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Agency requesting certificate of residence, otherwise deducting taxes from invoice
Thread poster: Christian Schaller
Christian Schaller
Germany
Local time: 21:56
English to German
Jul 12, 2016

I think there was a post somewhere about this or a similar issue, but I'm afraid I can't find it anymore.

An agency that wants to collaborate with me has asked me to provide them with a certificate of residence so that everything would be taxed correctly. The agency is based in Greece.

I don't see any reason why they would need a certificate of residence or why in the world they would have to deduct any taxes from my invoices if I do not provide them with one. This seems to be a very unique case, as I have never encountered any other client proceeding this way.

Does anyone have the slightest idea why this might actually be true? Or, as I would personally assume, is this agency simply mislead in some odd way by thinking translators working for them are somewhat like "direct employees" based in a different country?

Any insights on this would be greatly appreciated.


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Teresa Mozo  Identity Verified
Local time: 21:56
Member (2008)
German to Spanish
+ ...
It's not that unusual Jul 13, 2016

Some agencies in Spain demand it as well. In this way, they are on the safe side. In Germany you can get it in five minutes in your tax office, but since some agencies want a new one each year, you might consider if it is worth the effort or better move on.

Regards,
Teresa


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Christian Schaller
Germany
Local time: 21:56
English to German
TOPIC STARTER
Ok, but... Jul 13, 2016

... can someone explain why this would indeed be necessary?

I don't see any reason for this. Why would double taxation be an issue with someone providing services? It's like delivering goods, isn't it? It's like the agency's client would ask them to provide them with a certificate of residence.

As far as I can see, it would only really be important if one was directly employed with said agency and working for them from a different country.

I find this really puzzling.


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dkfmmuc  Identity Verified
Local time: 21:56
Member (2009)
German to English
+ ...
If it is not essential then move on Jul 13, 2016

In the last years I have realized that there is a negative correlation between unusual demands or even illegal requests and payment behavior respectively reliability.

Expecially two agencies with crappy rates and a disputable reputation even demand passport copies, which they are not entitled to. Don't know for what purposes they need it but requests like these should heighten your awareness.

Outside of banks, the financial sector (or access to a government facility - presenting the ID to the guard) noone is entitled to such a request.


Sorry the source of a law firm is in German only:
https://ggr-law.com/persoenlichkeitsrecht/faq/personalausweis-darf-mein-personalausweis-kopiert-werden/

So if this is not a big order I would just move on.

If not - and assuming you are based in Germany - I would order a "Meldebescheinigung" at the local government.

But not more. For all reliable business partners it is enough to state the tax ID on the invoice and not
proliferating confidential material like iDs. The recipient may order ten smartphones or so until you realize what is happening right now.

If you would like to know if your customer exists you should simply ask for a bank transfer (or PayPal payment) of 2 Euro or so. Then the ID purposes are fulfilled and you know that your counterpart has a bank account and who he is.

Good luck! And hope this helps.

Best regards

Gerd

[Edited at 2016-07-13 10:08 GMT]


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Dr. Matthias Schauen  Identity Verified
Germany
Local time: 21:56
Member
English to German
Previous discussion Jul 13, 2016

Here is a link to a previous discussion on the subject: http://www.proz.com/forum/money_matters/279386-is_a_residence_certificate_needed_in_eu_if_i_have_a_valid_eu_vat_number.html

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Mirko Mainardi  Identity Verified
Italy
Local time: 21:56
Member
English to Italian
+ ...
VAT number Jul 13, 2016

Have you tried telling them to check you up on VIES? That should assuage their "fears" and give them solid proof your business is in fact registered in Germany...

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Sheila Wilson  Identity Verified
Spain
Local time: 20:56
Member (2007)
English
+ ...
I don't know about Greece Jul 13, 2016

I do know that it isn't necessary in Spain - it just makes things easier and clearer for the client as if they're invoicing a freelancer in Spain then they should deduct tax at source. You don't have to comply. But I had this request from a Romanian agency and research showed that there IS actually a tax due to the Romanian government unless you can prove that you are in a country where there's a tax agreement in force. In other words, tax is due by non-residents of Romania is some cases. But as I say, I don't know the law in Greece.

