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Freelancing as a student - the formalities
Thread poster: eva75

eva75
English
+ ...
Apr 22, 2006

I have a translation degree and as a postgrad student have been doing translation jobs on and off over the past few months, some of which have paid quite well. None of my clients (based in Germany) required VAT details (my freelance income would be below the limit anyhow) or a social security number or any such formalities for that matter. I'm thinking of studying for another year and scraping as much "tax-free" money together as possible to pay off debts. Are there any catches?

Are there companies/agencies in countries where they will require the above details? I've recently seen freelance work for a government agency and they do require one to have one's own business. Doesn't this exclude part-time students from doing this work though?

I would love to have feedback from any other translators based in Europe, who have been or indeed are in this position.

Thank you.


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Gerard de Noord  Identity Verified
France
Local time: 02:25
Member (2003)
German to Dutch
+ ...
The formalities Apr 22, 2006

Hi Eva75,

Issuing invoices and paying taxes are no formalities, they're professional obligations.

In your profile you don't offer any country-specific information. You might be studying at the University of Guernsey, but how could we tell?

Regards,
Gerard


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Tim van den Oudenhoven
Germany
Local time: 02:25
Member (2006)
English to Dutch
+ ...
no real catches Apr 23, 2006

Hey Eva,

I am in pretty much the same position as you are: I have a uni degree and I'm now doing postgrad study along with being a freelance translator.

I actually do have a VAT-ID and I don't have to pay taxes on the first 5500 € I make a year, because of a special tax rate (in Belgium) for students who want to run an own business. And I didn't have to pay anything to set up my "business", too.

The VAT-ID makes you look more professional in any case

One of the reasons I took one was that, in Belgium, if you want to set up an invoice with 0% tax (for other EU-countries), both the client's and the customer's VAT-ID need to be included on your invoice. If I wouldn't have the VAT-ID, I'd normally need to charge 21% VAT on all translations I do.

What could happen is that you might have to pay the taxes on your translations when they process your tax return. But then again, I think that's only if you reach certain limits.

Bye,

Tim


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eva75
English
+ ...
TOPIC STARTER
Keep stumm Apr 23, 2006

Tim van den Oudenhoven wrote:

Hey Eva,

I am in pretty much the same position as you are: I have a uni degree and I'm now doing postgrad study along with being a freelance translator.

I actually do have a VAT-ID and I don't have to pay taxes on the first 5500 € I make a year, because of a special tax rate (in Belgium) for students who want to run an own business. And I didn't have to pay anything to set up my "business", too.

The VAT-ID makes you look more professional in any case

One of the reasons I took one was that, in Belgium, if you want to set up an invoice with 0% tax (for other EU-countries), both the client's and the customer's VAT-ID need to be included on your invoice. If I wouldn't have the VAT-ID, I'd normally need to charge 21% VAT on all translations I do.

What could happen is that you might have to pay the taxes on your translations when they process your tax return. But then again, I think that's only if you reach certain limits.

Bye,

Tim


Thanks for your reply. But personally, I don't see the point in having a VAT ID if you won't exceed the amount earned. How will the government ever find out anyway?

[Edited at 2006-04-23 11:36]


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eva75
English
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TOPIC STARTER
Keep stumm Apr 23, 2006

Gerard de Noord wrote:

Hi Eva75,

Issuing invoices and paying taxes are no formalities, they're professional obligations.



Well, I never mentioned in my post that I don't issue an invoice or rather a bill for my services. I always do this and am paid 30 days after, as promised.

The agencies I work with know I'm a student and know that I have enquired about the tax-free limit etc. They trust me. But I am thinking that noone would be any wiser if I did actually exceed this limit. Also as far the government knows, I'm just a student and that's it.


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texjax DDS PhD  Identity Verified
Local time: 20:25
Member (2006)
English to Italian
+ ...
this is an internet site, not a private place.... Apr 23, 2006

eva75 wrote:

But personally, I don't see the point in having a VAT ID if you won't exceed the amount earned. How will the government ever find out anyway



JUST like this!

tex


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Angela Dickson  Identity Verified
United Kingdom
Local time: 01:25
French to English
+ ...
Where are you? Apr 23, 2006

It's very difficult to offer specific help if we don't know which country you live in. But bear the following in mind (generally applicable in the UK):

- VAT is not the same as income tax
- If you're in the UK it's highly unlikely you'd need to register for VAT, in other countries this is different
- There is usually a tax-free allowance (in the UK it's around £4500) before you have to pay any income tax at all
- there are very big advantages to registering as self-employed in the UK - you can claim business expenses, and not pay tax on that money. The cost of, for example, a master's in translation, could fall into this category
- You are obliged to register as self-employed within three months of starting self-employment, and there are penalties for non-registration.


