Living in one country, VAT-nr in another?
Thread poster: Nils Vanbellingen

Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
+ ...
Mar 2, 2005

Hi people,

Several months ago I moved to Spain, and I would like to do some some part-time freelance translating here (I already work as an employee for a company in Gibraltar). I've been asking around a bit about the procedures and costs for this, and it seems that all freelancers (also part-time ones) have to pay the monthly "autonomos" tax, which is no less than € 230...quite some money if you're only aiming for a small income as part-time translator.

Therefore I was wondering if it's possible to live in one (EU-)country, but be VAT-registered in another. Reason I'm asking is because I've got some family in Belgium who's independent (not as a translator, he has his own architect agency) whose VAT-nr I could possibly use (if this doesn't have legal implications...anyone?) ...so, would it be possible for me to be living and freelancing in Spain, but being registered as a translator in Belgium (with a Belgian VAT)? And would this depend on where your official (registered) address is, because currently I'm still registered in Belgium, but I would like to change my official address to Spain...

Thanks for any help!


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Williamson  Identity Verified
United Kingdom
Local time: 23:11
Flemish to English
+ ...
Gibraltar is not Spain Mar 3, 2005

Gibraltar is not Spain. It might help if you check the legislation of Gibraltar with regard to being self-employed and taxes. You will be surprised. Why don't you register in Gibraltar, a tax-haven?


[Edited at 2005-03-03 07:46]


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Alison Schwitzgebel
France
Local time: 00:11
Member (2002)
German to English
+ ...
You can't "borrow" a VAT number Mar 3, 2005

Nils Vanbellingen wrote:

I've got some family in Belgium who's independent (not as a translator, he has his own architect agency) whose VAT-nr I could possibly use (if this doesn't have legal implications...anyone?)


Hi Nils!

The point of having a VAT number is that you are registered for tax. Any VAT you charge on your invoices has to be paid to the tax authorities in the country in which you are VAT registered. It does have the added benefit that you can deduct the VAT on any items that you buy for your business from your VAT tax bill.

There would certainly be legal consequences for "borrowing" someone's VAT number. Basically it would be tantamount to tax fraud.

I can't help you with any advice on the tax situation in Spain - it would be best to consult a tax advisor there rather to get really professional advice.

HTH

Alison


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Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
+ ...
TOPIC STARTER
Would it be possible? Mar 5, 2005

Williamson wrote:

Gibraltar is not Spain. It might help if you check the legislation of Gibraltar with regard to being self-employed and taxes. You will be surprised. Why don't you register in Gibraltar, a tax-haven?


[Edited at 2005-03-03 07:46]


I've been thinking about this as well...but can you register/ask for a VAT-nr in Gibraltar if your official address is in Spain or Belgium?


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Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
+ ...
TOPIC STARTER
Would it be "borrowing" Mar 5, 2005

Alison Riddell-Kachur wrote:


Hi Nils!



There would certainly be legal consequences for "borrowing" someone's VAT number. Basically it would be tantamount to tax fraud.



HTH

Alison


Fair enough, but would it be "borrowing" the number? I mean, couldn't I officially be registered as an employee within that company?


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Williamson  Identity Verified
United Kingdom
Local time: 23:11
Flemish to English
+ ...
Creativity with the rules Mar 6, 2005

There would certainly be legal consequences for "borrowing" someone's VAT number. Basically it would be tantamount to tax fraud.

Not if this person has translation (of say construction specifications) as a second activity and writes invoices in his name/company's name.

Of course, he will incur higher taxes. You could always propose him to pay the tax-difference between his current tax-bracket and the higher taxes he will have to pay if he writes invoices for translation services. You are merely a subcontractor in a country with a very lenient fiscal regime.
Gibraltar does not have VAT. That means you can not decuce VAT, but on the other hand you will not need to maintain an extensive administration or you run the risk of incurring fines if you make a mistake in your tax-declaration. Google a bit and you will find the address of companies house and other useful addresses.

[Edited at 2005-03-06 15:17]


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xxxMarc P  Identity Verified
Local time: 00:11
German to English
+ ...
Living in one country, VAT-nr in another? Mar 6, 2005

Nils Vanbellingen wrote:

Fair enough, but would it be "borrowing" the number? I mean, couldn't I officially be registered as an employee within that company?


This would mean that you would be resident in Spain but working for a Belgian architect's office who would invoice your customers on your behalf.

I have no idea whether this is legal or not, but it's certainly extremely complicated, and the architect's accountant would probably charge lots of money for sorting it out. Is it worth it, to save €230 per month?

I read elsewhere on the 'net that if you spend over 183 days per year in Spain, you become subject to Spanish tax law and liable for Spanish tax upon your world-wide income. If this is the case, you would be liable in Spain for income tax not only on your job in Gibraltar, but also on your job (you'd be employed, remember?) in Belgium.

