VAT (in German: Mehrwertsteuer) on invoice or not?
Thread poster: Dominique Fiedler

Dominique Fiedler
Local time: 06:18
English to German
+ ...
Oct 23, 2006

I have a question concerning adding VAT or what we call in German "Mehrwertsteuer" to your invoice. If I do a translation and send the invoice to the outsourcer, do I add the VAT (which is in Spain 16%) as well, in addition to what was the agreed rate? For example: rate agreed 0.08€/word, translated words: 1000. That would make 80€. Do I now add 16% from these 80€? I have seen this in Germany, but am not sure if it really is a general thing to do, and if an outsourcer would complain about it when seeing the invoice?
Thank you for your help.
Regards,
Dominique


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Kathi Stock  Identity Verified
United States
Local time: 23:18
Member (2002)
English to German
+ ...
Please provide more information Oct 23, 2006

Do you want to invoice a client in Spain or in Germany or in a non-EU country? I am assuming you live in Spain....correct?
What status do you have? Freelancer...registered self-employed...do you have a VAT number?

Kathi


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Dominique Fiedler
Local time: 06:18
English to German
+ ...
TOPIC STARTER
Invoices in general Oct 23, 2006

I was referring to invoices in general, i.e. I mostly translate within EU, but occasionally I have worked for non-EU (e.g. India).
To be honest, I am not registered as freelance translator. I do not do this on a very regular basis, depends on what comes up, since I am working in a different field.
However, I do have a VAT number.

Dominique


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Inga Jakobi  Identity Verified
Germany
Local time: 06:18
Member (2006)
Chinese to German
+ ...
If you are not registered, better don't state the VAT Oct 23, 2006

Hi,
as far as I know you state the VAT on the invoice because you have to pay it to the state (this is what the situation in Germany is, I think). But if you are not registered, it could be a bit confusing if you pay the VAT to the "Finanzamt". BTW, why not register? Then you will be told what to do anyway and it would be legal. But to be honest I don't know what the situation is like in Spain.
Regards,
Inga


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Derek Gill Franßen  Identity Verified
Germany
Local time: 06:18
German to English
+ ...
This sounds like a job for a tax consultant Oct 23, 2006

If you charge VAT, you have to pass it on to the fiscal authorities. And they will never decline money you send to them - even if you don't have to. But if you charge VAT, you have to pass it on. Many "forget" that and end up in a heap of trouble.

On the other hand, each country has its own rules on VAT and when it is charged. Your situation sounds even more complicated because you are apparently doing something, for which you charge (and pass on) VAT already.

I can imagine a situation in which it very well could be that you have to charge VAT on your translations - especially because you already do for another occupation.

I, for example, work as a translator and as an attorney. In Germany you can opt into charging VAT, but do not have to until your turnover exceeds a certain amount (around €50,000). That sum is different in every country.

Now, I do not know exactly, but I can imagine that if my turnover as an attorney exceeds €50,000 I will probably also have to charge VAT on my translations, even if the turnover for my translations does not exceed that amount. This is because, from the point of view of the fiscal authorities, the income from both occupations is considered income from non-dependent work (regardless of what non-dependent jobs it comes from).

This might all be different in Spain, so I would definitely recommend getting in touch with a tax consultant, who should be able to answer this question quite quickly and cheaply (in the hopes that you decide have the adviser do the rest of your work). My tax consultant didn't charge me anything for the info.

I hope this helped (a little) and didn't confuse the situation even more.


[Edited at 2006-10-23 20:28]


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JanaB  Identity Verified
Germany
Local time: 06:18
English to German
VAT Oct 23, 2006

A few days ago I was looking for a translator and got lots of different offers. I chose one that told me it would cost Euro 0,08 per source word, which I thought would be a total of Euro 360,- for 4500 words. In the invoice I got after he had finished the job, the total was Euro 417,60. So he simply added the VAT. I had a look at his offer again and he didn't say a word about that. I think he should have at least said that the price per word is Euro 0,08 plus VAT.

I was very angry about that, because in my opinion that's just a way of sounding cheaper to get the job. I know that some German translators do it like that, but it's really not trustworthy or honest. I don't know about translators in other countries.


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Alison Schwitzgebel
France
Local time: 06:18
Member (2002)
German to English
+ ...
Standard business practice to quote without VAT Oct 23, 2006

JanaB wrote:

I think he should have at least said that the price per word is Euro 0,08 plus VAT.



Hi there!

I can fully understand your frustration - you thought you were getting the job done 16% cheaper than the final price, and a 16% mark-up is quite hefty.

However it is standard business practice to quote prices to other buisness people without VAT. As a businessperson you can deduct the 16% VAT from your own VAT return, which means that there was, in effect, no mark up.

I agree that when quoting to private individuals you should always quote a price that include VAT.

To return to Dominique's question: best to consult a tax specialist in Spain (where you're based). In general, if you have a VAT number, you must charge VAT to all customers located in your country. You shouldn't charge VAT to business companies (with a VAT number) located abroad. You should still charge VAT To private individuals located abroad.

At least that is the case in Germany, and I assume it's the same or similar in Spain. But check it with a tax adviser to be certain.

HTH

Alison


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xxxLia Fail  Identity Verified
Spain
Local time: 06:18
Spanish to English
+ ...
Some Qs and As Oct 23, 2006

Dominique Fiedler wrote:

I was referring to invoices in general, i.e. I mostly translate within EU, but occasionally I have worked for non-EU (e.g. India).
To be honest, I am not registered as freelance translator. I do not do this on a very regular basis, depends on what comes up, since I am working in a different field.
However, I do have a VAT number.