Of course, they're actually asking for a fiscal residency certificate, i.e. under which jurisdiction you are domiciled for tax. This may not be where you live, although it normally is.


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Ronnie Halpern  Identity Verified
Local time: 20:56
Member (2003)
French to English
+ ...
UK Certificate of Residence Jul 13, 2016

Sheila's answer is interesting because I received a request last year for one of these certificates from an agency in Spain who I have worked with for a number of years without problem. They told me that if I could not provide one then they would now be obliged to deduct the "tax due" (since they don't know my tax situation, how do they calculate it?) under instructions from the Spanish authorities. I have never heard of this before.

It proved very difficult to find out how to obtain this certificate from HMRC. There is no-one you can phone, and the address is a PO Box No. I wrote to them and it took them 7 MONTHS to send me a one page letter and certificate, with an apology for the "delay".

During all this time I could not invoice for work done, because the effort likely to be involved in trying to recover whatever money would have been deducted in Spain was simply not worth contemplating.

I have only had this request from the one agency and would be interested to know if others have had a similar experience. My feeling is that if the certificate is not essential and it takes months to get it simply in order to be paid then it is just not worth the effort and it is better to find other clients who do not insist on it.

HMRC fines you if you are 1 day late paying the tax you owe, but there is no penalty on them for effectively preventing you from receiving the income due to you.


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Sheila Wilson  Identity Verified
Spain
Local time: 20:56
Member (2007)
English
+ ...
What I understand about Romania Jul 13, 2016

This doesn't apply to Spain.

I read that if a Romanian business outsources work abroad then that work is being lost to Romanians. That seemed to be their justification for imposing a tax.


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Christian Schaller
Germany
Local time: 21:56
English to German
TOPIC STARTER
Reiterating Jul 13, 2016

Due to various reasons, this issue just being one of them, I have decided not to collaborate with the agency in question.

What I still don't understand is, how can someone impose taxes on goods or services from another country (other than VAT) if the supplier is not a direct employee of the given company?


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Lincoln Hui  Identity Verified
Hong Kong
Local time: 04:56
Member
Chinese to English
+ ...
You're thinking it wrong Jul 13, 2016

What I still don't understand is, how can someone impose taxes on goods or services from another country (other than VAT) if the supplier is not a direct employee of the given company?

They're not imposing taxes on goods/services from another country, they're imposing tax on goods/services on their own country unless it can be proven that they're from abroad.


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Josephine Cassar  Identity Verified
Local time: 21:56
Member (2012)
Italian to English
+ ...
Same here Jul 13, 2016

I received this request of certificate of residence one year after having consigned some work to an Italian agency and was threatened that 10% would be deducted in case I did not comply as the agency had to show I was paying taxes in my country of residence and not in Italy. I answered that it was not fair to be asked for this certificate a year after as it is a hassle to obtain as I had already been asked by another agency-from Greece-to provide this certificate so I knew I would have to waste a whole day running from one department to another to try and get it-it is not available online, not even application forms. I did not send this certificate and never heard from the Italian agency. I had to refuse the work of the Greek agency which was ongoing as it had won a tender so needed to show that tax was being paid-or so I was told. Nowadays, I make it clear that I am to be asked for any certificates needed before.

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Rosa Plana Castillón
Spain
Local time: 21:56
English to Spanish
+ ...
Quite common in Spain Jul 13, 2016

The thread mentioned by Matthias above is very enlightening and provides lots of information that could apply to your case, such as this:

Steven Segaert wrote:

While VAT and social security are coordinated within Europe, income tax is not.

Where you are taxed for your income or profit (both as an individual and as a company) depends on the laws of your own country, and of the country where that income or profit was earned. Just about every country in the EU has a treaty with just about any other country in the EU, to avoid both non-taxation and double taxation. Romania and Greece also have such a treaty (https://static.anaf.ro/static/10/Anaf/AsistentaContribuabili_r/Conventii/Conventii.htm).

