Portugal (form)
- Romania (certificate of fiscal residence)
- Spain (certificate of fiscal residence)
- Taiwan (mandatory tax withholding)
- USA (form)


 

Peter Shortall  Identity Verified
Local time: 00:00
Member
French to English
+ ...
Difficult to get hold of Aug 6, 2015

Sheila Wilson wrote:

So far, in order to comply with this latest request, I've had to ring and visit my accountant several times; he's had to go to the island's capital twice, and I've had to visit the town hall and the bank and pay them about €3 and €7 respectively. And I still haven't got my certificate! I've had to tell my client not to pay my invoice yet - how crazy is thaticon_confused.gif?


I received the same request twice from a Romanian agency I worked for several years ago. Getting the certificate wasn't that complicated as all I had to do was send a letter, it just took ages - about three months. I hope the Spanish authorities will be quicker!


 

Preston Decker  Identity Verified
United States
Local time: 19:00
Chinese to English
China Aug 6, 2015

I've never been asked to provide anything of this sort in China. However, I've always been curious if this is a case of agencies/clients ignoring the law, or if there is in fact no law governing this issue. Anyone know the answer?

 

Teresa Borges
Portugal
Local time: 00:00
Member (2007)
English to Portuguese
+ ...
I've been providing Aug 6, 2015

certificates of fiscal residence for some years now to two clients (a Portuguese direct client and a Greek translation agency; by the way, as they are both public limited-liability companies, I wonder if there is a link there somewhere). This requirement has nothing to do with domestic tax laws but with the United Nations Double Taxation Convention. I have no problem whatsoever on obtaining the certificate from the Belgian fiscal authorities: it just takes two or three days!

 

2G Trad  Identity Verified
Italy
Local time: 01:00
Member (2000)
English to Italian
+ ...
TOPIC STARTER
UN Convention? Aug 7, 2015

Teresa Borges:
This requirement has nothing to do with domestic tax laws but with the United Nations Double Taxation Convention.

The reason why this is applied only by some countries (and only by some agencies) remains a mystery.

I would definitely avoid to spend money and time to provide this kind of proof every year, at least for EU agencies.

In the EU we already have the VIES database and the Intrastat system for that purpose.
They are just a few clicks away.

Cheers
Gianni


 

Andrea Halbritter  Identity Verified
France
Local time: 01:00
Member (2014)
French to German
+ ...
Never had that request from Poland Aug 7, 2015

I never had that request for Poland, although I regularly work with agencies from there....

[Modifié le 2015-08-07 04:35 GMT]


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
No UN double tax convention in force Aug 7, 2015

Teresa Borges wrote:

This requirement has nothing to do with domestic tax laws but with the United Nations Double Taxation Convention.


There is no such thing as a United Nations Double Taxation Convention in force. The UN and the OECD provide skeleton double tax conventions that countries can use as a basis for negotiating double tax conventions if they want, but that does not give any legal validity to the skeleton conventions. They don't have to use any skeleton.

Each pair of countries negotiate their own double tax conventions if they decide to do so. Or they don't have any such convention. These conventions define which country or countries have the right to tax various types of income, fortune, property etc.

These conventions rarely go into such detail as which documentation a taxpayer must provide in order to justify his or her situation, so you can be close to 100 % sure that it is not because of any double tax convention that certain countries ask for such documentation. In some cases, it may be because of over-zealous accountants or agencies that don't mind pestering others with demands for documentation not required by law. In others, it could be over-zealous officials that make up their own requirements stricter than what is prescribed by the law. I have come across that many times in France, but France does not appear to give problems related to the payment of foreign invoices, at least.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Not applied Aug 7, 2015

2G Trad wrote:

Teresa Borges:
This requirement has nothing to do with domestic tax laws but with the United Nations Double Taxation Convention.

The reason why this is applied only by some countries (and only by some agencies) remains a mystery.



