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"Certificate of Fiscal Residence" for Spanish bureau
Thread poster: NetLynx

NetLynx  Identity Verified
Local time: 07:02
English to Danish
+ ...
Apr 19, 2016

From only one translation bureau (among several others) I have been asked for this Certificate last year and now again. All others use my VAT number to confirm that I am a Danish citizen, obviously satisfactory to them.

Do anyone here know what the facts are to avoid double taxation between Spain and Denmark? Is one bureau right, or are all others?

TIA
NetLynx


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Irina Lazarescu  Identity Verified
Romania
Local time: 08:02
Member (2005)
English to Romanian
+ ...
Communautaire aquisition of goods and services Apr 20, 2016

All EU member states must comply with the rules for "communautaire aquisitions of goods and services". This means an yearly declaration to the fiscal authority with the goods and services (translations included as services) purchased or performed during that year, This must be accompanied by this Certificate of Fiscal Residence for the companied involved. If this company sent you such a document is complusory that you should submit a similar, one issued by local fiscal authorities. In this case you must contact the local fiscal burreau.
I may speculate (I am not a specialist in the field but I met some cases) that this company is a VAT payer and for VAT deduction or VAT pay backmust submit this document from your side together with all EU companies that collaborated during the fiscal year.
The other companies that don't ask for this document may be non-EU companies or VAT exempt companies because of small business and they don't need complications.


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
No such EU law Apr 20, 2016

Irina Lazarescu wrote:


All EU member states must comply with the rules for "communautaire aquisitions of goods and services". This means an yearly declaration to the fiscal authority with the goods and services (translations included as services) purchased or performed during that year, This must be accompanied by this Certificate of Fiscal Residence for the companied involved. If this company sent you such a document is complusory that you should submit a similar, one issued by local fiscal authorities. In this case you must contact the local fiscal burreau.
I may speculate (I am not a specialist in the field but I met some cases) that this company is a VAT payer and for VAT deduction or VAT pay backmust submit this document from your side together with all EU companies that collaborated during the fiscal year.
The other companies that don't ask for this document may be non-EU companies or VAT exempt companies because of small business and they don't need complications.


Could you quote which EU legislation obliges companies to send all this paper around in the EU? I don't have to do this in Germany, in any case. The VIES systems documents which companies are VAT registered, so no paper is required for that.

Business around the EU would grind to a halt if such massive bureaucracy were really required in the EU.

Countries like Spain and Romania keep causing problems with this, so I think we need to look at what exactly is going on in the countries requiring this time-wasting nonsense.


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Ioana Costache  Identity Verified
Romania
Member (2007)
English to Romanian
+ ...
Not only Spain and Romania Apr 20, 2016

Thomas T. Frost wrote:

Countries like Spain and Romania keep causing problems with this, so I think we need to look at what exactly is going on in the countries requiring this time-wasting nonsense.


Also Greece... I quit working with Greek clients for this reason. It's very annoying, but you needn't be so suspicious. There's nothing "going on" except idiotic tax authorities who like nothing better than to waste the taxpayers' time and money, because free enterprise should be rightfully punished At least, that's how it is in Romania. I only asked for such a certificate once and I'm not going to do it again.

[Edited at 2016-04-20 16:10 GMT]


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Oh yes, Greece Apr 20, 2016

Ioana Costache wrote:

Also Greece... I quit working with Greek clients for this reason. It's very annoying, but you needn't be so suspicious. There's nothing "going on" except idiotic tax authorities who like nothing better than to waste the taxpayers' time and money, because free enterprise should be rightfully punished At least, that's how it is in Romania. I only asked for such a certificate once and I'm not going to do it again.


Oh yes, Greece too. A bankrupt country throwing spanners in the works of people who work so the country can go even more bankrupt.

I did't mean anything suspicious was going on, only bureaucratic stupidities, as you rightly say. And I meant it was worth asking people demanding such papers what exactly which law or regulation says about it.

My policy is that if a client insists on such a document, they will have to accept to pay my hourly rate for the time wasted on such nonsense + postage and any mileage. Fortunately it hasn't happened yet, and the one client I work for in Spain does not practise this idiocy. So why do others?

