| Pages in topic: < [1 2 3] > | EU UID-Nr/EU Tax no Thread poster: TRADL
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| Not always.... | Apr 28, 2005 |
Williamson wrote:
The VAT-system works according to the principle of report of levy. Somewhere at the end of the line, somebody always pays VAT.
I don't charge VAT - any direct customer I have pays my fee without VAT, hence not always.....
| | | | Williamson 
United Kingdom
Local time: 18:28
Flemish to English
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| If inside the country where you are based. | Apr 28, 2005 |
If that direct customer lives in Germany, you are correct. If not the principle of report of levy is the basic principle of the E.U.VAT-taxation system.
[Edited at 2005-04-28 18:36]
| | | | | Maybe I am missing something..... | Apr 28, 2005 |
Williamson wrote:
If that direct customer lives in Germany, you are correct.
Maybe I am not understanding what you mean, but as far as I know it does not matter if my client is in Germany, Spain, France or the UK. No one payes VAT on my service.
[Edited at 2005-04-28 18:40]
[Edited at 2005-04-28 18:41]
| | | | Williamson
United Kingdom
Local time: 18:28
Flemish to English
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Sorry, my mistake, you are in Britain and do not have a VAT-number.
But for all those who have a VAT-number, are based in one E.U.- country and export a service to another the principle of report of levy is the basis of the system.
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Kevin Harper
United Kingdom
Local time: 18:28
German to English
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| What about 'place of supply of services'? | Apr 30, 2005 |
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_CL_000346&propertyType=document
In short, the above document is the UK interpretation of EU Directive 77/388/EEC, and I was surprised at what it seems to be saying.
It expressly mentions "written translation services" as being "consultancy services" and that in the case of business-to-business services in the EU, the place of supply of the services is the customer, and NOT the supplier.
It even says (in another document, which I couldn't find again) that such services are "outside the scope" of UK VAT.
Does that mean, when UK translators provide services to another EU country, they actually need to be VAT-registered in that other country, under the regulations that apply there?
Even if that is the case, UK translators would still not need to be VAT-registered unless they exceeded the VAT threshold by the business they did in that specific country.
Although I am not-VAT registered, I had always assumed that my services to other EU countries were regarded as supplies from one EU country to another, which would be VAT-free. Would this still be the case even if I am deemed to be providing the service in another country?
Going back to the need to supply a VAT number, it says in the document I linked to that you need to be satisfied that the EU customer is business customer. This is because there are different rules on place of supply if the customer is NOT a business. The document goes on to say that you need to obtain a VAT reference if at all possible for this purpose.
However, it is whether the CUSTOMER is a business or not that determines the place of supply. The supplier will always be a business, by definition. Perhaps there has been some confusion over this which has led to customers demanding VAT references specifically. If anything, it is translators that need to be demanding VAT references from them!
[Edited at 2005-04-30 17:22] ▲ Collapse
| | | | | Place of services | May 3, 2005 |
That UK notice appears a lot more complex than it need be.
Comparing it to the French VAT rules, the common position appears to be:
- if you supply translation services to a *business* (i.e. not private) customer abroad, it is an "export".
- as a general rule, exports are exempt from VAT in the exporting country and (if EU) subject to VAT in the importing country.
The other basic rule is that VAT is always paid by the final customer. The only possible... See more That UK notice appears a lot more complex than it need be.
Comparing it to the French VAT rules, the common position appears to be:
- if you supply translation services to a *business* (i.e. not private) customer abroad, it is an "export".
- as a general rule, exports are exempt from VAT in the exporting country and (if EU) subject to VAT in the importing country.
The other basic rule is that VAT is always paid by the final customer. The only possible exception is for very small businesses.
I'm surprised the UK threshold is so high, since this level corresponds more to supplies of goods in other EC countries (logical, since the supplier will pay lots of VAT on the raw materials and, being exempt from VAT, will be unable to deduct this for tax purposes; the difference between the "goods" and "services" thresholds thus corresponds to the presumed VAT content of the goods supplied).
Therefore, if you are below the VAT exemption threshold and don't opt in, you cause a significant complication for your EU customers.
In fact, I think (but do not know for sure) that a EU business customer is obliged to ADD the respective VAT to your VAT-exempt invoice and pay it directly to his local tax office. This would obviously not be a cheering thought for him.
