EU client refusing to give up VAT number
Thread poster: Jørgen Madsen

Jørgen Madsen  Identity Verified
Local time: 13:46
English to Danish
+ ...
Feb 28

A new client with an address in Ireland, phone number in the UK and head office in the US continues to claim they are not subject to VAT and refuses to give me their VAT number.
Anyone experienced this before? What to do?
I cannot invoice a EU client without a VAT number, right?


 

Fiona Grace Peterson  Identity Verified
Italy
Local time: 13:46
Member
Italian to English
They may be VAT-exempt Feb 28

The current tax threshold for the UK, under which a company is not required to be VAT registered, is currently £85,000. This may be the case for your client.

https://www.gov.uk/government/publications/vat-thresholds-remain-unchanged/vat-maintain-thresholds-for-2-years-from-1-april-2020


Tom in London
 

Samuel Murray  Identity Verified
Netherlands
Local time: 13:46
Member (2006)
English to Afrikaans
+ ...
SITE LOCALIZER
Charge them VAT, or use their USA address Feb 28

Jørgen Madsen wrote:
A new client with an address in Ireland, phone number in the UK and head office in the US continues to claim they are not subject to VAT and refuses to give me their VAT number.


If you are convinced that they are a company in the EU, and they do not have a VAT number, then you should charge them VAT. However, it may be that they are in fact in the USA. Ask the PM if it would be okay to put their US address on the invoice. It's a grey area, I know... but sometimes your contact may have been with a branch office even though from their perspective you are doing work for their main office.

Fiona Grace Peterson wrote:
They may be VAT-exempt. The current tax threshold for the UK, under which a company is not required to be VAT registered, is currently £85,000.


It is my understanding that not having to register for VAT is not the same as being VAT-exempt. VAT-exempt means you don't have to pay VAT. Not being required to register for VAT doesn't mean you don't have to pay VAT. In fact, the way I understand it, when you encounter such a client (from an EU country where the VAT registration threshold is so high that the client legitimately is not registered for VAT), you should charge them VAT.


[Edited at 2020-02-28 13:45 GMT]


Jørgen Madsen
Lea Lozančić
 

Jørgen Madsen  Identity Verified
Local time: 13:46
English to Danish
+ ...
TOPIC STARTER
I asked them... Feb 28

I asked why they would be tax exempt, but they didn't answer… in fact, they stopped responding altogether. But in their own words they are a leading in the business (they all seem to be), so size cannot be the reason.

 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
I think I know who they are Feb 28

This was discussed in November 2019:

https://www.proz.com/forum/money_matters/338516-european_agency_does_not_provide_vat_number.html

Anne Goergens and I were talking about the same agency, which we can't reveal here, but I can ask you in a private email.

If you look in the contract they want you to sig
... See more
This was discussed in November 2019:

https://www.proz.com/forum/money_matters/338516-european_agency_does_not_provide_vat_number.html

Anne Goergens and I were talking about the same agency, which we can't reveal here, but I can ask you in a private email.

If you look in the contract they want you to sign, you'll most likely find that they refuse to pay VAT, claiming not to be VAT registered, and expect you to pay the VAT you have to add when an EU client has no VAT number.

I.e. if you have agreed e.g. €0.10 per word, they expect to pay €0.10 including any VAT. I.e. you'd have to bill €0.08 and add the Danish 25% VAT, or €0.02, resulting in a 20% loss for you.

I was unable to locate the company in the Irish company register, and in any case, I don't see how it's possible that a translation agency can keep their turnover below the Irish threshold for service providers, €37,500.

Depending on where you look, they claim to be headquartered in Ireland and the UK.

The whole thing looks crooked to me. I would avoid them.
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Jørgen Madsen
IanDhu
Teresa Borges
Tom in London
ahartje
Kuochoe Nikoi-Kotei
 

Jørgen Madsen  Identity Verified
Local time: 13:46
English to Danish
+ ...
TOPIC STARTER
Straight 5's on Blueboard Feb 28

How can this company have 69 5's on the Blueboard?
Something's not right...


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Blue Board Feb 28

Jørgen Madsen wrote:

How can this company have 69 5's on the Blueboard?
Something's not right...


Exactly. And did you notice the flood of 5's from several translators on the same dates?

Try to look them up at paymentpractices.net if you have a subscription. On that site, it's possible to comment on companies without having had to work for them first.


Jørgen Madsen
 

Jørgen Madsen  Identity Verified
Local time: 13:46
English to Danish
+ ...
TOPIC STARTER
Nothing sucks like... Feb 28

XXX Translations.

 

Thomas Pfann  Identity Verified
United Kingdom
Local time: 12:46
Member (2006)
English to German
+ ...
Common misunderstanding Feb 28

If they don't have a VAT number (which is perfectly fine) they pay your full invoice (incl. VAT) but can't claim back the VAT – their loss. When quoting you probably quoted your 'price + VAT' to make them aware that the final rate they will have to pay is higher than the quoted rate.

I found myself in your client's situation once: I (not VAT-registered) outsourced some work to a Germany-based (and VAT-registered) colleague and didn't factor in that they were charging VAT. Well, I
... See more
If they don't have a VAT number (which is perfectly fine) they pay your full invoice (incl. VAT) but can't claim back the VAT – their loss. When quoting you probably quoted your 'price + VAT' to make them aware that the final rate they will have to pay is higher than the quoted rate.

I found myself in your client's situation once: I (not VAT-registered) outsourced some work to a Germany-based (and VAT-registered) colleague and didn't factor in that they were charging VAT. Well, I had to swallow the pill and pay a little more than expected. Lesson learned.