It sounds like a very complicated way of getting a VAT number. What do you want a VAT number for, anyway? The usual reason is to offset VAT on business costs against VAT on receivables. But if you're not going to be earning much (and therefore charging much VAT), what's the point? Conversely, if your turnover is going to be significant, why not pay taxes and and (if applicable) social charges in Spain, like everyone else there?

Marc


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Alex Pszczola  Identity Verified
Local time: 00:11
English to Polish
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Gibraltar to lose tax haven status Mar 7, 2005

Nils Vanbellingen wrote:

Williamson wrote:

Gibraltar is not Spain. It might help if you check the legislation of Gibraltar with regard to being self-employed and taxes. You will be surprised. Why don't you register in Gibraltar, a tax-haven?


[Edited at 2005-03-03 07:46]


I've been thinking about this as well...but can you register/ask for a VAT-nr in Gibraltar if your official address is in Spain or Belgium?


Well, you should read this:

Gibraltar to lose tax haven status

http://www.accountancyage.com/news/1139492

Kind regards,
Alex


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Williamson  Identity Verified
United Kingdom
Local time: 23:11
Flemish to English
+ ...
Gibraltar will remain British... Mar 10, 2005

Nils' question was about a VAT-number: Tax-haven or not, Gibraltar will remain British, meaning that unless he earns more than £55,000 p.a. (about €80,000) he may opt for a VAT-number, but he is not obliged to have one.

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Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
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TOPIC STARTER
Paying taxes Mar 18, 2005

MarcPrior wrote:




It sounds like a very complicated way of getting a VAT number. What do you want a VAT number for, anyway? The usual reason is to offset VAT on business costs against VAT on receivables. But if you're not going to be earning much (and therefore charging much VAT), what's the point? Conversely, if your turnover is going to be significant, why not pay taxes and and (if applicable) social charges in Spain, like everyone else there?

Marc


I want the VAT number because I don't want' to run the risk of getting caught for not paying taxes on income...and I presume that I need a VAT nr. for that...or am I wrong?


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Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
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TOPIC STARTER
Not obliged? Mar 18, 2005

Williamson wrote:

Nils' question was about a VAT-number: Tax-haven or not, Gibraltar will remain British, meaning that unless he earns more than £55,000 p.a. (about €80,000) he may opt for a VAT-number, but he is not obliged to have one.


Can you explain this a bit, Williamson? I am not obliged to have one?


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Jesús Marín Mateos  Identity Verified
Local time: 23:11
English to Spanish
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Not compulsory in the UK Mar 18, 2005

You don't need a VAT number in the UK (unless you earn more than that amount someone mentione), which means that if the same applies in Gibraltar (please find out) you shouldn't need to worry.
I feel your worry is that living in Gibraltar you will be working for Spanish agencies/clients who will ask you for a VAT number. It happens to me all the time because I live in London but sometimes work for Spanish agencies. It is hard for them to understand but eventually they do undertand.
Good luck.
Kind regards,
Jesus.


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Ralf Lemster  Identity Verified
Germany
Local time: 00:11
English to German
+ ...
Income tax vs. value-added tax Mar 18, 2005

Hi Nils,
I want the VAT number because I don't want' to run the risk of getting caught for not paying taxes on income...and I presume that I need a VAT nr. for that...or am I wrong?

Are you familiar with the fundamental concepts - specifically, the difference between income tax and value-added tax?

I would strongly recommend to see a tax advisor. You can get loads of advice in the forums, but to be able to use that properly, you should be familiar with the fundamental issues involved.

Best regards,
Ralf


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Williamson  Identity Verified
United Kingdom
Local time: 23:11
Flemish to English
+ ...
Notice Mar 18, 2005

The Chancelor of the Exchequer recently increased the VAT-treshold from £58,000 to £60,000. If you go to http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000086&propertyType=document, you will learn that persuant to notice 700/1 (please correct me if I am wrong,) you can choose to register for VAT, but are not obliged to do so, if you earn less than £60,000 (budget 2005). To earn €85,000 as a translator you must be really top and work day and night.

I am well aware that in some countries (e.g.:the country where you come from) VAT and income tax are linked by the local tax-administration to determine exactly how much you have earned.

Gibraltar is a Britsh off-shore fiscal paradise, which if the favourable fiscal status is abolished, becomes simply British.
This is still equal to a favourable business-climate. Little bureaucracy and minimum number of rules.


[Edited at 2005-03-18 22:07]


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Nils Vanbellingen  Identity Verified
Local time: 00:11
German to Dutch
+ ...
TOPIC STARTER
Live in Spain but freelance in Gibraltar? Mar 19, 2005

Jesus Marin wrote:

I feel your worry is that living in Gibraltar you will be working for Spanish agencies/clients who will ask you for a VAT number.


Well, not really actually. I'm living in Spain, and my worriy is that all freelancers in Spain (also part-time ones, which I would be) have to pay the monthly "autonomos" tax of € 230. So I was wondering if it's possible to register as a freelancer in Gibraltar (or even Belgium, my native country) while living in Spain to avoid the € 230...


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