Pages in topic:   [1 2 3 4 5] >
EU VAT changes as of 1 Jan 2010
Thread poster: JRM (X)

JRM (X)  Identity Verified
Italian to English
Dec 15, 2009

Hi all

I've just done a search on these forums (in English) to see if anyone has already raised this issue. As I couldn't find any previous posting on it, I thought I'd start the ball rolling.

I discovered today that as of 1 Jan 2010, the so-called place of supply rules for VAT in the EU are changing.

At the moment, as a translator working in the UK and supplying my translation services to clients in other EU countries, whether businesses or non-businesses, the rule seems to be that the supply is treated as occurring where the supplier belongs- meaning, in my case, the UK VAT rules apply. The practical effect is that unless you have a turnover of £68,000, you don't need to register for VAT in the UK.

However, as of 1 Jan 2010, this rule is being reversed in the case of business clients. As far as I've understood it, where a UK translator provides translation services to, for instance, a company in Italy, the service will be treated as having been supplied in Italy - meaning Italian VAT registration and payment rules will apply. Given that one needs to register in Italy as soon as you've billed 5000 euro of work (or at least, that was the case when I live there a few years ago), it would seem that many translators who are not registered for VAT (say in the UK) will now have to register in the country of their clients.

Is anyone else aware of this change and do they have any light to shed on the practical consequences?

For once, I'm praying I've totally got this wrong!

Thanks for your feedback
John


 

JRM (X)  Identity Verified
Italian to English
TOPIC STARTER
EU VAT changes as of 1 Jan 2010 - links to information Dec 15, 2009

As a postscript, I'm adding links to pages on the UK HMRC's site that deal with this issue:

http://www.hmrc.gov.uk/VAT/managing/international/exports/services.htm
http://www.hmrc.gov.uk/VAT/cross-border-changes-2010.htm
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_PROD1_029955&propertyType=document

Cheers
John


 

John Rawlins  Identity Verified
Spain
Local time: 18:47
Spanish to English
+ ...
I hope you are wrong too! Dec 15, 2009

If you are right, then the implications are pretty appalling.

 

Alex Lago  Identity Verified
Spain
Local time: 18:47
Member (2009)
English to Spanish
+ ...
I think you missunderstood Dec 15, 2009

The way I have understood this and seen it explained is that up to now a company in Germany that invoiced a company in the UK had to add German VAT, then the UK company had to contact the German IRS in order to get the VAT back, this made it complex for the companies so what they have decided to do is make the VAT applicable in the country where the service is "enjoyed", in this example the UK, to make it then easier for the UK company to get the VAT back, as they will be contacting the UK IRS.

However as far as I have understood this (I may be wrong) the German company will not add VAT to their invoice, but rather the UK company will have to regulate its VAT, ie they will have to make their VAT declaration indicating they paid UK VAT on that invoice (even though as yet they have not actually paid the VAT).

They not have paid the VAT but will have to keep track as though they had, they will then turn in their VAT declaration on that basis and pay (or get a refund) based on the result.

So in this example the UK company will act as though it had paid UK VAT and the German company will not have to worry about the VAT.

So, as far as I have understood this, this measure will make things easier for translators as we will be able to forget about VAT (except for invoices within our own country)


 

RobinB  Identity Verified
United States
Local time: 11:47
German to English
No material changes for translators Dec 15, 2009

John Mifsud wrote: it would seem that many translators who are not registered for VAT (say in the UK) will now have to register in the country of their clients.


No. As suppliers of certain defined "other services", little changes for translators. It's the other service providers that will be brought into line with e.g. translators. So, if a UK VAT-registered translator provides a translation to a client in another EU member state, no VAT is shown in the invoice. Instead, the client adds the local VAT payable to its own tax return, and simultaneously claims input tax in the same amount. The translator adds the UK VAT payable on the invoice amount to their own UK VAT return. Basically the "reverse charge" mechanism for services, rather than goods.

HTH,
Robin


 

Marie-Hélène Hayles  Identity Verified
Local time: 18:47
Italian to English
+ ...
I also think you must have misunderstood Dec 15, 2009

I wasn't aware of any changes in the system, but if you were correct, then logically you would have to register for VAT in every EU country in which you have a client - surely that can't be right?

In addition, as far as Italy is concerned (but I'd imagine also elsewhere), you couldn't register for VAT here anyway, as you have to be a resident and have a codice fiscale before you can open a Partita IVA. As I'm sure you'll remember, as you used to live here. (I suppose it's always possible that the EU regulations required member states to change this requirement, but I can just imagine the confusion at the Italian tax authorities if they suddenly got a load of non-residents trying to register for VAT!icon_smile.gif)


 

JRM (X)  Identity Verified
Italian to English
TOPIC STARTER
What do you mean by "other services"? Dec 15, 2009

RobinB wrote:

As suppliers of certain defined "other services"


Are you referring to some exemption which specifically covers translation services?
John


 

JRM (X)  Identity Verified
Italian to English
TOPIC STARTER
Good points Dec 15, 2009

Marie-Hélène Hayles wrote:

I can just imagine the confusion at the Italian tax authorities if they suddenly got a load of non-residents trying to register for VAT!icon_smile.gif)


You've made some very valid practical points Marie-Hélène. I just hope that in this case, the law is not the ass it often it is.