It's easily forgotten but VAT should be clarified before working together. If the client is not VAT-registered then you should make sure they understand that VAT will be added to the quoted price or, better still, quote a higher price which already includes VAT.
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Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
No, translator's loss Feb 28

Thomas Pfann refers to the general case, but we should be aware that in the case of this specific company (it is indeed the one I and Anne Goergens referred to; I checked with Jørgen), they make the translator accept the following clause in their Service Agreement:

'Since [agency] is not subject to any VAT Linguist agrees on covering such Fees on his/her behalf without claiming any VAT upon submitting the invoice to [agency].'

They don't mention this during the rate ne
... See more
Thomas Pfann refers to the general case, but we should be aware that in the case of this specific company (it is indeed the one I and Anne Goergens referred to; I checked with Jørgen), they make the translator accept the following clause in their Service Agreement:

'Since [agency] is not subject to any VAT Linguist agrees on covering such Fees on his/her behalf without claiming any VAT upon submitting the invoice to [agency].'

They don't mention this during the rate negotiation.
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philgoddard
United States
Member (2009)
German to English
+ ...
If it's not a silly question... Feb 28

Assuming they're in a different country to you, surely you shouldn't be charging them VAT anyway?

Tom in London
 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
EU Feb 28

philgoddard wrote:

Assuming they're in a different country to you, surely you shouldn't be charging them VAT anyway?


Yes, he should. It's in the EU. In order not to charge VAT when selling to another country in the EU's VAT area, the seller needs to check that the client has a valid VAT number. Otherwise VAT is due. It doesn't work like US sales tax.

So a consumer in the EU can't save the VAT simply by buying in another member state.


Teresa Borges
 

Christine Andersen  Identity Verified
Denmark
Local time: 13:46
Member (2003)
Danish to English
+ ...
EU Directive 2006/112/EC Article no. 195 "Reverse charge mechanism" Feb 28

This probably will not help, but until 31 December this year, the UK is still subject to EU regulations.

One of my clients makes out my invoices for me to approve, and has this at the bottom:

Ved handler mellem EU-lande er modtageren af tjenesten momspligtig i henhold til EU-direktiv 2006/112/EC Article No 196, "reverse charge mechanism".
(Jørgen can read that, but for those who cannot, it says:
For transactions between EU countries, the recipient of the se
... See more
This probably will not help, but until 31 December this year, the UK is still subject to EU regulations.

One of my clients makes out my invoices for me to approve, and has this at the bottom:

Ved handler mellem EU-lande er modtageren af tjenesten momspligtig i henhold til EU-direktiv 2006/112/EC Article No 196, "reverse charge mechanism".
(Jørgen can read that, but for those who cannot, it says:
For transactions between EU countries, the recipient of the service subject to VAT according to EU Directive … is liable to pay VAT.)

_____________________________________________________________

Article 196
VAT shall be payable by any taxable person to whom the services referred to in Article 56 are supplied or by any person identified for VAT purposes in the Member State in which the tax is due to whom the services referred to in Articles 44, 47, 50, 53, 54 and 55 are supplied, if the services are supplied by a taxable person not established in that Member State.


The English version of the directive is here
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006L0112&from=EN

_____________________________________________________________

Whether it is worth having a battle with the client or not, they are liable for VAT for the next 10 months…

One tiny benefit that will come from Brexit after that is that we will no longer have to wrangle over VAT with those who try to evade paying!
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Teresa Borges
 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
This particular agency Feb 28

This agency is running a murky setup, and it's unclear if they are registered in Ireland or the UK – or perhaps somewhere else.

In the agreement they want suppliers to sign, they claim to be ‘registered in Ireland as company with number XXXX and having its registered office at XXXXXXXX Street, Dublin XXX XXXX’. I cannot find any such company in the Irish company register with that address. Nor can I find any company registration for the branch they claim to have in the US. In
... See more
This agency is running a murky setup, and it's unclear if they are registered in Ireland or the UK – or perhaps somewhere else.

In the agreement they want suppliers to sign, they claim to be ‘registered in Ireland as company with number XXXX and having its registered office at XXXXXXXX Street, Dublin XXX XXXX’. I cannot find any such company in the Irish company register with that address. Nor can I find any company registration for the branch they claim to have in the US. In all the contact information I found, there is not a single Irish telephone number. Instead, they indicate their UK phone number together with their Irish address.

When I asked them about a billing address, they said, ‘Our billing address is: [the address above]'.

The Company's own website says:

XXXXXXXX (Head Office)
XXXXX Road
XX XXX London, UK
+44 XXX XXXX

[Edit:] This matches their registration at the UK Companies House.

In their privacy policy, the address indicated is:
XXXXXXXX, XXXXXXXX Street, Dublin XXX XXXX, Republic of Ireland)
phоne number: UK +44 XXX XXXX
'As an Ireland Headquartered Company, XXXXXX complies with the General Data Protection Regulation'

They also give the Irish address and the UK phone number in their Proz profile.

In their LinkedIn profile, they also claim to be headquartered in Dublin and to have 11-50 employees. How on earth can that work below the VAT threshold?

They preferred to pay in USD, which is strange for an Anglo-Irish company.

So they claim to be headquartered in Ireland and in the UK but have no phone numbers and no corresponding company registration in Ireland.

And if they’re running their operations in the UK or Ireland or both, why will they only pay in USD?

[Edited at 2020-02-28 20:44 GMT]
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Teresa Borges
 

Tom in London
United Kingdom
Local time: 12:46
Member (2008)
Italian to English
Immediate Feb 29

Jørgen Madsen wrote:

How can this company have 69 5's on the Blueboard?
Something's not right...


69 5s on the Blueboard should immediately make you suspicious.


Jørgen Madsen
 


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EU client refusing to give up VAT number

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