It is not applied anywhere; it doesn't exist. It's a skeleton.


 

Parrot  Identity Verified
Spain
Local time: 01:00
Member
Spanish to English
+ ...
As far as Spain goes (2 cents' worth) Aug 11, 2015

Spanish agencies (well, actually all of us, as service providers) have to ask for EU VAT number (VIES number) to comply with Form 349. This is the form that tells authorities how much VAT traffic there was with other EU countries.

Otherwise, all Spanish companies are obliged to deduct 19% from resident suppliers. This is declared by them separately on Form 110. Someone who resides abroad for tax purposes has to show his EU VAT number so as not to get included in that company's Form 110, unless he resides outside the EU (per address), in which case he goes to Form 349 (if in the EU). Evidently, such a person has nothing to do with the Spanish tax authorities and they have no jurisdiction over him.

At the end of the year, it all squares in the global figures of Spanish tax declaration forms taken all together (300, 303, 390 & 349 - the VAT group - and 110, 130 & 100 - the income tax group).

A company may or may not ask for residence certificates, but it is obliged to ask for CIF/ NIF (Spanish Tax ID codes) or VIES numbers. No invoice is legal without it. A VIES number serves in lieu of fiscal residence. So does a US tax account number, a South American RUC or CUIT.

(At the root of this is EU VAT harmonisation; how a country implements that is up to it).

Government suppliers are required by law to ask for a tax certificate (101). (In theory, everyone is required, but only government suppliers face direct tax audits as per contract).

[Edited at 2015-08-12 09:19 GMT]


 

Cristina Crişan  Identity Verified
Romania
Local time: 02:00
Member
English to Romanian
+ ...
not VAT Aug 12, 2015

As far as I know, in Romania, and I suspect in other European countries as well, this is not VAT related. Instead, there is a tax on income earned in the country by non-resident individuals and companies. One can only get away with not paying it if there is a double taxation convention in force between the two countries. This is what the certificate is all about.

 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
VAT or tax Aug 12, 2015

MCristy wrote:

As far as I know, in Romania, and I suspect in other European countries as well, this is not VAT related. Instead, there is a tax on income earned in the country by non-resident individuals and companies. One can only get away with not paying it if there is a double taxation convention in force between the two countries. This is what the certificate is all about.


Validating VAT status in the VIES system would be a strong clue that the individual or company concerned is registered for income or corporate tax too. Asking for other certificates is just a form of protectionism.

A few countries tax non-resident entities, but it is more the exception than the rule. The US is now such an exception, but providing a signed W-8BEN or W-8BEN-E form is enough to avoid the tax if a double tax convention is in force. Taiwan is another example, and there is apparently no way to avoid it.

Romania is part of the EU where we are supposed to have free movement of capital, services, goods and people. Demanding tax certificates that are complicated or time-consuming to obtain could be an illegal obstacle to free movement even if tax law is not within the scope of EU law. It could also be deemed to constitute illegal protectionism by making it more complicated to buy services abroad than from domestic entities, as some suppliers will simply refuse to deal with countries that demand so much red tape.

Double tax convention or not, a non-resident supplier could only be liable for tax if national tax law stipulates that non-resident suppliers are included in the scope of who is liable for tax. In most countries, tax law is reasonable enough not to include them, so it isn't necessary to read any double tax conventions. The problems begin when a few countries are not reasonable and try to tax entities they shouldn't tax, or demand so much documentation to justify that the entity is non-resident that it’s better not to trade with that country.

Seen from a translator's point of view, the easiest solution is to avoid supplying anything to the few countries concerned, as he or she does not have the resources to take the case through the courts.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Turkey Aug 18, 2015

I just stumbled on this in a Blue Board:

"Reply (10 Jul): She did not send her tax residence certificate for 6 months which is a legal requirement for a translator. But we decided to pay and not work again. We are not sure if she declares her taxes. "

http://www.proz.com/blueboard/6320


 
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