Freelance translator in Germany: is voluntary VAT registration worthwhile?
Thread poster: StandaZizka

StandaZizka  Identity Verified
Local time: 08:19
English to Czech
+ ...
Nov 5, 2009

Dear Colleagues

After re-locating to Germany I am returning to the job of a freelance translator (originally with high expectations...) and after visiting the local Finanzamt I need to take a decision whether I should pay / charge VAT...

There seems to be turnover thresholds on whether I must pay VAT or not – which is in a year one €17,500, and I think €50,000 in a year two. If none of these are exceeded and considering how close we are to the end of a German financial year I don’t think I will exceed none of these either this or next FY. So it seems at presents it’s my voluntary decision to become a VAT payer...

As a freelance translator, provider of a service, I am not going to purchase lots of goods or require too many services (input VAT tax); I have already incurred some costs (computer, software) and in next few months I can foresee further costs related with software, etc. And as for charging VAT to clients, there seems to be many exemptions when I do not need to charge VAT to clients in other EU countries (if VAT registered) or even outside EU, so eventually there may not be so much VAT to be paid to the Finanzamt... Because of my language combination I assume majority of the clients will be outside Germany.

What sort of scenarios could occur wrt VAT in my case? What advantages / disadvantages would there be for me to be VAT payer?

I’d be grateful for any advice / insights / tips.

Many thanks
Stan


 

Jerzy Czopik  Identity Verified
Germany
Local time: 08:19
Member (2003)
Polish to German
+ ...
I would never start without VAT Nov 5, 2009

Simply because you now say, you do not need to deduct VAT, but then you will have a telephone bill (includes VAT), Internet bill (includes VAT) or a railway ticket (oh, this includes VAT too). And so on...
Charging VAT is not a problem at all - you do not pay that yourself, so you earn the same.


 

StandaZizka  Identity Verified
Local time: 08:19
English to Czech
+ ...
TOPIC STARTER
What Nov 5, 2009

Jerzy Czopik wrote:

Charging VAT is not a problem at all - you do not pay that yourself, so you earn the same.


I get your point Jerzy. Would you say that it also depends whether majority of clients are based in Germany or overseas?

Can you please explore on the charging mechanism - sorry, I may be totally daft. For example, I have got a 1,000-word job for a German translation agency. Let's say I agreed on 0.10 eur per source word; in total do I charge them 100 eur + 19% VAT? Obviously they need to be VAT-registered too, right?


 

Sebastian Witte  Identity Verified
Germany
Local time: 08:19
Member (2004)
German to English
+ ...
One drawback of opting for VAT is ... Nov 5, 2009

... you become more expensive towards private individuals and certain public as well as private corporations based within the EU (including Germany) that can't claim back the paid VAT from the revenue office as they are either not VAT-registered or do not incur the VAT payment in exercise of their business (for instance, imagine someone being a VAT-registered merchant and wishing to have their daughter's birth certificate translated).

 

Jerzy Czopik  Identity Verified
Germany
Local time: 08:19
Member (2003)
Polish to German
+ ...
Private individuals are not my customers Nov 5, 2009

or at last not my targeted customers, so for the vast majority of my turnaroung charging VAT is not a problem at all.

Everything you produce and charge to your customers within Germany is subject to 19% VAT. This means, that you simply calculate your price (in your example: 100 EUR) and then write an invoice about 100 EUR net plus 19 EUR VAT making it 119 VAT in total.
All custmers in Germany are to be charged VAT.
With delivery abroad things change, you do not charge VAT - when the customer does have a EU VAT number or is situated outside of the EU. But I must admit in such case a good tax advisor will be quite necessary to keep all invoices fully correct and in accordance to the law.


 

Estefanía González  Identity Verified
United Kingdom
Local time: 07:19
Member
English to Spanish
+ ...
Absolutely worthwhile Nov 18, 2009

Jerzy Czopik wrote:

Simply because you now say, you do not need to deduct VAT, but then you will have a telephone bill (includes VAT), Internet bill (includes VAT) or a railway ticket (oh, this includes VAT too). And so on...
Charging VAT is not a problem at all - you do not pay that yourself, so you earn the same.



I couldn’t agree more. As Jerzy has already pointed out you will not earn more or less by charging VAT. You just add 19% to your rate and that’s it.

On top of that, if you opt for the VAT registration you can deduct the VAT from your business related expenses, which is quite a lump of money.

Good luck!

Estefanía


 

Andrea Garfield-Barkworth  Identity Verified
Germany
Local time: 08:19
Member (2015)
German to English
Can I ask if you opted for VAT registration? Feb 15, 2010

I'm just wondering what you decided to do in the end, StandaZizka. And how are you getting on with the registration process?

 

StandaZizka  Identity Verified
Local time: 08:19
English to Czech
+ ...
TOPIC STARTER
To M00nshine: Oh, yes Feb 15, 2010

Yes, now I have got my VAT number...

Re: process - all I had to do was pick up (you can also print it), fill in and submit a tax registration form on which I made it clear I wanted to pay VAT and then just wait couple of weeks to receive my tax registration number and seperately aslo my VAT number. The latter one enables me to log into the Elster system, where I am now due to submit my first VAT settlement (difference between the VAT you paid on suppliers invoices and VAT you are due to pass onto the state from your invoices issued to your customers) - a process which I need to do every month, which I do not mind, at least I shall keep my invoices nice and tidy every month.

I need to admit that I consult my tax advisor in these early days as I am not sure whether all my invoices meet all elegibility requirements. But soon this should be an automative process as it is not a science - I did my own tax return in the Czech Republic, though here want to get it right, therefore use tax advisor for the first year, maybe in the 2nd subject to my earnings.

Have you got any specific questions I could assist?


 

peiling  Identity Verified
Germany
Local time: 08:19
Chinese to English
+ ...
Tax advisor's fee Feb 15, 2010

Hi StandaZizka, may I ask how much did your tax advisor charge? Thanks.

 


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