VAT ID required for small entrepreneurs?
Thread poster: Sander Van de Moortel

Sander Van de Moortel  Identity Verified
China
English to Dutch
+ ...
Mar 23, 2011

Hello


I am trying to become a mobile translator, i.e. I want to travel around a bit, connecting to the internet to do some translation whenever I need the money or feel like it.

I used to live in Germany, so I became a freelancer there. I received a company number but no VAT ID since I do not have to levy vat according to §19 of the German income tax law (UstG) concerning small entrepreneurs. I left Germany a couple of months ago and am now abroad. I have issued a couple of invoices to my clients (one in Spain, one in Belgium).

One of them now tells me that for invoicing across borders, I need to have a VAT ID registered in some European database, and that I need to get this sorted urgently by my accountant.

Firstly, I have no accountant - I declare my returns myself on an annual basis.
Secondly, other clients in the E.U. do not seem to mind that I do not have a VAT ID
Thirdly, I do not want a VAT ID since this means a lot of paperwork and declaring quarterly returns, making it hard to stay mobile


Who is right? Have you any tips or solutions?



Thanks


 

Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 04:59
English to Dutch
+ ...
AFAIK Mar 23, 2011

...when you deliver paid services in a country in the EU, you have to charge VAT.
Normally, when you deliver within the same country as where you are, you charge them the local VAT, for which you will need a VAT number in that country.
If you work for a client in another country of the EU, you do not charge VAT, but you have to make a comment on your invoice that the VAT has been shifted to the customer.

Now for your situation, I don't know what would apply. I guess the best you could do is get a German VAT and a German address of residence. Your invoices would then mention this address as the address of your company. Where you really do the work is then up to you.
You would then charge VAT to German customers (or, if indeed the German tax office has exempted you, not VAT). To customers elsewhere in the EU, see above.

But your situation is complicated, I recommend you sort this out with the nearest German tax office. I am not a lawyer, so don't take my advice to the letter.


 

Jose Ruivo  Identity Verified
Portugal
Local time: 03:59
Member (2007)
English to Portuguese
+ ...
Tax ID number Mar 23, 2011

| supose you can use the number that identifies you to the tax authorites of the country where you're registered - that is often called a VAT number, even if don't have to charge VAT, and a VAT number is not always equal to a tax ID number.

I suppose you could try entering you tax ID number in the database mentioned and check if it identifies you.

Regards,
José Ruivo


 

Sheila Wilson  Identity Verified
Spain
Local time: 03:59
Member (2007)
English
+ ...
Who is right? Good question! Mar 23, 2011

I would say that, to a certain extent, they're all right - there is just one party who has got it all wrong and that's the EU for implementing something without thinking about how it would be applied for ALL business transactions.

Basically, we're in a halfway house here. In common with other European countries, here in France you do not need to register for VAT until you reach a certain turnover and hence you do NOT have to add VAT to your bill. In that way, we're more like private individuals than companies.

However, in other ways, we are truly international businesses (sounds good, doesn't iticon_smile.gif). We invoice businesses who DO have to add VAT and have to account for payments they make. Or in this case, VAT payments they DON'T make.

So, what you need to do is to give your non-German EU clients a VAT number WITHOUT adding VAT to your invoice. Here in France, we can do that once we manage to convince our local tax offices of the need. In the UK, it seems to be impossible and translators there are somehow having to choose between voluntary registration for VAT (and all the admin etc that goes with it) and waving goodbye to non-UK clients within the EU.

I hope something is possible in Germany.


 

RobinB  Identity Verified
United States
Local time: 21:59
German to English
If you are no longer resident in Germany... Mar 23, 2011

you can't write invoices from a German address, unless of course you've maintained your registered residence here. Where do you pay income tax? And where is your registered place of business?

Your case is so unusual that you're going to have to consult a tax adviser/tax accountant to avoid the risk of being prosecuted for tax offences.

BTW, even if you fall under the German small business rule, you can still obtain a German VAT ID No. from Saarlouis. This is the recommended course of action, and the fact that you don't want extra paperwork doesn't cut any ice.


 

christeld  Identity Verified
Local time: 03:59
Norwegian to English
+ ...
Spanish client? Mar 23, 2011

sandervdm wrote:

One of them now tells me that for invoicing across borders, I need to have a VAT ID registered in some European database, and that I need to get this sorted urgently by my accountant.



I presume that it is your Spanish client who is attempting to impose this requirement, it seems to be all too common (and there are plenty of posts on the forums about this exact issue, and perhaps some solutions -- I'm sure someone who's got more experience with getting around the issue will come along and comment later) due to what I presume to be Spain's own governing laws relating to VAT.

I am VAT registered so I've not encountered the issue myself, but I've seen it come up frequently on the forums. You may be able to gain more of an understanding of the situation with Spain and VAT by searching the forums.

Good luck!


 


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