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Is a residence certificate needed in EU if I have a valid EU VAT number?
Thread poster: A.Albu

A.Albu  Identity Verified
Romania
Local time: 06:48
Member (2002)
English to Romanian
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Dec 18, 2014

A Greek client is asking me to provide them with a residence certificate in order to not deduct 20% off of my invoice. I have provided them with my EU Vat No. (which can be checked in VIES at http://ec.europa.eu/taxation_customs/vies/) and told them that the mention „Reverse charge according to directive 77/388 EEC article 28c” which is included in my invoice should be enough. Why would I have to apply for a residence certificate and queue up to get it, since I have a valid EU VAT No.? None of my other European customers have ever requested such documentation from me. Has anyone experienced anything similar? Any advice/opinion/suggestion shall be welcome. Thanks in advance! Andrei

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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
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No Dec 18, 2014

You are the one who is supposed to ask for their VAT number, put it on the invoice, mention that VAT is due by them, verify their VAT number, keep documentation for that for 10 years, and report it to your national VAT authority.

Not them. They have to pay the VAT in Greece (and then deduct it).

The person you are dealing with doesn't have a clue what he or she is doing. You need to get hold of someone higher up in the food chain.


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A.Albu  Identity Verified
Romania
Local time: 06:48
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This is exactly how I proceeded Dec 18, 2014

Thank you, Thomas. I had checked their VAT No. prior to accepting the job and also included it in my invoice. By stating "Reverse charge according to directive 77/388 EEC article 28c" in the VAT field of my invoice, I thought it should be clear to them that THEY pay the VAT (in accordance with EU law) and that I am not charging them anything else than what is due for my work, completed as per their PO. But someone seems to be a blockhead there, and I am afraid this comes right from the top.

Thomas Frost wrote:

You are the one who is supposed to ask for their VAT number, put it on the invoice, mention that VAT is due by them, verify their VAT number, keep documentation for that for 10 years, and report it to your national VAT authority.

Not them. They have to pay the VAT in Greece (and then deduct it).

The person you are dealing with doesn't have a clue what he or she is doing. You need to get hold of someone higher up in the food chain.


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Sheila Wilson  Identity Verified
Spain
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I think it relates to Greek income tax Dec 18, 2014

I don't think it is anything to do with VAT(though I could be wrong).

Quite a few EU countries deduct income tax in advance of the supplier receiving the money. I believe it happens in Italy, maybe in Greece and certainly it happens here in Spain. Here, if we invoice a Spanish company we have to deduct a percentage (was 21% this year). This amount, instead of being paid to us, is paid directly to the tax office by the client. This is good for the government as they get their hands on the money earlier.

Maybe this is why the client wants some proof that you don't live in Greece. It isn't a reason for us to scrabble around trying to prove where we live - our registered address appears on the invoice, after all. But it may be easier for the client if you give proof. Really, we all need some sort of certificate ready to avoid these last-minute crises and confusion. But if our authorities don't provide something, it isn't easy to know what to do.


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A.Albu  Identity Verified
Romania
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It becomes a pain in the neck Dec 18, 2014

Thomas Frost wrote:

The person you are dealing with doesn't have a clue what he or she is doing. You need to get hold of someone higher up in the food chain.


This is the reply I just got from them:

"Dear Andrei

As I mentioned without this certificate we are obliged to deduct fees 20% for the tax office"

I am considering making a negative Blue Board entry if I do not come to terms with them. What would you think?


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Dr. Matthias Schauen  Identity Verified
Germany
Local time: 05:48
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English to German
Income tax, not VAT Dec 18, 2014

A Spanish client of mine asked for such a residence certificate this year for the first time. This is how I understood it after some research: Translations for EU businesses are viewed as being carried out at the client's sites (we know that already from the VAT statement mentioned in the posts above). But if you work in the client's country you should also pay taxes there. To avoid this, we have double-taxation agreements between the countries. But the foreign country can only refrain from taxing you if it is sure that you pay taxes in your home country. That's what the residence certificates are for. If your client has no proof that you live and already pay taxes in another country, they have to deduct a standard tax rate from your invoice and transfer it to their fiscal authorities.
I don't know why only some clients need this, and I am also not sure if this really pertains to translations, but if your client and/or their tax advisors/offices think so, you should probably just do it.
Your local tax office should be able to provide a residence certificate to you. In Germany you can download the form, complete it and send it to the tax office, and they will finalize it and send it back to you free of charge.