 

Heinrich Pesch  Identity Verified
Finland
Local time: 19:47
Member (2003)
Finnish to German
+ ...
Every three months Dec 15, 2009

The only change I'm aware of is that from next year on VAT will be declared every third month, not every month as now. I don't know of other countries than Finland.
So there will be less formality for me.
I charge VAT only for Finnish customers and private persons abroad.

Regards
Heinrich


 

Patricia Lane  Identity Verified
France
Local time: 18:47
French to English
+ ...
how it is being explained in France Dec 15, 2009

As I understand it, given how it is being explained in France, the change is as follows:

- invoicing to a client in an EU country other than your own, you still do not charge VAT, but you need to make a declaration to customs in your own country that you have invoiced X amount to Client Y in Z country, so that the client who uses those services pays the appropriate VAT level in his country.
- same is true if you are a buyer of products or services in EU countries other than your own. You will be invoiced without VAT and liable for VAT in your own country at your country's rate.

> so the biggest change for most folks is having to file these added forms with customs.

For those not obligated to charge VAT, it sounds like they'll need to get an Intracommunity VAT number to fulfill these new requirements.

I'll post more once my CPA gives me a crib sheeticon_smile.gif

Patricia


 

Williamson  Identity Verified
United Kingdom
Local time: 17:47
Flemish to English
+ ...
What about the treshold? Dec 15, 2009

RobinB wrote:

John Mifsud wrote: it would seem that many translators who are not registered for VAT (say in the UK) will now have to register in the country of their clients.


No. As suppliers of certain defined "other services", little changes for translators. It's the other service providers that will be brought into line with e.g. translators. So, if a UK VAT-registered translator provides a translation to a client in another EU member state, no VAT is shown in the invoice. Instead, the client adds the local VAT payable to its own tax return, and simultaneously claims input tax in the same amount. The translator adds the UK VAT payable on the invoice amount to their own UK VAT return. Basically the "reverse charge" mechanism for services, rather than goods.

HTH,
Robin


What about those who are below the £68,000 VAT-treshold?


 

RobinB  Identity Verified
United States
Local time: 11:47
German to English
HMRC website Dec 15, 2009

John Mifsud wrote: Are you referring to some exemption which specifically covers translation services?


See the HMRC website on VAT for services. It's all explained there (and in the EU VAT Directive, though that's slightly less transparent).

Robin


 

RobinB  Identity Verified
United States
Local time: 11:47
German to English
Small business exemption Dec 15, 2009

Williamson wrote: What about those who are below the £68,000 VAT-treshold?


That I don't know, as it's irrelevant for our business. It may well be the case that there is no change versus the current regime (which I suspect is the most likely outcome), i.e. you add a note to your invoice stating that you're VAT-exempt under the relevant UK legisation. Your EU-based client then goes through the motions of adding both the local VAT amount and the offsetting input tax amount to their own VAT return, just as they do now.

I suggest you speak to HMRC about it. Or even ask your friendly translator association to make its members aware of the new rules, thereby avoiding loads of redundant questions in various online forumsicon_smile.gif

Robin


 

JRM (X)  Identity Verified
Italian to English
TOPIC STARTER
Redundant? Dec 15, 2009

RobinB wrote:

I suggest you speak to HMRC about it. Or even ask your friendly translator association to make its members aware of the new rules, thereby avoiding loads of redundant questions in various online forumsicon_smile.gif

Robin


Goodness me, RobinB. Nice of you to take it upon yourself to decide the question was redundant.

A search of the forums (as I've already mentioned) elicited no other mention of this issue, and my initial post seems to have generated some useful discussion and awareness-raising.

Thanks in any case for your input.
John


 

RobinB  Identity Verified
United States
Local time: 11:47
German to English
Your question not redundant Dec 15, 2009

John Mifsud wrote:Goodness me, RobinB. Nice of you to take it upon yourself to decide the question was redundant.


Was I suggesting that? I don't think so. Logically, the first instance of anything new can't be redundant, unless my mind has wandered off into the snowy wastes. AFAIK you are the first person to ask this question, so it is the ones coming after you that will be redundant (and unfortunately experience shows that the same VAT-related questions keep being asked time after time on ProZ, as well as elsewhere).

And it's certainly a justified question, as the EU changed the rules without a big song and dance, and I suspect that all the national tax authorities have only now been reminding their taxpayers. Here in Germany at least, the issue has only surfaced in the press in the past month or so, and even the tax accountants only notified their clients relatively recently.

Robin


 
Pages in topic:   [1 2 3 4 5] >


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

EU VAT changes as of 1 Jan 2010

Advanced search







Déjà Vu X3
Try it, Love it

Find out why Déjà Vu is today the most flexible, customizable and user-friendly tool on the market. See the brand new features in action: *Completely redesigned user interface *Live Preview *Inline spell checking *Inline

More info »
Protemos translation business management system
Create your account in minutes, and start working! 3-month trial for agencies, and free for freelancers!

The system lets you keep client/vendor database, with contacts and rates, manage projects and assign jobs to vendors, issue invoices, track payments, store and manage project files, generate business reports on turnover profit per client/manager etc.

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search