To register for VAT or not?
Thread poster: Helena Grahn

Helena Grahn  Identity Verified
United Kingdom
Local time: 23:23
Member (2006)
English to Portuguese
+ ...
Nov 8, 2012

I have noticed more and more that some countries in Europe need a VAT number whereas in the UK it is an optional thing to do up to £70K+. I wonder what the advantages are when you are VAT registered (or disadvantages) and if you guys also have come across many of these cases that you lose the business for not having a VAT number. Tks!


Ty Kendall  Identity Verified
United Kingdom
Local time: 23:23
Hebrew to English
I've worked with..... Nov 8, 2012

Italian, French, Lithuanian, Hungarian, Belgian, Maltese and German outsourcers in the past year and none of them have ever insisted on a VAT number (some have asked but when I told them I didn't have one it was no big deal - I got paid regardless with no fuss).

I'm not an expert from what I was told and from what I've read, there are more disadvantages than advantages for a sole trader to register for it unnecessarily.


Russell Jones  Identity Verified
United Kingdom
Local time: 23:23
Italian to English
Title Nov 8, 2012

Hi Helena

I've edited the title of your thread, because registering for VAT or not and being a company or sole trader are two entirely separate issues (in the UK where you are).
Both companies and sole traders can choose whether or not to register if their annual turnover is below the threshold.


Di Penney  Identity Verified
United Kingdom
Local time: 23:23
French to English
Disadvantages that spring immediately to mind... Nov 8, 2012

Apart from the increase in paperwork, if you have customers in the UK who are not VAT registered you are effectively increasing the price you charge to them by 20% (unlike VAT- registered customers, they are unable to reclaim the amount as VAT input).

You can treat export sales as zero-rated but, if the customer is in the EU, you have to ensure that their VAT registration number is included on the invoice. Moreover, if the EU customer is not a business, then the place of supply is deemed to be the UK and not the EU member state and you will therefore need to charge UK VAT. It's all in HMRC VAT notices 725 ("The Single Market") and 741a ("Place of Supply") provided you can summon the will to read themicon_smile.gif

I'm still trying to think of advantages...


Michael Wetzel  Identity Verified
Local time: 00:23
German to English
the advantage Nov 9, 2012

The advantage (and the entire point of VAT) is that, like a "normal" business, your income would be subject to VAT but your expenditures would not. You would pay VAT up front, but it would then be refunded to you in full at the end of the month/ quarter/ year.

The difficulties caused by not having a VAT number for business clients in other EU countries (or, perhaps, those clients' failure to understand how to deal correctly with this particular bit of British exceptionalism) might be another reason to consider declining the VAT exemption.

The real question is the balance between the money gained through the VAT refunds you receive and the time and/or money gained in dealing with inner-EU businesses vs. the money lost in dealing with private clients and VAT-exempt businesses as well as the time lost filing your returns.

In most EU countries, the question is purely academic, anyway, because the exemption threshold is well below what we need to earn to make a decent living as a full-time translator. However, things are very different in the UK, and you'll have to figure out the numbers for your own personal situation.


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