VAT and invoicing UK customers from Italy
Thread poster: Oliver Lawrence

Oliver Lawrence  Identity Verified
Italy
Local time: 04:36
Italian to English
+ ...
Aug 10, 2010

Dear all

If this is an old chestnut for some of you, please pardon me for bothering you with it again, however I would appreciate some clarification.

I live and work in Italy, where I am registered for Italian VAT (or "IVA", as those here will know), and I have supplied a written translation to customer in the UK (a translation agency with a UK VAT number). My customer is therefore using the translation for business purposes, and the place of supply, according to the EU regulations that I've seen, is the UK. I have been happily issuing invoices without VAT on them to UK customers for well over a year now, but I have recently changed accountant, and the new guy says I have to include IVA on my invoice, on the grounds that my customer is in an EU country.

My customer doesn't agree, saying that VAT should be omitted from the invoice, as for this type of transaction it is dealt with at the UK end via the reverse charge mechanism. I haven't found anyone yet who does agree with my accountant, but have not yet been able to put my finger on anything definitive that convinces me the other way either (e.g. a reference to an Italian law or European directive that mandates me to leave off the IVA).

Any informed comment would be much appreciated.

Thanks all,
Oliver.

[Edited at 2010-08-10 19:00 GMT]


 

Tom in London
United Kingdom
Local time: 03:36
Member (2008)
Italian to English
Chestnuts Aug 10, 2010

Oliver Lawrence wrote:

I live and work in Italy, where I am registered for Italian VAT (or "IVA", as those here will know), and I have supplied a written translation to customer in the UK ....... the place of supply, according to the EU regulations that I've seen, is the UK


Not so Oliver. You are based in Italy and therefore the place where you supply your service is Italy and for both of those reasons, you are subject to Italian tax law and not, under any circumstances, to UK tax law.

AFAIK Italian tax law requires you to add VAT to your invoices, at the current rate set by the Italian fiscal authorities.

Conversely, I am based in the UK but work with a lot of Italian clients. The place where I supply my service is the UK and I am exclusively subject to UK tax law.

That's all I know for sure. I won't presume to answer the remainder of your query, but I'd suggest you post in the Italian-language forums, where there are lots of Italian translators doing what you do. For these purposes, think of yourself as an Italian.

icon_smile.gif

[Edited at 2010-08-10 17:42 GMT]


 

Oliver Lawrence  Identity Verified
Italy
Local time: 04:36
Italian to English
+ ...
TOPIC STARTER
Place of supply vs EU Directives Aug 10, 2010

Tom in London wrote:

You are based in Italy and therefore the place where you supply your service is Italy.


Thanks Tom. I realise I'm not covered by UK tax law, but I had been under the impression that European Council Directives apply in Italy.

Directive 2006/112/EC (article 56 paragraph 1) says that the place of supply is in the customer’s country: “The place of supply of the following services to ... taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business", where the list includes "(c) the services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services, as well as data processing and the provision of information;”, and I've heard that translation counts as a consultancy service.

Article 44 of the same Directive (as modified by Directive 2008/8/EC) appears to back this up: “The place of supply of services to a taxable person acting as such shall be the place where that person has established his business”.

Does this not mean that my place of supply of services to a UK customer is the UK?


 

Giuliana Buscaglione  Identity Verified
Austria
Local time: 04:36
Member (2001)
German to Italian
+ ...
No VAT for B2B Aug 10, 2010

Hello Oliver,

it does apply the reverse charge, your client is right, that is if you are VAT-registered in an EU-Country X and your client is VAT-registered in an EU-Country Y you do not add any VAT, but mention the specific directive in your invoice (can't remember for Italy, but it's a 1972 directive, sorry, I'm registered in Austria) and you have to indicate your VAT no. and your client's VAT no. in the invoice. Since Jan 1st 2010 there are some slight changes, but they do not concern B2B transactions per se, it's still reverse charge

VAT is not to be added to CH and US clients as well.

If you and your client are VAT-registered in the same Country, then the VAT has to be added.

Giuliana


 

InfoMarex
Ireland
Local time: 03:36
Member (2008)
Spanish to English
+ ...
VAT in European Union countries Aug 10, 2010

Oliver,

This is an old chestnut indeed. I have taken the following from our TOBs and I have changed the name of our firm - InfoMarex - for your name and "the Republic of Ireland" for "Italy" in the following five point summary on VAT. The given is that you are actually registered for VAT in Italy and have a legitimate VAT number which you put on all your invoices.

VAT rules are the SAME Europe-wide. VAT rates are country specific and are NOT the same Europe-wide.

===========

Mr Oliver Lawrence is registered for Value Added Tax in Italy.

