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Effect on translators of upcoming changes to EU VAT laws?
Thread poster: JRM (X)

JRM (X)  Identity Verified
Italian to English
Sep 17, 2014

Hi all

I've just done quite a thorough search on the forums to see if this issue is being discussed. Having failed to find anything on point so far, I'm beginning to think I might be concerned about nothing.

Even so, I thought I'd raise the matter to see what conclusion others on Proz.com have come to.

My limited understanding is that from 1 January 2015, under EU law, the place where a supply of a service is deemed to have been made for VAT purposes will change (particularly when the end customer is not a business). Whereas up till now the supply was deemed to have taken place where the service was performed, that is now about to change, so that the supply is deemed to have been made at the location of the customer.

In my case, operating as I do from the UK as a sole trader providing translation services to customers principally in Italy, up till now this has meant my service supplies have been deemed to be made in the place where I perform the service - i.e. the UK, irrespective of the whether the client is a business or private individual. The professional advice I got was that I therefore only had to register for VAT (and charge VAT) if I ever exceeded the UK's very high annual turnover threshold for VAT registration.

But by changing where the supply is deemed to have been made, my understanding is that I would now be subject to the much lower VAT registration thresholds applicable in, for instance, Italy in my case.

Does anyone know what the position is regarding translation services, and whether it will change under the new laws? I've done some extensive reading on the internet on the subject and I think the new laws only change the position regarding the provision of broadcasting services, telecommunications services and electronically supplied services. The latter would on the face of it seem to cover translation services, but I think the definition of electronically supplied services deals mainly with automated services requiring minimal human intervention - so not really the kind of services translators would normally provide. But I've been unable to find any clear specific guidance regarding the position for translators and so remain confused.

Thanks in advance for any elucidation on this point.


 

Tom in London
United Kingdom
Local time: 01:35
Member (2008)
Italian to English
Me too Sep 17, 2014

Hi John,

I'm in the same language pair as you are, and I, too, am based in the UK.

I wasn't aware that anything like this was on the cards, and I'll look into it.

I'm a bit puzzled about it because, as you know, each individual member state sets its own VAT rates, and these can differ greatly across the EU.

Moreover, as a UK taxpayer, all of my invoicing is in the English language. I find it hard to envisage a situation in which invoices would have to be in both English and in the other language of the country whose VAT rate would be applicable.

I also find it difficult to understand how a taxpayer based in the UK, with no residence in (say) Italy and no address there, would be able to register in Italy and do VAT returns according to Italian practice. I just can't see how this would be possible.

And what would happen if this taxpayer, based in the UK, happened to work with clients in Italy, France, Germany, the Netherlands, Greece, etc.?

Let me make some enquiries and I'll post back here.

[Edited at 2014-09-17 12:14 GMT]


 

JRM (X)  Identity Verified
Italian to English
TOPIC STARTER
Effect on translators of upcoming changes to EU VAT laws? Sep 17, 2014

Dear Tom

That is exactly what the concern is (varying VAT rates and registration thresholds), although I understand the HMRC in the UK is operating a mini one-stop shop to avoid the need to deal with multiple EU tax authorities http://www.hmrc.gov.uk/posmoss/

Look forward to hearing what you can come up with on this subject.

Thanks
John

PS I did come across these Explanatory Notes dealing with the changes: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf


 

Tom in London
United Kingdom
Local time: 01:35
Member (2008)
Italian to English
I updated my previous post Sep 17, 2014

Please see the new version above

 

Giovanni Guarnieri MITI, MIL  Identity Verified
United Kingdom
Local time: 01:35
Member (2004)
English to Italian
I can't find anything either... Sep 17, 2014

but the new directives are for B2C only... I don't work for any private individual...

Also, I read this on the HMRC website...

if the service is supplied through an individual consumer’s telephone landline, the consumer location will be the place where the landline is located.

This seems to apply to us... and if we are dealing with B2C... I don't think anything is going to change for us...


 

Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 02:35
English to Polish
+ ...
Globalization, huh? Sep 17, 2014

They're going to promote parochialism and not globalization with such changes. Microproneurs dealing with multiple different taxation systems, invoicing regimes and languages and whatnot... I'm speechless. Anyway, judging by a cursory look at the explanatory notes I'm hoping those changes don't apply to us but only to ISPs, TV networks etc.

[Edited at 2014-09-17 12:19 GMT]


 

RobinB  Identity Verified
United States
Local time: 19:35
German to English
Not applicable Sep 17, 2014

John,

Unless you’re in the business of supplying telecommunication, broadcasting or electronic services to consumers, you’re not affected by this change to the VAT rules. Please read section 1.3 in the EU document you link to, which - together with the glossary in section 1.6 - indicates very clearly that professional services such as translation are not covered by this change, even if they are technically delivered by electronic means.