In certain countries, the attitude is sometimes that more paper is always better, far beyond the legal requirements. One typically finds such countries near the bottom of economic performance tables.


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Ioana Costache  Identity Verified
Romania
Member (2007)
English to Romanian
+ ...
Careful what you wish for Apr 20, 2016

Thomas T. Frost wrote:
it was worth asking people demanding such papers what exactly which law or regulation says about it.


I know exactly what the legal basis is in Romania, and I suppose other countries will have something more or less similar - this application form for a certificate should give you an idea. It's bilingual. You'll appreciate the quasi-English translation, I'm sure

It's from the tax authority website, and it's the one I submitted along with a fair stack of "supporting documents", wasting about 6 hours of my life in the process (two trips: one to submit the application after waiting for 2 hours in a queue in a dingy building, and one to collect the precious certificate after waiting for another hour or so in a queue in another dingy building; and let's not forget the taxi fare, because the tax office is in the middle of nowhere). No, you can't submit them online, it simply won't do. You have to go there and hand in the papers. I'll be glad to deprive myself of such joys in the future, and choose instead to work with clients based in less fiscally benighted countries.

[Edited at 2016-04-20 16:34 GMT]


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Ioana Costache  Identity Verified
Romania
Member (2007)
English to Romanian
+ ...
Truer words were never spoken Apr 20, 2016

Thomas T. Frost wrote:

In certain countries, the attitude is sometimes that more paper is always better, far beyond the legal requirements. One typically finds such countries near the bottom of economic performance tables.


Not that they're capable of making the connection...

[Edited at 2016-04-20 16:30 GMT]


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Sheila Wilson  Identity Verified
Spain
Local time: 06:02
Member (2007)
English
+ ...
The EU are onto it - don't hold your breath Apr 20, 2016

http://ec.europa.eu/taxation_customs/taxation/company_tax/double_taxation_conventions/index_en.htm
"Discussions among Member States on this subject will be resumed in 2006 in the framework of a working group. The Commission intends to present a communication in 2006 explaining its short and long term strategy."

I don't know if they've got anywhere yet, but it clearly hasn't been of much use.


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
What's the EU doing? Apr 20, 2016

Ioana Costache wrote:

I know exactly what the legal basis is in Romania, and I suppose other countries will have something more or less similar - this application form for a certificate should give you an idea. It's bilingual. You'll appreciate the quasi-English translation, I'm sure

It's from the tax authority website, and it's the one I submitted along with a fair stack of "supporting documents", wasting about 6 hours of my life in the process (two trips: one to submit the application after waiting for 2 hours in a queue in a dingy building, and one to collect the precious certificate after waiting for another hour or so in a queue in another dingy building; and let's not forget the taxi fare, because the tax office is in the middle of nowhere). No, you can't submit them online, it simply won't do. You have to go there and hand in the papers. I'll be glad to deprive myself of such joys in the future, and simply choose to work with clients based in less fiscally benighted countries.

[Edited at 2016-04-20 16:33 GMT]


Well either the client pays me for every minute and cent wasted on such nonsense, or they can find someone else. I usually ask about formalities and withholding taxes up front to avoid nasty surprises.

Such bureaucracy is clearly not in conformity with the overall principles of the EU's Internal Market's freedoms of movement, but until someone takes the bureaucrats to the EU's Court of Justice, their bureaucratic sabotage will continue. Or maybe if a group of translators sent a petition to the EU institutions, then in 20 years, some Eurocrat might wonder if perhaps it would be an idea to consider whether it should be considered to give further consideration to potential future considerations that could potentially lead to suggestions for improvement.


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2G Trad  Identity Verified
Italy
Local time: 07:02
Member (2000)
English to Italian
+ ...
Ask first if there's any paperwork involved Apr 20, 2016

Thomas T. Frost:
I usually ask about formalities and withholding taxes up front to avoid nasty surprises.

That's what I do too.
This should be a mandatory field in Proz job posting procedure, so one knows which job poster it's easier to work with.