Dominique


If you invoice in Spain, you add VAT, as this is required for translation.

If you invoice a customer in the EU outside of Spain, you don't charge VAT (or deduct IRPF).

BUT you must complete Modelo 349, listing all EU/non-Spain clients, their VAT number and the amount invoiced.

When you say you are not a freelance translator, do you mean you are not "de alta como autónoma" with Hacienda?

When you say you have a VAT number, I take it you mean your NIF?

I have only one number valid for all tax purposes, and that's my NIF, which is also my ID. I'm a Hacienda-registered translator, by the way.


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xxxLia Fail  Identity Verified
Spain
Local time: 06:18
Spanish to English
+ ...
or for the Spanish forum:-) Oct 23, 2006

Derek Gill Franßen wrote:

If you charge VAT, you have to pass it on to the fiscal authorities. And they will never decline money you send to them - even if you don't have to. But if you charge VAT, you have to pass it on. Many "forget" that and end up in a heap of trouble.

On the other hand, each country has its own rules on VAT and when it is charged. Your situation sounds even more complicated because you are apparently doing something, for which you charge (and pass on) VAT already.

I can imagine a situation in which it very well could be that you have to charge VAT on your translations - especially because you already do for another occupation.

I, for example, work as a translator and as an attorney. In Germany you can opt into charging VAT, but do not have to until your turnover exceeds a certain amount (around €50,000). That sum is different in every country.

Now, I do not know exactly, but I can imagine that if my turnover as an attorney exceeds €50,000 I will probably also have to charge VAT on my translations, even if the turnover for my translations does not exceed that amount. This is because, from the point of view of the fiscal authorities, the income from both occupations is considered income from non-dependent work (regardless of what non-dependent jobs it comes from).

This might all be different in Spain, so I would definitely recommend getting in touch with a tax consultant, who should be able to answer this question quite quickly and cheaply (in the hopes that you decide have the adviser do the rest of your work). My tax consultant didn't charge me anything for the info.

I hope this helped (a little) and didn't confuse the situation even more.


[Edited at 2006-10-23 20:28]


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xxxLia Fail  Identity Verified
Spain
Local time: 06:18
Spanish to English
+ ...
You are not 'charged' VAT as such... Oct 23, 2006

Alison Riddell-Kachur wrote:

I can fully understand your frustration - you thought you were getting the job done 16% cheaper than the final price, and a 16% mark-up is quite hefty.

However it is standard business practice to quote prices to other buisness people without VAT. As a businessperson you can deduct the 16% VAT from your own VAT return, which means that there was, in effect, no mark up.

Alison


...what you do, in effect, is "collect" it on behalf of the state authorities.

So, to add to Alison's explanation, when you bill 100 and add VAT 16, you receive 116 but then pass on the 16 to the government.

And when someone bills you 100 and adds VAT 16, you pay 116, but then ask the government for that 16 back (when they offset VAT you collected and the VAT you paid).

The final result is that - athough there's time delay - you are not out of pocket.

Obviously, for personal issues this doesn't apply, so it has annoyed me in the past when I have been quoted X (e.g. for a job in the house) and have not been told that that DIDN'T include VAT, becuase in this case you really are paying the VAT with no chance of recovering it.

[Edited at 2006-10-23 21:34]


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Heinrich Pesch  Identity Verified
Finland
Local time: 07:18
Member (2003)
Finnish to German
+ ...
I charge VAT only to customers in the same country Oct 24, 2006

and from customers abroad that are private persons. In fact I do not work for private persons, but last week I recieved a mail from some "Alfonso", who offered a big job. After a lot of negotiation it came out that this Alfonso (name changed) lives in France and has no VAT-number or at least did not want to give it to me. I told him to go to an agency in his town and order the translation from there.
It is IMO advisable to register with the tax office and pay VAT, then you can reduce the VAT you pay on business related stuff like phone-bill, software etc.
VAT is not your money, it belongs to the tax authority and is no part of your income. The same applies for the customer, so business customers do not care much.

Cheers
Heinrich


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avantix  Identity Verified
Netherlands
Local time: 06:18
German to Dutch
+ ...
EU invoicing procedure Oct 24, 2006

According to EU-legislation, if you have a VAT-registration (and you write that you have) it is rather simple:

1. You should add VAT to your inland invoices.

2. You do not have to add VAT to invoices for customers in other EU countries, but you must state THEIR local VAT-number on your invoice (e.g. after two or three empty lines below the client's address).
I would never accept an invoice from within the EU that includes [local] VAT. It is possible to reclaim it, but that is a pain (meaning: a time consuming and complicated procedure).

3. You do not have to add VAT to invoices for customers outside EU.

General: your own VAT reg.number should always be stated on your invoice.

These are EU rules which - to the best of my knowledge - apply to all EU countries.

And, to be complete, don't forget to mention your bank's IBAN and BIC numbers if you expect payment through standard bank transfer. Otherwise the charges could be horrendous, if the bank executes payment at all.

Herman


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Dominique Fiedler
Local time: 06:18
English to German
+ ...
TOPIC STARTER
Thank you Oct 24, 2006

Dear all,

thank you very much for all your advice and sharing your knowledge and experience with me. It is certainly not such a straightforward matter, but I have learned quite a lot from all your comments.

Thank you and best wishes,

Dominique


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