To apply that treaty (= to NOT to tax you in Greece), the Greek authorities (the place where the one who pays for the services is located) need a paper stating that you (or your company) are a tax resident in Romania (or, not in Greece). "Tax residence" means that you are taxed in that country - that doesn't have to be the place you live in.

The form they use to ascertain that fact, is this one - https://www.google.ee/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http://www.steuerliches-info-center.de/cae/servlet/contentblob/52890/publicationFile/696/025_Griechenland_Form_E230.pdf&ei=zs6TVMe3BeLNygP51YCQBg&usg=AFQjCNGNcMNPiR5Mux07B3prnwW-5SZHuQ&sig2=VCxSArQdlZO4KpC6WUeu0g

Your Greek client is obliged to provide the authorities with that information, or to withhold Greek income tax for what they pay you (after which you are welcome to sort it out with the Greek authorities).

You can have that form filled and stamped at the tax office in your own country. I mailed ahead to make sure they could accommodate that, and it turned out to be no problem. I suggest you check with your own tax office to confirm this.


Most of my Spanish clients need this certificate and it only takes me a few minutes to request it from the HMRC (I have to renew it every year though). It's not that the company is making a dodgy request – it's just that they have to be able to present this document to the Spanish tax authorities if they require it. I worked in a Spanish translation company for years – I can tell that this request is legit!


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Christian Schaller
Germany
Local time: 21:56
English to German
TOPIC STARTER
VAT? Jul 14, 2016

Lincoln Hui wrote:

They're not imposing taxes on goods/services from another country, they're imposing tax on goods/services on their own country unless it can be proven that they're from abroad.


What kind of taxes would this be though other than VAT? And that's what a VAT ID is for, at least within the EU.

[Edited at 2016-07-14 06:03 GMT]


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Christian Schaller
Germany
Local time: 21:56
English to German
TOPIC STARTER
Mindboggling Jul 14, 2016

Rosa Plana Castillón wrote:

The thread mentioned by Matthias above is very enlightening and provides lots of information that could apply to your case, such as this:

Steven Segaert wrote:

While VAT and social security are coordinated within Europe, income tax is not.

Where you are taxed for your income or profit (both as an individual and as a company) depends on the laws of your own country, and of the country where that income or profit was earned. Just about every country in the EU has a treaty with just about any other country in the EU, to avoid both non-taxation and double taxation. Romania and Greece also have such a treaty (https://static.anaf.ro/static/10/Anaf/AsistentaContribuabili_r/Conventii/Conventii.htm).

To apply that treaty (= to NOT to tax you in Greece), the Greek authorities (the place where the one who pays for the services is located) need a paper stating that you (or your company) are a tax resident in Romania (or, not in Greece). "Tax residence" means that you are taxed in that country - that doesn't have to be the place you live in.

The form they use to ascertain that fact, is this one - https://www.google.ee/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http://www.steuerliches-info-center.de/cae/servlet/contentblob/52890/publicationFile/696/025_Griechenland_Form_E230.pdf&ei=zs6TVMe3BeLNygP51YCQBg&usg=AFQjCNGNcMNPiR5Mux07B3prnwW-5SZHuQ&sig2=VCxSArQdlZO4KpC6WUeu0g

Your Greek client is obliged to provide the authorities with that information, or to withhold Greek income tax for what they pay you (after which you are welcome to sort it out with the Greek authorities).

You can have that form filled and stamped at the tax office in your own country. I mailed ahead to make sure they could accommodate that, and it turned out to be no problem. I suggest you check with your own tax office to confirm this.


Most of my Spanish clients need this certificate and it only takes me a few minutes to request it from the HMRC (I have to renew it every year though). It's not that the company is making a dodgy request – it's just that they have to be able to present this document to the Spanish tax authorities if they require it. I worked in a Spanish translation company for years – I can tell that this request is legit!


Be that as it may, I think it is really silly. It's like a supermarket asking their suppliers from abroad to provide them with certificates of residence because they would otherwise be charged income taxes for the supplied goods since they cannot otherwise verify where the products were produced. This is just mindboggling.


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