Cheers
Gianni


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Ioana Costache  Identity Verified
Romania
Member (2007)
English to Romanian
+ ...
What are the odds Apr 20, 2016

Thomas T. Frost wrote:

Or maybe if a group of translators sent a petition to the EU institutions, then in 20 years, some Eurocrat might wonder if perhaps it would be an idea to consider whether it should be considered to give further consideration to potential future considerations that could potentially lead to suggestions for improvement.


That'll be the day
Come to think of it, EU institutions are quite fond of tax certificates. They never fail to ask for a couple every time they organize a tender for translation services - see, for instance, item EC5 in this
clarification document for tenderers (presumably more Byzantine than the initial document requiring such clarification).

"EC – 5 – Proof of payment of taxes
What kind of proof of payment of income taxes must be provided by natural persons for the purposes of this tender?
A certificate issued by the competent authority proving that the tenderer has no debt concerning income taxes and social security charges on their professional activity."

This particular document dates back to 2011. More recently, they've started asking for proof that individual translators don't have criminal records... I wonder what's next, my cats' vaccination records?


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Parrot  Identity Verified
Spain
Local time: 07:02
Member (2002)
Spanish to English
+ ...
It's not citizenship, it's where you pay taxes Apr 21, 2016

That's determined by the number of days a year you spend there (minimum 183 as far as Spain is concerned, after which you have to register). Other than that, appearing on the VIES database as registered in Denmark should be sufficient. In fact, all a Spanish company needs for your invoice to be valid is your name, your registered address and the VIES number.

Your client seems to have that mixed up.

For us (registered in Spain), certificates are a simple online procedure. We take out electronic ID certification from the mint, log into the portal and download them. You can't do that with Danish tax residence - that's what the VIES database is for. The client (not you) is supposed to look you up.

[Edited at 2016-04-21 08:06 GMT]


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Michael Wetzel  Identity Verified
Germany
Local time: 07:02
German to English
VAT or withholding income tax and social-security fees? Apr 21, 2016

I think this has been cleared up before here.

I don't think the certificate of fiscal residence has anything to do with VAT (and I therefore also don't think it has any relation to EU directives about VAT or anything else halfway directly related to the EU).

Some countries require businesses to withhold income tax and/or social-security fees on money they pay to freelancers in order to combat the evasion of taxes and fees. The US and several Southern European countries seem to do this. Many countries do not require businesses working with freelancers to withhold this money. Germany is one of them.

The problem is when a person from a country that does not require withholding works for a client in a country that does: They have to find a form that has no purpose in their own country and is foreign to their tax system and is correspondingly hard and annoying to get. The situation also generally seems perfectly clear, simple, and normal for the client and totally bizarre for the freelancer.

For freelancers without a registered company, having a VAT number from one country probably always means that they are a tax resident there (I can't think of a possible counter-example). However, once a registered company becomes involved, it would be easy to have a business (and VAT number) in one country, but be a tax resident in another, and I think that is why these clients may need (or at least plausibly, but mistakenly, think that they need) this form.


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
Hm Apr 21, 2016

Michael Wetzel wrote:

However, once a registered company becomes involved, it would be easy to have a business (and VAT number) in one country, but be a tax resident in another, and I think that is why these clients may need (or at least plausibly, but mistakenly, think that they need) this form.


I don't think so. If the client is dealing with the business entity, then what business is it of theirs where the director or employees are tax resident? The client has no direct dealings with them. It's the business entity that matters. If you download a copy of Word from a Microsoft website in another country, you don't require Microsoft to send you a certificate of fiscal residence for Bill Gates. It's completely irrelevant.

I think in many cases, clients that are unsure of the tax laws prefer to demand this paperwork as a precaution but without thinking about how much time they are wasting for the translator.


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Thomas T. Frost  Identity Verified
Member (2014)
French to Danish
+ ...
183 days Apr 21, 2016

Parrot wrote:

That's determined by the number of days a year you spend there (minimum 183 as far as Spain is concerned, after which you have to register).


That's a common myth, but reality is more complicated. The 183-day rule often only comes into play if tax residence can't be determined by other factors, such as where one's 'centre of life interests' is (family, children, schools, work …). One can find these rules in the many double taxation agreements.

Before one relies on the 183-day rule to avoid tax, it would be wise to study the tax residence question in detail.


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