Pages in topic:   [1 2] >
Intracommunity VAT (VIES) in Spain?
Thread poster: jagalla

jagalla  Identity Verified
United Kingdom
Local time: 03:27
Member (Feb 2018)
Spanish to English
+ ...
Feb 15

I understand that you need to register for this in order to work with agencies/ companies in Spain if you live in another EU country - I live between the UK and Spain, so am not sure what I would need to do, if anything? None of the clients I've worked with to date have asked me for this, so am confused, can anybody help? Thnaks in advance.

 

Teresa Borges
Portugal
Local time: 03:27
Member (2007)
English to Portuguese
+ ...
VAT Feb 15

This matter has been discussed several times, please check:
https://www.proz.com/forum/business_issues/314938-vat_or_no_vat.html
https://www.proz.com/forum/money_matters/173296-vat_cant_issue_an_invoice_in_spain_without_vat_registration.html


 

Sheila Wilson  Identity Verified
Spain
Local time: 03:27
Member (2007)
English
+ ...
It has little to do with physical location at the time Feb 15

jagalla wrote:
I understand that you need to register for this in order to work with agencies/ companies in Spain if you live in another EU country - I live between the UK and Spain, so am not sure what I would need to do, if anything? None of the clients I've worked with to date have asked me for this, so am confused, can anybody help?

You can't be officially resident in both, and as a self-employed freelancer (if that's what you are) you can only normally be registered in your country of residence (in the longer term, at least). I imagine you know that you have a right to stay in another EU member country for three months at a time, but anything longer is subject to various administrative requirements.

So, what address is on your invoices? For every job you do, you should use the same address - regardless of where you actually are or where your client is. And you pay taxes to that country on all your income too, regardless of where the money ends up being stored or spent. If it's in the UK, then you need to do everything required by the law and the tax authorities in the UK. You may not have to register for VAT there - not even to work with Spanish clients, although some of them like to make life difficult for you and easier for themselves. If you're invoicing from a Spanish address then you do everything by Spanish rules, and you will need to register for VAT (IVA).


 

jagalla  Identity Verified
United Kingdom
Local time: 03:27
Member (Feb 2018)
Spanish to English
+ ...
TOPIC STARTER
Thanks Teresa, will check these out Feb 15



 

jagalla  Identity Verified
United Kingdom
Local time: 03:27
Member (Feb 2018)
Spanish to English
+ ...
TOPIC STARTER
VAT Feb 15

Thanks Sheila - I use my UK address on my invoices, as this is where I'm registered for tax. The Inland Revenue say that I don't need to register in order to supply services in Spain, but the Spanish are saying that they can't accept an invoice without VAT added, and once agency has just said that they are only prepared to work with translators who have an intracommunity VAT number. What a nightmare!
Sheila Wilson wrote:

jagalla wrote:
I understand that you need to register for this in order to work with agencies/ companies in Spain if you live in another EU country - I live between the UK and Spain, so am not sure what I would need to do, if anything? None of the clients I've worked with to date have asked me for this, so am confused, can anybody help?

You can't be officially resident in both, and as a self-employed freelancer (if that's what you are) you can only normally be registered in your country of residence (in the longer term, at least). I imagine you know that you have a right to stay in another EU member country for three months at a time, but anything longer is subject to various administrative requirements.

So, what address is on your invoices? For every job you do, you should use the same address - regardless of where you actually are or where your client is. And you pay taxes to that country on all your income too, regardless of where the money ends up being stored or spent. If it's in the UK, then you need to do everything required by the law and the tax authorities in the UK. You may not have to register for VAT there - not even to work with Spanish clients, although some of them like to make life difficult for you and easier for themselves. If you're invoicing from a Spanish address then you do everything by Spanish rules, and you will need to register for VAT (IVA).


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Physical location may be a factor Feb 15

Sheila Wilson wrote:

jagalla wrote:
I understand that you need to register for this in order to work with agencies/ companies in Spain if you live in another EU country - I live between the UK and Spain, so am not sure what I would need to do, if anything? None of the clients I've worked with to date have asked me for this, so am confused, can anybody help?


You can't be officially resident in both, and as a self-employed freelancer (if that's what you are) you can only normally be registered in your country of residence (in the longer term, at least). I imagine you know that you have a right to stay in another EU member country for three months at a time, but anything longer is subject to various administrative requirements.

So, what address is on your invoices? For every job you do, you should use the same address - regardless of where you actually are or where your client is. And you pay taxes to that country on all your income too, regardless of where the money ends up being stored or spent. If it's in the UK, then you need to do everything required by the law and the tax authorities in the UK. You may not have to register for VAT there - not even to work with Spanish clients, although some of them like to make life difficult for you and easier for themselves. If you're invoicing from a Spanish address then you do everything by Spanish rules, and you will need to register for VAT (IVA).


