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Do I need a VAT number to invoice EU clients from the UK?
Thread poster: Diana Edmond

Diana Edmond
United Kingdom
Local time: 21:33
Member (2008)
Italian to Romanian
+ ...
Jun 29, 2013

Hi all!

I'm fairly new to the UK and am trying to work out how to get around the whole VAT invoicing problem with EU clients (mainly in Italy in my case).

I've read all the threads on here already, but I would love to:
1. Confirm that I definitely do NOT need to register for VAT here in order to sell my services to EU customers (my income will definitely be below the threshold).
2. Convince the clients that I do not need to be registered, and help them circumnavigate any reverse charge VAT problem at their end.

The problem with No. 2 is, there appears to be nowhere on the HMRC site that states this explicitly with reference to supplying services to a VAT-registered business in another member state. Other than providing a link (from the EU site) to a list of the different VAT thresholds in each member state, what else can I send the clients to make this clear? Does anyone have any useful links up their sleeve?

(PS: My first application for a NI number has just been turned down, and without being able to invoice non-UK clients from here and that money being paid into my UK bank account, I will struggle to convince the UK authorities that I am trading here.)

I know people on here have in the past suggested this HMRC link (http://tinyurl.com/onh6vdu), but it's very long and doesn't set out as clearly as I'd like just why I don't need to be registered (I would, after all, be sending an English link to non-English speakers).

Thank you in advance for your suggestions!


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Jane Proctor  Identity Verified
France
Local time: 22:33
French to English
Call them Jun 29, 2013

on 0300 200 3700.

I'd be very surprised if you have to - unless your turnover exceeds 79k (and I don't think overseas sales count, so you can probably well exceed that), BUT call the Inland Revenue directly. They're really helpful and you'll get the correct answer, rather than supposition. Think you'll have to wait until Mon am now.
Their site (HMRC) is really accessible too and if, as you say, nothing is mentioned, that's more than likely because it isn't relevant.

I've been out of the UK for a while, and I really miss the (lack of) tax and simplicity of being a freelancer out of the UK. Enjoy!


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EvaVer  Identity Verified
Local time: 22:33
Member (2012)
Czech to English
+ ...
Unfortunately, I think so Jun 29, 2013

There is the "Reverse Charge" Directive - when you provide services to a VAT-registered client in another Member State, the service is deemed rendered in THEIR country, and VAT is due BY THE CLIENT. I don't know about the UK, but the Czech IRS construes it (and it is thus transposed into our law) by saying that you must be registered - up to 2012 fully (i.e., for ALL your business); as from 2013, there is a special status that makes is possible to declare only "transborder" business. I am just about to make my declarations for the first time. In theory, the rules should be the same throughout the EU, although many agencies seem to ignore them.

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Russell Jones  Identity Verified
United Kingdom
Local time: 21:33
Italian to English
UK experience Jun 29, 2013

I'm not sure it is very helpful for people with no direct UK experience to be offering advice in this forum. The issue is of greater relevance in the UK because of our high VAT threshold.

The reverse charge directive certainly applies, but that only places the responsibility on the client - to account for both input and output tax.

From reading the many previous threads on this subject, it appears that some non-UK clients (especially in Spain) have insisted on a VAT number before making payment, but the majority view, if I have interpreted this correctly, is that this is a misinterpretation of the rules and is done to avoid getting into unknown territory with the authorities.

Most thread contributors have managed not to succumb to the pressure for voluntary registration.


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Jack Doughty  Identity Verified
United Kingdom
Local time: 21:33
Member (2000)
Russian to English
+ ...
One agency's instructions Jun 29, 2013

An agency in Germany, to which I sent my standard invoice, required me to make the following additions to it:
Include the words "VAT reversed";
State the customer's full postal address and VAT number;
Add a serial number to the word "Invoice".
But as Russell says, various agencies in various countries interpret this EU rule in different ways. I have not so far had to obtain a VAT number. I read somewhere that it is possible to obtain such a number without actually registering for VAT.


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Samantha Payn  Identity Verified
United Kingdom
Local time: 21:33
Member (2008)
Russian to English
+ ...
I've managed without so far Jun 29, 2013

I am a freelance translator living and working in the UK with some agency clients in other EU countries. I am not VAT registered.
I have added the words "Boorer Translations is exempt from VAT in the UK per the registration thresholds announced in the Supplement to notices 700/1 and 700/11, April 2013." to my invoices and this seems to have satisfied all EU clients so far.
Hope this helps.
Samantha


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Michael Joseph Wdowiak Beijer  Identity Verified
United Kingdom
Local time: 21:33
Member (2009)
Dutch to English
+ ...
my experience as a freelance translator in the UK Jun 29, 2013

Hi Diana,

I have lived in the UK now for 3 or 4 years now and work primarily for Dutch and Belgian agencies (and a few elsewhere in Europe and other countries) and I have never had a problem with VAT. All my invoices state:

VAT-exempt: HMRC Reference Notice 700/1 (Apr 2010)

Occasionally, people used to ask me for my tax number (which no longer happens) and I would then explain to them that in the UK we don't have to register for VAT unless we earn over £79,000/year.