This is also logical from a "fair competition" perspective: with the UK threshold being so high, many small businesses would have a 20% price advantage over their European counterparts for their exports when in fact, the VAT exemption is intended purely to simplify matters for small local businesses.
Finally, if you are not registered as a business then, in many EU countries, you will be presumed to be an undeclared "employee". Your customer could then be assessed for all the unpaid social security charges and fined for failing to declare you as an employee.
So your customer has every reason to ask for an EC VAT code or business identifier number on your invoices. ▲ Collapse
| | | | | I forgot to reply to this... | May 3, 2005 |
Kevin Harper wrote:
Does that mean, when UK translators provide services to another EU country, they actually need to be VAT-registered in that other country, under the regulations that apply there?
Certainly not in all the EU countries I have dealt with. Maybe some countries have weird protective systems but I would tend to bank on the general rationale of the "freedom to provide services" and claim this would be an unnecessary (thus illegal) restriction...
Kevin Harper wrote:
Although I am not-VAT registered, I had always assumed that my services to other EU countries were regarded as supplies from one EU country to another, which would be VAT-free. Would this still be the case even if I am deemed to be providing the service in another country?
It isn't "VAT-free" but VAT is payable first and foremost in the destination country. Although I'm not sure of the exact situation applying to invoices from "VAT-exempt" persons, for the non-exempt the client pays the VAT on the invoice directly to his taxman, at the VAT rate in force in his own country.
However, the VAT-registered translator must, in France at least, state the client's VAT code on the invoice (I suppose this is partly to prove where VAT liability lies, and partly to prove that the provider has checked that the client is indeed a "business use" customer).
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| HMCE phone call.... | May 3, 2005 |
The best way to get answeres related to the UK is speaking direcly with the UK officials.
The telephone number for VAT is 0845 010 9000.
I have spoken to them today and received the following answers:
1.) In regards to being non-VAT registered the countries we invoice would have to follow the same procedure as they do for providers in their own country who have not reached the threshold and are not VAT registered. However, please note that the person I spo... See more The best way to get answeres related to the UK is speaking direcly with the UK officials.
The telephone number for VAT is 0845 010 9000.
I have spoken to them today and received the following answers:
1.) In regards to being non-VAT registered the countries we invoice would have to follow the same procedure as they do for providers in their own country who have not reached the threshold and are not VAT registered. However, please note that the person I spoke to was hesitant as he/they are not knowledgable in the VAT process in other countries.
2.) We as translators fall into the category of being able to "Reverse Charge" VAT. This means that even being VAT registered and supplying our VAT number (to make things easy for our clients) we do NOT charge VAT. The customer is liable for it in their own country. Apparantley this is common practice among other EEC countries.
The good news about this is that even though we do not charge VAT we can still claim back VAT that we have paid out. If under the threshold and voluntarily registering for VAT you can claim VAT paid out either 6 months prior to registering or up to three years depending on the circumstance. - Check with the HMCE directly. (Hurrah!)
3.) Translations services are NOT considered as e-services. As explained by the person I spoke to, just because we communicate and receive and deliver work electronically does not classify us as an e-service. NOTE: UNLESS we do something LIVE online. I did not persue this further as I don't offer this service, but if you do this may not apply to you.
4.) And finally, on the HMCE website to register for VAT it asks for a business bank acount. If you are a sole trader a personal account will suffice.
PLEASE NOTE THAT YOU SHOULD CONTACT THE HMCE DIRECTLY ON THE NUMBER ABOVE. THESE REPSONSES ARE TO MY PARTICUKAR QUERIES AND YOU SHOULD SEEK THEIR DIRECT ADVICE. ALL CALLS ARE RECORDED AND THEY WILL SEND THROUGH ALL THE LITERATURE FOR YOU TO EXAMINE.
[Edited at 2005-05-03 10:48]
[Edited at 2005-05-03 10:49]
[Edited at 2005-05-03 10:50]
[Edited at 2005-05-03 11:40] ▲ Collapse
| | | | Kevin Harper
United Kingdom
Local time: 18:28
German to English
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| What's the difference? | May 3, 2005 |
If there is some item on your VAT return where you have to pay a surcharge for VAT-exempt services, then surely every single EU customer would be requiring VAT registration for their English translators. However, in my experience, this is not the case.