So unless you’re a telco, a broadcaster or a provider of automated electronic services, you can forget the whole thing.

HTH,

Robin


 

Roy OConnor
Local time: 02:35
German to English
Nothing to do with translations Sep 17, 2014

The scope of services included in these new changes seems to be vey specific to telecoms and electronic services. I don't see how this could involve translations. Perhaps only if you have set up a web site for paid automated translations.

Sending a translation by e-mail is not really much different from printing it out and putting it in the post (like we used to). Contrary to popular belief, the Internet is useful to translators, but not essential.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
RobinB is right - we're not concerned Sep 17, 2014

RobinB wrote:

Unless you’re in the business of supplying telecommunication, broadcasting or electronic services to consumers, you’re not affected by this change to the VAT rules. Please read section 1.3 in the EU document you link to, which - together with the glossary in section 1.6 - indicates very clearly that professional services such as translation are not covered by this change, even if they are technically delivered by electronic means.

So unless you’re a telco, a broadcaster or a provider of automated electronic services, you can forget the whole thing.


This is correct. I researched it recently. It is explained that it only concerns the type of electronic services where no individual work is done for each customer, i.e. where the customers buy standard services that don't vary from one customer to the other.

This is a non-issue.


 

2G Trad  Identity Verified
Italy
Local time: 02:35
Member (2000)
English to Italian
+ ...
Electronic services only Sep 17, 2014

RobinB:
Unless you’re in the business of supplying telecommunication, broadcasting or electronic services to consumers, you’re not affected by this change to the VAT rules.


Correct.

Explanation in Italian: http://bit.ly/1BLWfjE

Cheers
Gianni

@John: in Italy there's no threshold to be VAT registered. You have to register if your business is run regularly and continuously, regardless of your income.


 

dkfmmuc  Identity Verified
Local time: 02:35
Member (2009)
German to English
+ ...
A tiny amendment to your question Sep 17, 2014

Dear John,

what is about the traditional and tried and tested instrument of the so called INCOTERMS.

Shouldn't be the phrase enough that you deliver your translation:

EXW = ex works

and the customer has to pay freight and all local taxes himself?

Link:
http://iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/

[Edited at 2014-09-17 13:59 GMT]


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
INCOTERMS are for goods Sep 17, 2014

"The Incoterms® rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods."

Unless you sell translations as shipments of physical letters moulded in some material, I don't see how INCOTERMS could apply to translations.

"the customer has to pay freight " you said. Is this a joke?icon_smile.gif


 

Tom in London
United Kingdom
Local time: 01:35
Member (2008)
Italian to English
Hmmm Sep 17, 2014

Thomas Frost wrote:

.....unless you sell translations as shipments of physical letters moulded in some material....


Hmmm - an interesting concept. I must look into having all my future translations reproduced in vacuum-moulded plastic, ready for shipment to the customer !


 

Samuel Murray  Identity Verified
Netherlands
Local time: 02:35
Member (2006)
English to Afrikaans
+ ...
What it boils down to Sep 17, 2014

John Mifsud wrote:
Does anyone know what the position is regarding translation services, and whether it will change under the new laws?


Well, both the UK and NL tax service web sites create the impression that translation services may be included in this deal. It boils down to what exactly "electronically supplied services" are. The EU's explanatory notes {1} {2}, seem to indicate that translation is not included, for it defines electronically supplied services as follows:

‘Electronically supplied services’ (hereinafter ‘electronic services’) shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology).

This seems to exclude human translation services.

The UK tax service's explanation of MOSS {3} explains this the way I understand it too:

Where education, training, or a similar service is delivered by a person over the Internet or an electronic network (such as a Webinar), this is not considered to be an electronically supplied service. ... [But unlike] Webinars or distance learning, automated learning does not involve any human involvement and is considered to be a digital service.

If ... a student is required to complete and submit an on-line examination paper which is automatically checked and scored by computer; this is a digital service. ... However, if the service involves the completed examination paper being marked or assessed by an assessor, for B2C supplies the place of supply will remain the place where the service is performed.


None of what we do is automated to this extent -- there is always a lot of human involvement.


[Edited at 2014-09-17 15:27 GMT]


 

Samuel Murray  Identity Verified
Netherlands
Local time: 02:35
Member (2006)
English to Afrikaans
+ ...
@Tom Sep 17, 2014

Tom in London wrote:
Moreover, as a UK taxpayer, all of my invoicing is in the English language. I find it hard to envisage a situation in which invoices would have to be in both English and in the other language of the country whose VAT rate would be applicable.


If this applies to you, you'd probably be using the MOSS facility, which means that although you'll be charging VAT according to the rate in the customer's country of residence, you'd be paying it in your own country. You are free, of course, to register for VAT in some or all of your customers' countries, if you really, really want to, but the MOSS makes that unnecessary.


 
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