As long as your other taxes are all in order you can just ignore VAT. I have heard that there are a few difficult countries (like Spain) but I have yet to get any work from a Spanish company so I wouldn't know personally.

Michael


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Sonia Hill
United Kingdom
Local time: 21:33
Italian to English
I don't have a VAT number Jun 29, 2013

I'm another one without a VAT number. A few agencies asked me about it last year when the new legislation was brought in, but I explained the situation and they all said it was fine.
I have had one or two Spanish agencies say they can't send me work, but other Spanish agencies have said it is fine. Most of my clients are in Italy, with a few in Germany and the Netherlands and none of them have said it is a problem.


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Tom in London
United Kingdom
Local time: 21:33
Member (2008)
Italian to English
The answer is simply "no". Jun 30, 2013

Since you are registered as a taxpayer in the UK, the only rules you need to adhere to are the UK rules. Other countries, including other EU Member States, have no jurisdiction over your tax affairs and you should not attempt to adhere to their rules.

Under the UK rules you do not need to be VAT-registered unless your annual turnover exceeds (currently) £73,000.

On my own invoices (which, of course, are in English) I write "VAT not applicable". End of story. Nobody has ever queried this.

As for Spain: if some Spanish accountants don't understand EU law that's their problem - not yours. I don't often work for Spanish clients but I've never encountered any problems. I suspect the Spanish issue is down to local ignorance. What's certain is that non-Spanish translators are not subject to Spanish law, Spanish accounting requirements etc.

[Edited at 2013-06-30 09:15 GMT]


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Rad Graban  Identity Verified
United Kingdom
Local time: 21:33
English to Slovak
+ ...
No Jul 1, 2013

My clients only require UTR number.

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Michael Joseph Wdowiak Beijer  Identity Verified
United Kingdom
Local time: 21:33
Member (2009)
Dutch to English
+ ...
Unique Taxpayer Reference (UTR) Jul 1, 2013

Hi Rad,

Don't quote me on this but as far as I know there is no need for you to give anyone your Unique Taxpayer Reference (UTR). Stating on your invoices that you are VAT exempt (in some way) should suffice.

Michael


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Diana Edmond
United Kingdom
Local time: 21:33
Member (2008)
Italian to Romanian
+ ...
TOPIC STARTER
Thank you! Jul 1, 2013

Thank you all for your replies, they help a lot! Now I can understand this issue better and can provide my clients with some explanation that I hope they will find satisfactory.

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Oliver Walter  Identity Verified
United Kingdom
Local time: 21:33
Member (2005)
German to English
+ ...
My experience is similar Jul 1, 2013

Similar to the previous contributors, my experience is that I don't need a VAT number (I'm UK resident and not VAT-registered) for invoices that I send to the UK, Italy, Luxemburg, France, Germany, Austria. Companies in the Czech Republic and Spain seem to think that I do need such a number, so I don't do work for them. On my invoices I state "VAT is not payable" and if there is a question about this in an email (before I start to work for them) I inform them that I am not VAT-registered because my income is below the threshold for UK registration.

Oliver


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Cristina C.  Identity Verified
Romania
Local time: 23:33
Member (2016)
English to Romanian
+ ...
place of supply Jul 2, 2013

Tom in London wrote:
As for Spain: if some Spanish accountants don't understand EU law that's their problem - not yours. I don't often work for Spanish clients but I've never encountered any problems. I suspect the Spanish issue is down to local ignorance. What's certain is that non-Spanish translators are not subject to Spanish law, Spanish accounting requirements etc.



How to work out your place of supply of services for VAT

Whenever you supply services, then for VAT purposes, it is essential to know the 'place of supply'. This determines which country's VAT rules should be used and how you have to account for the VAT on the sale.

If you are supplying services abroad, then the place of supply is not always obvious. (fragment copied from the HMRC site)

If you look at the EU place of supply rules, you'll see that they are divided into two categories: business to business and business to non-business customer.

The supplier has to be a business and the VAT number certifies that it is indeed a business.

Jack is (sort of) right. Here in Romania, like in many other European countries, we can register for VAT without actually having to pay it.


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Erik Freitag  Identity Verified
Germany
Local time: 22:33
Member (2006)
Dutch to German
+ ...
OT: Why not register? Jul 2, 2013

This is slightly off-topic, but anyway: What I always fail to understand when reading this question and similar ones is why people are so reluctant to register for VAT. The amount of work is negligible, and it pays back several times by reclaiming VAT from business expenses. Only if your clients are mainly private persons it would make some sense not to register for VAT.

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