VAT No. IT 1234567 X

Mr Oliver Lawrence must charge VAT at the xyz% rate to all clients
1. in Italy whether or not they have a VAT registration number
2. in the European Union who do NOT have a VAT registration number.

Mr Oliver Lawrence does NOT charge VAT to clients
1. in Italy who have a VAT exemption certificate
2. in the European Union who have a VAT registration no. in their own county
3. in the rest of the world.

On VAT deductions, you deduct VAT only on Italian invoices payable by you, AND on invoices for software from firms located outside Italy. The first part is a general rule. The second part of the last sentence was introduced some two or so years ago.

Kind regards,

Michael J McCann
InfoMarex


 

Teresa Borges
Portugal
Local time: 03:36
Member (2007)
English to Portuguese
+ ...
Council Directive 2006/112/EC on the common system of value added tax Aug 10, 2010

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:en:PDF

 

Sarah Jane Webb  Identity Verified
Local time: 04:36
Italian to English
+ ...
the way I do it (as instructed by my accountant) Aug 10, 2010

Hi Oliver,

My accountant told me to include the following note in my invoices to the UK and other EC countries:

Exempt from VAT pursuant to article 7 subparagraph 4 letter d of Presidential Decree 633/1972

Cheers
Sarah


 

RobinB  Identity Verified
United States
Local time: 21:36
German to English
Get a new accountant Aug 10, 2010

Hi Oliver,

I suggest you save yourself a lot of hassle and find a new accountant who's at least relatively up-to-date about EU VAT legislation.

Presuming that both you and your UK client have a VAT ID number, there's no VAT chargeable at all on your invoice in Italy, as the place of supply is actually the UK. The UK client will add UK VAT at the current rate to the invoice total and report it (as output tax) in their next VAT return, at the same reclaiming exactly the same amount as input tax.

That's the current state of EU VAT legislation for cross-border translation services, in a nutshell. In fact, it's exactly the same procedure as has applied for years now, despite the recent overhaul of EU VAT rules.

Robin


 

David Wright  Identity Verified
Austria
Local time: 04:36
German to English
+ ...
agree with Robin Aug 11, 2010

Get an new accountant!

 

Parrot  Identity Verified
Spain
Local time: 04:36
Member
Spanish to English
+ ...
Get a new accountant 3 Aug 12, 2010

What he said had me worried and looking around for VAT legislation updates as well (procedures of implementation here in Spain may change every year).

But the basic principle is what Robin, Informarex and Guiliana indicate: B2B VAT is paid in the purchasing country at the rate of the purchasing country.

You charge VAT if the customer does not have an EU VAT number. That applies to anybody.


 

Stefano Papaleo  Identity Verified
Italy
Local time: 04:36
Member (2005)
English to Italian
+ ...
Get a new accountant... Aug 12, 2010

... IMMEDIATELY!!!icon_wink.gif

What has been said so far is correct, no VAT charged and include the note about the law/directive in your invoice... besides, your UK client may not even have a VAT number since you don't need to unless your revenue is over £70k (http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015895)

So, do yourself a favour... find an accountant familiar with foreign trade;)

Best,

Stefano


 

Oliver Lawrence  Identity Verified
Italy
Local time: 04:36
Italian to English
+ ...
TOPIC STARTER
Thank you Aug 21, 2010

to those who have commented. I have also been to the Agenzia delle Entrate office, where they have confirmed what virtually all of you have said (and what I suspected from the outset anyway), i.e. that IVA is not chargeable, and provided a reference. As I have only recently changed to this accountant from a guy who was actually much worse, I may stick with him for a little longer, especially as there is no-one else in the town where I live; of course, if I lose any more confidence in him, then I will consider changing immediately.

 

Tony Keily  Identity Verified
Local time: 04:36
Italian to English
+ ...
I used to use this Aug 21, 2010

Hi Oliver

Before I changed over to the simplified tax regime, I used to use this 'dicitura':

IVA esclusa ai sensi di art 7. comma 4, lett. e) del DPR n. 633/72 (circolare del 10/06/1998 No. 147 della Dir. Centrale Affari Giuridici e Contenz. Tributario del Min. delle Finanze).


 

Raffaella Panigada  Identity Verified
Switzerland
Local time: 04:36
Member (2007)
English to Italian
+ ...
Note on invoice Aug 21, 2010

Hi Oliver,

after the recent changes in VAT legislation, I was advised by my accountant and many colleagues on different mailing lists to stop quoting the old Presidential Decree, since it was no longer relevant, and start quoting:

" Operazione fuori campo IVA per mancanza del requisito territoriale ai sensi della Direttiva 2008/8/CE
VAT-exempt in compliance with Council Directive 2008/8/EC"


Best of luck with your new accountant,

Raffaella


 


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