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Angela Dickson  Identity Verified
United Kingdom
Local time: 01:25
French to English
+ ...
Agencies Apr 23, 2006

The agencies I work with know I'm a student and know that I have enquired about the tax-free limit etc. They trust me. But I am thinking that noone would be any wiser if I did actually exceed this limit. Also as far the government knows, I'm just a student and that's it.
It's nothing to do with your agencies whether you pay tax or not. If you're self-employed you are responsible for paying your own taxes.


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Williamson  Identity Verified
United Kingdom
Local time: 01:25
Flemish to English
+ ...
VAT-ID Apr 23, 2006

The VAT-ID makes you look more professional in any case.
Not necessarily, in Germany, the VAT-treshold is 55000 euros (?) and in the UK £61.000.
In Belgium, it is 5500 euros.


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eva75
English
+ ...
TOPIC STARTER
VAT vs income tax Apr 23, 2006

I think I've got the two mixed up... again! VAT registration is an option, not a necessity, whereas registering for income tax is a necessity even if you think you may not go over the tax-free allowance (normally less than 7,000 euro). Is that right?

Has anyone got a list of the tax-free allowances in each of the member states?

[Edited at 2006-04-23 18:14]


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eva75
English
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TOPIC STARTER
income tax registration really necessary? Apr 23, 2006

Angela Dickson wrote:

The agencies I work with know I'm a student and know that I have enquired about the tax-free limit etc. They trust me. But I am thinking that noone would be any wiser if I did actually exceed this limit. Also as far the government knows, I'm just a student and that's it.
It's nothing to do with your agencies whether you pay tax or not. If you're self-employed you are responsible for paying your own taxes.


Right, so basically agencies don't care. But if I never register for income tax, the government in any country wouldn't have a clue what I'm up to!


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Samuel Murray  Identity Verified
Netherlands
Local time: 02:25
Member (2006)
English to Afrikaans
+ ...
No special catches, just the usual ones Apr 24, 2006

eva75 wrote:
I'm thinking of studying for another year and scraping as much "tax-free" money together as possible to pay off debts. Are there any catches?


Depends on the country. In my country, a certain amount of income is tax free, regardless of your status (student etc). So as long as your income is less than that amount, you won't pay any tax. This applies whether you are a student or a professional. The threshold is, however, quite low. Also remember that if you do not conform to certain requirements that indicates your income as business-based, you can't write off certain expenses against taxes.

Ask yourself... will you really, really save money by keeping your income so low that you don't have to pay tax?

I don't know what the situation in your country is, though... there may be additional things to consider.


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xxxMarc P  Identity Verified
Local time: 02:25
German to English
+ ...
Freelancing as a student - the formalities Apr 24, 2006

eva75 wrote:

I don't see the point in having a VAT ID if you won't exceed the amount earned. How will the government ever find out anyway?


Here's how:

The agencies I work with (...) I always do this (issue an invoice or rather bill for my services) (...) as far the government knows, I'm just a student and that's it


Your customers are businesses, which means that the invoices you issue to them form part of their tax returns. These invoices are investigated on a random basis by the tax authorities. You are not therefore safe in assuming that the tax authorities have no way of knowing that you are working illegally.

The agencies I work with know I'm a student and know that I have enquired about the tax-free limit etc. They trust me. (...)


Whether your customers trust you is irrelevant. You issue invoices, and your customers make those invoices available in good faith to the tax authorities.

...so basically agencies don't care. (...) It's nothing to do with your agencies whether you pay tax or not. If you're self-employed you are responsible for paying your own taxes.


Correct. If you are arrested for tax evasion, your agency customers won't care - it is not their problem.

Marc


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Niina Lahokoski  Identity Verified
Finland
Local time: 03:25
Member (2008)
English to Finnish
+ ...
Tax declaration?! Apr 24, 2006

Surely you must have to fill in a tax declaration form every year, where you state your income, even if you don't have your own business.

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Angela Dickson  Identity Verified
United Kingdom
Local time: 01:25
French to English
+ ...
Anonymity Apr 24, 2006

Bear in mind that, while you are anonymous, most of us here are using our real names and are hardly likely to say 'yes, we advise you to carry on working illegally'.

Also, I really don't think you'd be better off keeping stumm. A small income and large outgoings (particularly if those outgoings relate to your translation activity) could well translate into a zero or even a negative tax bill, depending on your previous circumstances. By not registering, you lose the ability to write off your expenses against tax. There might be a few 'formalities' to go through, but it's not that onerous (depending on where you are) and you'll be well used to it if and when you become a full-time freelancer.


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