Good luck,
Matthias


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A.Albu  Identity Verified
Romania
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Intra-community service Dec 18, 2014

Sheila Wilson wrote:

Quite a few EU countries deduct income tax in advance of the supplier receiving the money. I believe it happens in Italy, maybe in Greece and certainly it happens here in Spain. Here, if we invoice a Spanish company we have to deduct a percentage (was 21% this year). This amount, instead of being paid to us, is paid directly to the tax office by the client. This is good for the government as they get their hands on the money earlier.


Sheila,

I have a few Spanish clients and none have asked me to produce a residence certificate. What you say may happen within the country itself, but not at an intra-community level.


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Thomas T. Frost  Identity Verified
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Not quite Dec 18, 2014

Dr. Matthias Schauen wrote:
Translations for EU businesses are viewed as being carried out at the client's sites (we know that already from the VAT statement mentioned in the posts above).


No, for the purpose of VAT, the place of delivery is considered to be at the client's premises. That's not the same as considering that the work takes place there.


But if you work in the client's country you should also pay taxes there. To avoid this, we have double-taxation agreements between the countries.


No double tax agreement comes into play at all, because no work takes place at the client's premises.

It would still be interesting to know why some agencies ask for this.


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Thomas T. Frost  Identity Verified
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Ask for justification Dec 18, 2014

Andrei Albu wrote:

This is the reply I just got from them:

"Dear Andrei

As I mentioned without this certificate we are obliged to deduct fees 20% for the tax office"

I am considering making a negative Blue Board entry if I do not come to terms with them. What would you think?


I would ask for justification/documentation for what or who exactly requires this according to which law.


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A.Albu  Identity Verified
Romania
Local time: 06:48
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Shouldn't such requests be made PRIOR to any business engagement? Dec 18, 2014

Dr. Matthias Schauen wrote:

A Spanish client of mine asked for such a residence certificate this year for the first time.
Your local tax office should be able to provide a residence certificate to you. In Germany you can download the form, complete it and send it to the tax office, and they will finalize it and send it back to you free of charge.

Good luck,
Matthias


Matthias, thank you, I am with you. Alas, in this country one needs to actually approach the tax office and stand in line God knows how long to get a document. We are far from Germany (not only geographically). Should they have made it clear from the beginning that they needed such documents, I would have not taken the job. Now, I'd rather scrape off 20% of my invoice than wasting time (and money) by standing in lines, especially now at the end of the year. But as I said, it is not fair to come up with such conditions AFTER the job has been completed. So I am still considering a Blue Board entry.


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Thomas T. Frost  Identity Verified
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Any other verification? Dec 18, 2014

Is there a national online business register where you can be found? Would they accept that as proof?

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A.Albu  Identity Verified
Romania
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Done already Dec 18, 2014

Thomas Frost wrote: I would ask for justification/documentation for what or who exactly requires this according to which law.


Have already done it. Have asked the accountant to put me in touch with a legal minded person. Still waiting for their reply. I shall keep you informed when/if I get it.


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Thomas T. Frost  Identity Verified
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French to Danish
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Or do it yourself Dec 18, 2014

Can you find a model for such a certificate and edit it to say what they want?

If customers are so difficult, that could be a way out. So long as it only states true facts, I wouldn't worry too much.


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A.Albu  Identity Verified
Romania
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VIES should be enough Dec 18, 2014

Thomas Frost wrote:

Is there a national online business register where you can be found? Would they accept that as proof?


I gave them the VIES link where they can check my VAT No. Not only does it state the number is valid, but it also provides the company's legal address (including the country, of course). This should be enough, in my opinion. I, for one, checked their VAT number, saw it is valid and they are headquartered in Greece, and I was satisfied with it. They could also check the online business register, but I am afraid they would have to pay a fee to access it.


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Samuel Murray  Identity Verified
Netherlands
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Agree with Sheila Dec 18, 2014

Sheila Wilson wrote:
Maybe this is why the client wants some proof that you don't live in Greece. It isn't a reason for us to scrabble around trying to prove where we live - our registered address appears on the invoice, after all. But it may be easier for the client if you give proof.


Yes, it sounds like it could have something to do with income tax instead of VAT. So what the OP needs to do is to prove that she does not live in Greece, and that should be fairly simple: don't all EU residents have residence cards? Simply scan the residence card, and cross out the numbered bits. Perhaps the client also accepts an EU driving licence as proof of residence.


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