Are technical translations exempt from VAT in the UK?
Thread poster: i-write

i-write
Local time: 12:08
English to Dutch
+ ...
Apr 14, 2010

Hi everybody,

Due to changes in the law in 2010, my accountant asked me a question on English VAT law.
I am a technical writer and translator, based in the Netherlands, but I work for UK-based publishers on a regular basis. I know that in the UK, businesses can be registered for VAT. But I would like to know if the service of translating in itself is exempt from VAT. For instance, the translation of an ICT manual for a publisher. In the Netherlands I am not allowed to charge VAT because translating and writing texts is a service that is exempt from VAT. I only charge VAT for translating or writing commercial texts, such as product leaflets or advertisements.

Thanks for your input!


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Mary Worby  Identity Verified
United Kingdom
Local time: 11:08
Member
German to English
+ ...
As far as I know, no Apr 14, 2010

I am a translator working in the UK. I am VAT registered and have to apply VAT to all translation services carried out for UK agencies. There is no distinction for different categories of translation.

This is to the best of my knowledge, at least. I'm not an expert.


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Rifraf
Local time: 12:08
no VAT? Apr 14, 2010

i-write wrote:
In the Netherlands I am not allowed to charge VAT because translating and writing texts is a service that is exempt from VAT. I only charge VAT for translating or writing commercial texts, such as product leaflets or advertisements.


Making translations and writing texts are NOT services which are exempted from VAT; what made you think that?

For clients in the Netherlands you have to charge 19% VAT, but if you deliver your services to clients abroad you are exempted from charging VAT.


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 12:08
English to Dutch
+ ...
Even in the Netherlands... Apr 14, 2010

Your assessment of the situation in the Netherlands is not correct.
It is not clear at all if translation is VAT exempted work in the Netherlands. The different inspectors have different opinions. Mine is of the opinion that for ALL translation work VAT must be charged. There are other inspectors (other tax regions) where NO translation work falls under VAT. And yet other inspectors (like yours, apparently) think that some kinds of translation are different from others.

Translators in the Netherlands should always make very sure what their local tax inspector thinks about translation work. If you haven't done already, go to your local tax office and ask for a decision in writing, or you might get into real trouble later.


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Rifraf
Local time: 12:08
VAT Apr 14, 2010

Jan Willem van Dormolen wrote:

Your assessment of the situation in the Netherlands is not correct.
It is not clear at all if translation is VAT exempted work in the Netherlands. The different inspectors have different opinions. Mine is of the opinion that for ALL translation work VAT must be charged. There are other inspectors (other tax regions) where NO translation work falls under VAT. And yet other inspectors (like yours, apparently) think that some kinds of translation are different from others.


For me this is a first that I hear of it!

Other professions, such as text writers etc, or other companies providing a service, all have to charge VAT.

I have never heard of the fact that this differs per tax inspector.
As far as I know ALL TRANSLATION WORK provided has to be with VAT.


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 12:08
English to Dutch
+ ...
There's a first for everything Apr 14, 2010

Well, Rifraf, as you can see from the OP, there are indeed tax inspectors that believe that at least some translation work is exempt from VAT. And from personal experience, I can tell you that I've met several colleagues who have all heard different stories from their respective tax inspectors.
The problem lies in the fact that 'creative work' is exempt from VAT. Whether translation is creative work, well, even translators can't agree on that, so is it any wonder that poor tax inspectors who have no idea what translation involves disagree too?


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i-write
Local time: 12:08
English to Dutch
+ ...
TOPIC STARTER
Still a bit confused about VAT for translation services ... Apr 14, 2010

Thank you all for your assistance. It is clear to me that for UK translation jobs, VAT has to be applied.
The Dutch situation still remains a bit of a mystery, since the tax inspector in my district (Groningen) has informed me (and my accountant agrees) that the writing and translating of manuals, books etc. is exempt from VAT. VAT is only applied to commercial/PR texts and leaflets, according to this inspector.


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Rifraf
Local time: 12:08
why not post in the Dutch forum? Apr 14, 2010

i-write wrote:

Thank you all for your assistance. It is clear to me that for UK translation jobs, VAT has to be applied.
The Dutch situation still remains a bit of a mystery, since the tax inspector in my district (Groningen) has informed me (and my accountant agrees) that the writing and translating of manuals, books etc. is exempt from VAT. VAT is only applied to commercial/PR texts and leaflets, according to this inspector.


In Dutch it would be much easier to discuss this further:)

If you send an invoice to a client outside the Netherlands, your invoice should state NO VAT.

Jan Willem; If you are right, how come ALL the freelance translators that we work with and are based in the Netherlands send invoices including VAT?

For me that's normal: just as we always include VAT on the invoices for our clients.


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Gillian Searl  Identity Verified
United Kingdom
Local time: 11:08
Member (2004)
German to English
VAT exemption limit is £70,000 Apr 14, 2010

Hi,
You don't have to register in the UK for VAT until your turnover goes above £70,000 per year. And that is for work done with businesses in the UK. I will never reach the limit as 90% of my work is with businesses in various countries in Europe. So you average freelancer is not obliged to register for VAT.

I am not an expert on whether having reached the limit (and registered) you then charge VAT on translations but it is my understanding that no VAT is actually charged to companies in other EU countries as long as you have exchanged VAT numbers.
Hope that helps
Gillian


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 12:08
English to Dutch
+ ...
No VAT for foreign countries Apr 14, 2010

Gilian is right:
Between countries in the EC, no VAT should be charged, but the VAT numbers (of both vendor and client) should be on the invoice.
So a Dutch translator should never charge VAT to an agency based outside the Netherlands.


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Michael Wetzel  Identity Verified
Germany
Local time: 12:08
German to English
No VAT for inner-EU, cont'd. Apr 14, 2010

The short answer has already been given. The issue isn't directly relevant to your work for business clients: You only have to write on your invoice that no Dutch VAT has been paid and you ought to make it clear that your client is responsible for paying British VAT.

The German Chambers of Commerce suggest the following line in invoices for translations to businesses in other EU-member-states:
Without German VAT (reverse-charge-system) 0,00 EUR

The logic is that the service is not actually VAT-exempt, but rather that the buyer is responsible for paying the tax. No VAT, VAT exempt, etc. are therefore technically wrong. Does anyone have an opinion about whether the phrase above is understandable? (I also briefly explain this situation in the text of the bill, because many clients probably don't have a firm grasp of the regulations.)

Does anyone know the rule for private clients?

And it is interesting that a Dutch tax consultuant is asking a Dutch translator about English law.


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Enrique Cavalitto  Identity Verified
Argentina
Local time: 07:08
Member (2006)
English to Spanish
Please consider contributing to the relevant wiki page Apr 14, 2010

As a way of collecting valuable information as a community on this issue, and to give it permanence in time, it would be nice if you could consider posting on this issue in the wiki page Tax issues for freelancers.

Please add content and to edit that page. A common repository of information on this important issue will be another contribution to achieve the goals defined at http://www.proz.com/about/ipetition/

Regards,
Enrique


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