Agency in Europe requires CFR for US translator before paying?
Thread poster: Stefanie Reinhold

Stefanie Reinhold  Identity Verified
United States
Local time: 19:04
English to German
+ ...
Sep 12, 2014

Hello my fellow US translators. I have encountered something I had not heard of in over 20 years of business practice.
A European agency asked me to present a "certificate of US residency", form 8802. Is that something I will need to expect in future? Is this something new?

Thank you.

[Edited at 2014-09-12 22:21 GMT]


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Thayenga  Identity Verified
Germany
Local time: 02:04
Member (2009)
English to German
+ ...
Proof of residency Sep 13, 2014

Hi Stefanie,

this might indeed be a new EU-requirement. It must be the same requirement US agenies follow when they require that European translators must submit the W-8BEN before they are willing to work with the non-US service providers.


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Nancy Greenleese  Identity Verified
Italy
Local time: 02:04
Member (2013)
Italian to English
+ ...
certificate of U.S. residency for exemption from taxes Sep 13, 2014

Dear Stefanie,

Years ago when I was living in the U.S., I had to supply this certificate in order to be exempt from taxes levied by a German employer. In this case, the employer was a media outlet, not a translation agency. I was working as a freelancer.

Supplying the certificate worked in my favor. Otherwise, I would've been paying taxes in the U.S. AND Germany.

Hope this helps.

N


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Not an EU requirement Sep 13, 2014

This cannot be an EU requirement, as income tax is a national competency, not an EU competency.

It could possibly be a requirement of a particular country, but we don't know which country is concerned.

When a VAT-registered business in the EU sells to another VAT-registered business elsewhere in the EU, it is for the buying business to account for the payment (and then deduction) of VAT, not the selling business, but the selling business must verify the buying business' VAT status (can be done online) and keep proof. It is possible that the European business you refer to has simply gone over the top and want to be holier than the Pope, falsely believing they must also verify buying businesses outside the EU (no VAT is billed to them either). There are plenty of people in Europe who go around inventing their own restrictions, and plenty of others who then blame the EU for it.

That American W-8BEN is very complicated to fill out correctly, and if a US agency required that as a prerequisite of not withholding US tax, I would simply decline unless it were a significant job, as spending hours reading US tax forms and several pages of documentation and double tax treaties is not worth the trouble for minor jobs. It can't even be filed online, and the form must be accompanied by a letter from the client. The IRS has become paranoid about foreign transactions.


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Thomas Rebotier  Identity Verified
Local time: 17:04
English to French
Or statement for German agency Sep 14, 2014

A German agency I work with asks the following statement on all invoices:

>> Das fakturierte Entgelt ist in Ihrem Land steuerpflichtig und von Ihnen als Steuerschuldner zu versteuern (§ 13b Abs. 1 Nr. 1UStg und § 13 Abs. 2 UStg).
(The invoiced remuneration is subject to taxation in your country and you shall pay tax on it as a tax debtor – art 13b para. 1 no. 1 german VAT act and art. 13 para. 2 german VAT act.")

This releases them from paying VAT. Maybe you can suggest this to your client if they insist and the form is a pain to obtain.


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LEXpert  Identity Verified
United States
Local time: 19:04
Member (2008)
Croatian to English
+ ...
You get it from the IRS Sep 14, 2014

... by filling out the appropriate application form and sending it in. There is a nominal fee (ca. $25), but for that you can get up to ca. 20 certificates (they are supposedly country-specific, even though they probably all read the same), of which you can select multiple certificates for the same country (if you have multiple clients there), or multiple countries, or a combination thereof. So be sure to use the full allotment! The nominal validity is one year.
It takes about 6 weeks, but may be faster depending on the office's workload.
I've only been asked for it once.


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Stefanie Reinhold  Identity Verified
United States
Local time: 19:04
English to German
+ ...
TOPIC STARTER
Starting 2014, fee is $85 Sep 14, 2014

Thanks to all for your interesting responses.

Starting this year, the application fee with the IRS for this form is $85. The job for this company was under $300. I did not learn about the requirement until I asked about payment status of my invoice... The agency is in Rumania.

Here the instructions for this form. http://www.irs.gov/instructions/i8802/ch01.html

I am trying to clarify now whether the agency will pay for this fee. I will keep you posted!


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Sheila Wilson  Identity Verified
Spain
Local time: 01:04
Member (2007)
English
+ ...
Isn't there a minimum? Sep 14, 2014

Stefanie Reinhold wrote:
Starting this year, the application fee with the IRS for this form is $85. The job for this company was under $300.

That's just crazy! How much tax would be due on that job anyway? I live in Europe and the only company I've ever signed a W8-BEN for was the one where I do thousands of dollars' work per year. I thought the others hadn't asked because my total invoice value didn't cross a threshold. I know it's in the opposite direction, but surely it can't be valid from the first job? What if you do a minimum job, say €30? Bureaucracy gone mad, as usual!


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LEXpert  Identity Verified
United States
Local time: 19:04
Member (2008)
Croatian to English
+ ...
W-8 clarification Sep 14, 2014

$85! Wow. It has definitely gone up. I'd play hardball since they didn't mention it up front, or if that fails just tell them to keep the tax. It's bound to be less than $85

Thomas Frost wrote:

That American W-8BEN is very complicated to fill out correctly, and if a US agency required that as a prerequisite of not withholding US tax, I would simply decline unless it were a significant job, as spending hours reading US tax forms and several pages of documentation and double tax treaties is not worth the trouble for minor jobs. It can't even be filed online, and the form must be accompanied by a letter from the client. The IRS has become paranoid about foreign transactions.


To be fair, it's a one-page form with 10 line items, and most of them simply ask for your personal data. The only confusing part is that the instructions make it sound like you might need to obtain an ITIN (which *is* complicated), while in reality you don't. You just leave that line blank.

You send the completed W-8BEN directly to the payer (agency or client), who puts in a file in case somebody from the IRS ever asks for it, which will probably never happen. I'm not sure what part of the process (fill out form, send to agency/payer) could be sped up by "filing electronically".


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
W-7 / W-8BEN Sep 14, 2014

It's not the W-8BEN that is complicated to fill out, in fact, but the W-7 required to obtain an ITIN (tax number). The W-7 has to be mailed on paper to the IRS, together with a letter from the agent.

I had a few designs uploaded on a US site selling apparel, and they were the ones who suddenly required the W-8BEN AND a tax number. Here is a copy of their instructions:

Tax Information for NON-US Residents Only
I'm not a United States citizen or a US Green Card holder and live outside the United States: ABC-Company will withhold the maximum applicable US withholding taxes on payments unless:
• You are eligible for a reduced withholding rate under an applicable income tax treaty with the US and you submit an accurate and complete Form W-8BEN
• The payment you receive is connected with a US trade or business and you submit an accurate and complete Form W-8ECI
Note that these forms require you to have a US tax ID number. If you don't already have one, complete Form W-7 and file it with the IRS to obtain a US ID number.


They appear to be wrong about the requirement for a tax number. Getting this sorted out with them was a gigantic shambles during months, and nobody in their end seemed to have the slightest understanding of this. I shut down my account with them.

If it's just a question of filling in the W-8BEN and e-mailing it to the agent, it's obviously not a bit deal. Getting a tax number is, though.


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