If you want to do these things right, they can be extremely complicated. What tax is concerned, the place to start is the relevant 'double tax agreement'. The one between Spain and the UK is here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

First you have to determine where you are resident:


Article 4
RESIDENT

1. For the purposes of this Convention, the term “resident of a Contracting State”
means any person who, under the laws of that State, is liable to tax therein by reason
of his domicile, residence, place of management, place of incorporation or any other
criterion of a similar nature, and also includes that State and any political subdivision or
local authority thereof. This term, however, does not include any person who is liable to
tax in that State in respect only of income or capital gains from sources in that State or
capital situated therein. The term “resident of a Contracting State” includes a pension
scheme established in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);

b) if the State in which he has his centre of vital interests cannot be
determined, or if he does not have a permanent home available to him
in either State, he shall be deemed to be a resident only of the State in
which he has an habitual abode;

c) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.


Usually you only have to pay tax on self-employment income in the country of residence.

However, if you have a "permanent establishment", such as an office, in the country where you are not resident, you could still be liable for tax in that other country:


Article 20
OTHER INCOME

1. Items of income beneficially owned by a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Convention, shall be taxable only
in that State.

[…]

3. The provisions of paragraph 1 shall not apply to income, other than income
from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner
of such income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, and the
right or property in respect of which the income is paid is effectively connected with
such permanent establishment. In such case the provisions of Article 7 shall apply.



Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that
State unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much
of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to
that permanent establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities under the
same or similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed
as deductions expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative expenses so incurred,
whether in the State in which the permanent establishment is situated or elsewhere.

4. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.

5. For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.

6. Where profits include items of income or capital gains which are dealt with
separately in other Articles of this Convention, then the provisions of those Articles
shall not be affected by the provisions of this Article.


What the UK is concerned, there is something else to consider, as you can be resident, but not domiciled: https://www.gov.uk/tax-foreign-income/non-domiciled-residents .

Then there is the question of social charges, which is a separate matter. In the EU they are coordinated by Regulations 883/2004 and 987/2009.

It would be a good idea to try to find a setup that makes you liable for tax in only one country and settles any other ambiguity, so as to prevent any administrative problems.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
You could register for VAT Feb 15

jagalla wrote:

the Spanish are saying that they can't accept an invoice without VAT added, and once agency has just said that they are only prepared to work with translators who have an intracommunity VAT number. What a nightmare!


Nothing obliges them to do business with anyone.

Even though you have the right not to be VAT registered, it does cause a lot of problems when you do business outside your own country.

If it is an important client, why don't you just register for VAT? Unless you sell a lot to consumers, you may well gain from being VAT registered, as you can get the VAT paid on expenses back.


 

jagalla  Identity Verified
United Kingdom
Local time: 03:27
Member (Feb 2018)
Spanish to English
+ ...
TOPIC STARTER
Thanks Thomas - going to cosult when I'm in Spain next week. Thanks to all:) Feb 15

One of the issues is that I don't want to have to add VAT for clients in the UK, but there may be no choice in the end I suppose. Let's see what they tell me in Spain.

Thomas T. Frost wrote:

Sheila Wilson wrote:

jagalla wrote:
I understand that you need to register for this in order to work with agencies/ companies in Spain if you live in another EU country - I live between the UK and Spain, so am not sure what I would need to do, if anything? None of the clients I've worked with to date have asked me for this, so am confused, can anybody help?


You can't be officially resident in both, and as a self-employed freelancer (if that's what you are) you can only normally be registered in your country of residence (in the longer term, at least). I imagine you know that you have a right to stay in another EU member country for three months at a time, but anything longer is subject to various administrative requirements.

So, what address is on your invoices? For every job you do, you should use the same address - regardless of where you actually are or where your client is. And you pay taxes to that country on all your income too, regardless of where the money ends up being stored or spent. If it's in the UK, then you need to do everything required by the law and the tax authorities in the UK. You may not have to register for VAT there - not even to work with Spanish clients, although some of them like to make life difficult for you and easier for themselves. If you're invoicing from a Spanish address then you do everything by Spanish rules, and you will need to register for VAT (IVA).


