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Fiscal residency certification?
Thread poster: MK2010

MK2010  Identity Verified
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Thanks for the read :) Sep 2, 2020

Tom in London wrote:

I think this whole thing is ridiculous. If I issue an invoice, isn't it ****ing obvious that my tax residency address (no matter where it is) is the address on the invoice, that the invoice is de facto a legally binding document, and that should any of the information on it turn out to be false, I could risk very severe legal penalties including incarceration?

How stupid would you have to be to think otherwise?

In my past (bitter) experience working in Italy (and I suspect Spain may be similar), there is an assumption that every bit of information you provide, such as your address, is in fact false, and you therefore have to prove that it isn't. This generates a potentially endless chain of bureaucracy, because in turn you then have to prove that any official document you may provide, proving that the information you gave is not false, is itself not false. I used to spend, on average, one week out of every four obtaining documents as backup for other documents which should have been completely unnecessary anyway.

I didn't really understand Kafka until I went to live in Italy. Now I'm back in the UK, a place where despite its many faults as compared to Italy, there is an assumption that you are acting honestly and in good faith in all your business transactions; the corollary being that if it turns out you're not, you will find the authorities coming down on you like a ton of bricks.

I miss many things about Italy but Italian bureaucracy is not one of them. In the end, that was what drove me away from Italy - with deep regret - because the bureaucracy made it impossible for me to continue living there. Native Italians have their own ways of dealing with their country's bureaucracy but for a non-Italian like me, with a name that stands out as "foreign", everything was much more difficult.

Thanks for reading. I feel better now



[Edited at 2020-09-02 09:36 GMT]


I always find it interesting to hear about things work in other countries, including bureaucracy. I wonder which one is the absolute worst in the world.


 

MK2010  Identity Verified
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Yes Sep 2, 2020

Dr. Matthias Schauen wrote:

This is probably about the flat tax for non-residents in Spain. It seems that you have to prove that you are tax-resident in a country with a double-taxation agreement with Spain. Otherwise the Spanish payer is supposed to withhold this 24% flat tax (19% if you are resident in an EU country).

https://home.kpmg/xx/en/home/insights/2011/12/spain-income-tax.html

It is interesting, though, that not all Spanish/Greek/Italian clients say they need this, just some of them. Maybe it depends on whether you understand payments for invoices to foreign clients as "income generated abroad" or not? What if a Spanish company ordered a surface design job for their offices from a foreign company (or a foreign freelancer)? Would they have to withhold any taxes on the invoice if the foreign company/freelancer did not provide a tax residency certificate?

Here are some past discussions on this topic:
https://www.proz.com/forum/translation_in_the_uk/288217-certificate_of_fiscal_residence_completing_form_for_freelancing_in_uk.html#2854204
https://www.proz.com/forum/business_issues/169328-statement_from_fiscal_authority_in_germany.html
https://www.proz.com/forum/business_issues/61970-is_a_certificate_of_financial_residence_mandatory_in_spain_for_foreign_vendors.html


[Edited at 2020-09-02 10:04 GMT]

[Edited at 2020-09-02 11:54 GMT]


Thank you, Dr. M, you are correct, that is the tax in question. And thanks for the links.


 

MK2010  Identity Verified
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True Sep 2, 2020

Christophe Delaunay wrote:

Philippe Etienne wrote:

the alternative to avoid bizarre documentation requests is to turn down any country having Mediterranean beaches.



You've just sum it up sooo well, Philippe!!


Too bad some the countries that have mastered the art of living can't say as much for their administrative procedures!

Thank you all for your answers.


Philippe Etienne
Tom in London
 

RobinB  Identity Verified
United States
Local time: 15:46
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EIN Sep 5, 2020

As Marina suggested, an EIN should be sufficient to document your status as a U.S. business taxpayer. And yes, it costs nothing. So if you can dig out your EIN, that should be sufficient, because they're only issued to registered business entities.

Are you doing business as a sole proprietor or DBA? If so, you may want to consider forming an LLC. I don't know which state you're located in, and the formation costs for LLCs vary widely. Here in Texas, for example, it's about $300 as
... See more
As Marina suggested, an EIN should be sufficient to document your status as a U.S. business taxpayer. And yes, it costs nothing. So if you can dig out your EIN, that should be sufficient, because they're only issued to registered business entities.

Are you doing business as a sole proprietor or DBA? If so, you may want to consider forming an LLC. I don't know which state you're located in, and the formation costs for LLCs vary widely. Here in Texas, for example, it's about $300 as a one-time payment, with no recurring annual fees. In California it's $800 or $900, with a recurring annual fee. But the point is that by doing business as a registered entity (even if it's pass-through for tax purposes, but that's an entirely internal matter for the IRS), you can avoid all the silly questions from "Club Med" agencies asking for you for tax residency certificates like this, in the same way that they wouldn't ask a software provider in the U.S. to provide them with this certificate before they get paid. Nobody needs a tax residency certificate for B2B transactions with U.S. companies, just their EIN.

Just a thought...
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MK2010  Identity Verified
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Agree Sep 5, 2020

Thank you for confirming that info, Robin. I'm going to follow that route (the EIN) and hope for the best! Not sure about the LCC yet, but I should probably look into it.

 
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