This is how I understand it:
Although a VAT-registered German agency will have physically to pay the VAT on a German supplier's invoice, they do not have to pay any VAT directly to an English supplier, regardless of wheth... See more If there is some item on your VAT return where you have to pay a surcharge for VAT-exempt services, then surely every single EU customer would be requiring VAT registration for their English translators. However, in my experience, this is not the case.
This is how I understand it:
Although a VAT-registered German agency will have physically to pay the VAT on a German supplier's invoice, they do not have to pay any VAT directly to an English supplier, regardless of whether that supplier is VAT registered or not. They can, of course, claim back the VAT they paid to the German supplier on their VAT return. Therefore if all three companies are charging a VAT-exclusive or VAT-exempt fee of €X.XX, then €X.XX is ultimately what the German agency pays in each case.
What is the difference that causes the German agency to pay more in any of the three cases?
If they then have to pay out VAT on services from EU suppliers (which is not how I understand the system in the UK), again, what is the difference whether the supplier is VAT registered or not. In both cases, the Germany agency would be paying €X.XX times the applicable VAT rate, wouldn't they?
Is there some confusion over not being able to reclaim VAT, without realising they haven't paid any in the first place? Or is there an assumption in some countries that prices quoted for business to business services include VAT? So, if UK VAT-exempt suppliers were registered, their invoices would be 17.5% less for services to other EU countries. But that is not the case. If and when I register for VAT, my VAT-INclusive rate will not be the same as my current VAT-exempt rate, that will be my VAT-EXclusive rate. There should not be an assumption that VAT-exempt supplies contain phantom VAT.
As far I understand things, the only difference would be my ability to reclaim VAT on goods and services provided to me in the UK, and my not having to pay VAT on goods and services provided to me (for my business) from other EU countries.
Or am I still missing something?
[Edited at 2005-05-03 13:01] ▲ Collapse
| | | | | No difference | May 3, 2005 |
That is exactly how I understand it.....!
| | | | Kevin Harper
United Kingdom
Local time: 18:28
German to English
+ ...
| VAT Registration for Non-Residents | May 3, 2005 |
http://www.hwca.com/publications/euvat210604.pdf
The following link from an accountancy firm seems to support the idea that VAT registration may be required in countries other than your home country.
I looked at the Dutch VAT site (following the link from Kay Fischer's articles in [...another site...]) and this also seems to be a possibility. However, at least in... See more http://www.hwca.com/publications/euvat210604.pdf
The following link from an accountancy firm seems to support the idea that VAT registration may be required in countries other than your home country.
I looked at the Dutch VAT site (following the link from Kay Fischer's articles in [...another site...]) and this also seems to be a possibility. However, at least in the Netherlands, there is an exception for subcontractors.
With any luck, I won't need to register where I've been trading to date. ▲ Collapse
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| You don't................... | May 3, 2005 |
Kevin Harper wrote:
With any luck, I won't need to register where I've been trading to date.
Kevin,
You don't.
I asked that very specific question to the HMCE when I called today.
Really your best bet is to call them directly, they answer straight away and answer all your questions. (I see that you're in the UK).
P.S. Following the information on the link your provided, you'd have to do this when you passed the threshold in EACH country.....but it is different for the category translators fall under.
Beth
[Edited at 2005-05-03 20:31]
[Edited at 2005-05-03 20:33]
| | | | Kevin Harper
United Kingdom
Local time: 18:28
German to English
+ ...
| | Accounting ease | May 4, 2005 |
Agreed that it all boils down to the same thing: whether you are VAT exempt or VAT registered, the foreign client will have to pay VAT, on your ex-VAT fees, directly to his tax office at his local rate.
My post was very confused in this respect.
I have never paid French VAT on the (extremely few) EC services I have purchased, preferring to pay the foreign VAT and write it off as a non-deductible loss, for one simple reason: it is an accounting nightmare. I only remember... See more Agreed that it all boils down to the same thing: whether you are VAT exempt or VAT registered, the foreign client will have to pay VAT, on your ex-VAT fees, directly to his tax office at his local rate.
My post was very confused in this respect.
I have never paid French VAT on the (extremely few) EC services I have purchased, preferring to pay the foreign VAT and write it off as a non-deductible loss, for one simple reason: it is an accounting nightmare. I only remembered this when looking at my own computerised VAT returns to see how it was managed.
In brief, my (French tax authority approved) accounting software does not cater for EC services!
It seems I have to create new templates and make about three different entries just to book a single payment for services to an EC subcontracter.
hmm. ▲ Collapse
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