If you want to do these things right, they can be extremely complicated. What tax is concerned, the place to start is the relevant 'double tax agreement'. The one between Spain and the UK is here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

First you have to determine where you are resident:


Article 4
RESIDENT

1. For the purposes of this Convention, the term “resident of a Contracting State”
means any person who, under the laws of that State, is liable to tax therein by reason
of his domicile, residence, place of management, place of incorporation or any other
criterion of a similar nature, and also includes that State and any political subdivision or
local authority thereof. This term, however, does not include any person who is liable to
tax in that State in respect only of income or capital gains from sources in that State or
capital situated therein. The term “resident of a Contracting State” includes a pension
scheme established in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);

b) if the State in which he has his centre of vital interests cannot be
determined, or if he does not have a permanent home available to him
in either State, he shall be deemed to be a resident only of the State in
which he has an habitual abode;

c) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.


Usually you only have to pay tax on self-employment income in the country of residence.

However, if you have a "permanent establishment", such as an office, in the country where you are not resident, you could still be liable for tax in that other country:


Article 20
OTHER INCOME

1. Items of income beneficially owned by a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Convention, shall be taxable only
in that State.

[…]

3. The provisions of paragraph 1 shall not apply to income, other than income
from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner
of such income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, and the
right or property in respect of which the income is paid is effectively connected with
such permanent establishment. In such case the provisions of Article 7 shall apply.



Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that
State unless the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but only so much
of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be attributed to
that permanent establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities under the
same or similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed
as deductions expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative expenses so incurred,
whether in the State in which the permanent establishment is situated or elsewhere.

4. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.

5. For the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year unless
there is good and sufficient reason to the contrary.

6. Where profits include items of income or capital gains which are dealt with
separately in other Articles of this Convention, then the provisions of those Articles
shall not be affected by the provisions of this Article.


What the UK is concerned, there is something else to consider, as you can be resident, but not domiciled: https://www.gov.uk/tax-foreign-income/non-domiciled-residents .

Then there is the question of social charges, which is a separate matter. In the EU they are coordinated by Regulations 883/2004 and 987/2009.

It would be a good idea to try to find a setup that makes you liable for tax in only one country and settles any other ambiguity, so as to prevent any administrative problems.


 

Nikki Scott-Despaigne  Identity Verified
Local time: 04:27
French to English
VAT and residence Feb 15

I think you need to read through previous threads on the same subject.

The VAT point will depend on where your business is registered.

If I understand the main points of your situation correctly, your business is registered in the UK. If you are under the VAT threshold, cannot charge VAT to any of your customers, unless you have opted to register voluntarily, which some people decide to do for various reasons.

If you remain under the threshold and do not register, then you will not have a VAT registration number and in the UK, that means you will not be issued with an intracommunity (VIES) number. The idea is that is you are not VAT-registered, you do not need an intracommunity VAT number. With the same facts, other European administrations take a different approach. My translation/interpreting activity is registered in France. I am under the compulsory VAT registration threshold and I consider do not have any other reason to register voluntarily. However, the French state nevertheless allocates an intracommunity VAT number - a sort of zero-rated number - based on my business registration number. The difference is it means that I can fill in forms that I might not otherwise be able to fill in.

Among many agencies requiring translators to register online, if you cannot fill in the intracommunity VAT number, you will not be able to complete the online registration. A certain number of direct clients will insist on having your intracomm VAT number and not all are willing to hear that the UK logic is that if a UK business is not VAT registered, it cannot obtain an intracomm VAT number. The majority of European member states adopt the opposite logic: whether you need it or not, administratively you may need it, so they give you one, or (as in France), you apply to the business department of your local tax office to obtain one).

Just as you can live anywhere, theoretically, you can register your business anywhere, but you have to respect the European rules and regulations. For example, a number of people resident in France have a business activity registered in the UK as the level of contributions is lower. The French press recently made quite a lot of noise about a lawyer (?) taking care of the affairs of clients living in France but who had registered their businesses in the UK. The French authorities have taken a bad view of this type of set-up, considering it tantamount to seeking to avoid paying contributions in France, where the people concerned were actually resident.

In the meantime, if your business is registered in the UK, you will not be able to obtain an intracomm VAT number and if you are "resident" in the UK within the meaning of the European rules 'n' regs, you may be stuck with that for now, at least.

[Edited at 2018-02-15 22:26 GMT]


 

Daniel Frisano
Monaco
Local time: 04:27
Member (2008)
English to Italian
+ ...
Buy time Feb 16

Tell them that you have already applied but it takes a long time. Meanwhile they may send you some work anyway (same as they would do with extra-European providers). Then perhaps they will forget about the whole thing. Mediterraneans often bring up this kind of confusing issue just because they loooove to waste everybody's time (trust me, I am Italian).

[Edited at 2018-02-16 00:01 GMT]


 

Jessie LN  Identity Verified
United Kingdom
Local time: 03:27
Spanish to English
+ ...
So frustrating Feb 19

This is driving me nuts because despite reading lots of information and forum discussions on this, there doesn't seem to be a real answer!

I did find this, however:
"In the case of foreign traders, Spanish law makes distinctions based on the manner in
which they operate in Spain:

– Traders who have what under Spanish law is referred to as “a permanent
establishment in Spain” (i.e. an office in Spanish territory) must apply for an
identification number at the appropriate office or branch of the State Tax
Administration Agency (AEAT) responsible for the place of establishment.
– Traders who have no permanent establishment must submit their application
directly (or through their tax representative, if appropriate) at the AEAT office or
delegation responsible for the area where they intend to operate.

Traders who do not reside in Spain may apply for their identification number at the
consulate or representative office of Spain in their country of residence or origin.

There are no exemptions from the obligation to register for VAT based on turnover
thresholds. "

https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/traders/vat_refunds/2010/vademecum-refund-spain_2010_en.pdf
from this page: https://ec.europa.eu/taxation_customs/business/vat/eu-country-specific-information-vat_en

So if I registered for VAT in order to comply with Spanish regulations, would I need to charge my clients VAT??! This is incredibly confusing.

[Edited at 2018-02-19 11:11 GMT]

[Edited at 2018-02-19 12:12 GMT]


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
When to charge VAT Feb 19

Jessie LN wrote:

So if I registered for VAT in order to comply with Spanish regulations, would I need to charge my clients VAT??! This is incredibly confusing.


Things quickly get complicated if you effectively operate in more than one country.

But the rules for when to charge VAT are quite simple:

Consumer or non-VAT-registered business:
• In the EU's VAT area (not exactly the same as the EU): yes.
• Outside this area: no.

VAT-registered business:
• In the same EU Member State as you: yes (they get the VAT back).
• Anywhere else in the EU's VAT area: no, but you must validate their VAT number in the VIES system, keep the validation and mention their VAT number on the invoice and "reverse VAT charge". You must also report such transactions to your local tax authorities (VAT fraud prevention measure; this information is forwarded to the authorities in the client's countries), which is usually quite simple. In Germany they just want the VAT numbers and the amounts. Also in this case, it makes no difference to the client, as they don't actually pay the VAT.
• Anywhere else: no.

And remember, if you do register, that you can then reclaim national VAT on your own expenses and won't pay VAT to suppliers elsewhere in the EU's VAT area (they then require your VAT number, so as not to charge VAT).

This is essentially all there is to it.


 

Jessie LN  Identity Verified
United Kingdom
Local time: 03:27
Spanish to English
+ ...
non-VAT-registered business Feb 19

Thomas T. Frost wrote:

Jessie LN wrote:

So if I registered for VAT in order to comply with Spanish regulations, would I need to charge my clients VAT??! This is incredibly confusing.


Consumer or non-VAT-registered business:
• In the EU's VAT area (not exactly the same as the EU): yes.
• Outside this area: no.



Thank you, Thomas. That makes some things a bit clearer! However, if I run a 'non-VAT-registered' business, how can I charge VAT within the EU VAT area?


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
You can't Feb 19

Jessie LN wrote:

if I run a 'non-VAT-registered' business, how can I charge VAT within the EU VAT area?


You can't and don't if you are not VAT-registered.


 

Jessie LN  Identity Verified
United Kingdom
Local time: 03:27
Spanish to English
+ ...
but Feb 19

Thomas T. Frost wrote:

Jessie LN wrote:

if I run a 'non-VAT-registered' business, how can I charge VAT within the EU VAT area?


You can't and don't if you are not VAT-registered.


But you said:

But the rules for when to charge VAT are quite simple:

Consumer or non-VAT-registered business:
• In the EU's VAT area (not exactly the same as the EU): yes.

To me, this says that a non-VAT-registered business charges VAT in the EU's VAT area. Can you clarify? Thank you.


 
Pages in topic:   [1 2] >


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

Intracommunity VAT (VIES) in Spain?

Advanced search







memoQ translator pro
Kilgray's memoQ is the world's fastest developing integrated localization & translation environment rendering you more productive and efficient.

With our advanced file filters, unlimited language and advanced file support, memoQ translator pro has been designed for translators and reviewers who work on their own, with other translators or in team-based translation projects.

More info »
Déjà Vu X3
Try it, Love it

Find out why Déjà Vu is today the most flexible, customizable and user-friendly tool on the market. See the brand new features in action: *Completely redesigned user interface *Live Preview *Inline spell checking *Inline

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search