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Fiscal residency certification?
Thread poster: MK2010

MK2010  Identity Verified
United States
Local time: 15:52
Member (2017)
French to English
+ ...
Sep 1

I'm being asked to supply this to a client in Europe so they can prove to their tax authorities that I pay my taxes in the U.S. Problem is: it's 85 bucks per year, and you have to fill out a tax form and send it to the authorities and wait for them to send you back an official letter stating that you do in fact pay your taxes in the U.S.

In all my 10 years as a freelance translator, I have never had to do this. I've had to provide some sort of proof before, of course, which is norm
... See more
I'm being asked to supply this to a client in Europe so they can prove to their tax authorities that I pay my taxes in the U.S. Problem is: it's 85 bucks per year, and you have to fill out a tax form and send it to the authorities and wait for them to send you back an official letter stating that you do in fact pay your taxes in the U.S.

In all my 10 years as a freelance translator, I have never had to do this. I've had to provide some sort of proof before, of course, which is normal when working with international clients, but this seems a little extreme.

Anyone else ever had this experience, whether in the U.S. or in another non-EU country? In the U.S., it's IRS form 8802. Just reading the instructions takes time, which only makes the whole thing more irritating. And since this is a new client, I can't even be sure that the volume of work will be worth this ***yearly*** investment!


[Edited at 2020-09-01 20:42 GMT]
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Samuel Murray  Identity Verified
Netherlands
Local time: 15:52
Member (2006)
English to Afrikaans
+ ...
@MK Sep 1

MK2010 wrote:
I'm being asked to supply a fiscal residency certification to a client in Europe so they can prove to their tax authorities that I pay my taxes in the United States.


I'm guessing... Spain or Italy. Even fellow-EU citizens are officially required to prove fiscal residency to Spanish (and sometimes also to Italian) clients, although some Spanish and Italian clients' bookkeepers manage to get away with not requesting it. For me as a Netherlands resident, getting the required document is free.

Explain to the client that in your country, that document is not free, and ask them if they would accept some other form of proof, e.g. a copy of some of your tax return documents. Or, if this relates to VAT, if you're unsure how much work you're going to get from that client, simply tell the client to go ahead and deduct VAT from your payment (so you're essentially giving a 21-22% discount).

By the way, don't you mean form 6166?

[Edited at 2020-09-01 21:06 GMT]


Philippe Etienne
 

MK2010  Identity Verified
United States
Local time: 15:52
Member (2017)
French to English
+ ...
TOPIC STARTER
Bingo Sep 1

Samuel Murray wrote:

MK2010 wrote:
I'm being asked to supply a fiscal residency certification to a client in Europe so they can prove to their tax authorities that I pay my taxes in the United States.


I'm guessing... Spain or Italy. Even fellow-EU citizens are officially required to prove fiscal residency to Spanish (and sometimes also to Italian) clients, although some Spanish and Italian clients' bookkeepers manage to get away with not requesting it. For me as a Netherlands resident, getting the required document is free.

Explain to the client that in your country, that document is not free, and ask them if they would accept some other form of proof, e.g. a copy of some of your tax return documents. Or, if this relates to VAT, if you're unsure how much work you're going to get from that client, simply tell the client to go ahead and deduct VAT from your payment (so you're essentially giving a 21-22% discount).

By the way, don't you mean form 6166?

[Edited at 2020-09-01 21:06 GMT]


You guessed right, it's Spain I already sent them another form, but upon re-reading their guidelines, they say the Spanish tax authorities insist on that form and won't accept any other. They also say the VAT rate would be 24%... That ain't nothin.'

From what I gather, the form you fill out is 8802 and the letter they send you is considered Form 6166.


 

Lynn Fang  Identity Verified
Taiwan
Local time: 22:52
Member (2012)
English to Chinese
my experience Sep 2

The document is free in my country. But I have to travel to the city for it. I live in a remote area.
Then I took the test in early June.
40+ days later I received the end client's feedback via the agency saying "Excellent - good translation, good language, compliance with technical rules..."
Now it's almost 2 months, I do not see any jobs from that agency.
Not a really bad experience.


 

Emilija Ivanovska  Identity Verified
United States
Local time: 10:52
Member (2005)
English to Macedonian
+ ...
Same... Sep 2

I just applied for one two weeks ago. For an agency in Spain. At first they agreed to W9 form, but as the volume increased and payment amounts got higher, they insisted on the fiscal residency certificate. I guess there is no way around it.

 

LIZ LI  Identity Verified
China
Local time: 22:52
Member (2008)
French to Chinese
+ ...
France as well Sep 2

About 10 years ago, I was asked by a French publishing house to provide proofs of Non-EU fiscal residency.
So I went directly to the local tax bureau, you know, it was before 2010 and things were done face-to-face, off line.
The compliance department checked out that France had signed double tax treaty with mainland China, so they just gave me what I wanted, within less that 15 mins.
The certificat was made in Chinese, of course, so I had to translate it into French by myself.
... See more
About 10 years ago, I was asked by a French publishing house to provide proofs of Non-EU fiscal residency.
So I went directly to the local tax bureau, you know, it was before 2010 and things were done face-to-face, off line.
The compliance department checked out that France had signed double tax treaty with mainland China, so they just gave me what I wanted, within less that 15 mins.
The certificat was made in Chinese, of course, so I had to translate it into French by myself.
And months later, I received their payment in full, without tax.
It was not a difficult procedure to follow, but I'm a bit surprised that you have to pay for such certification.
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MK2010  Identity Verified
United States
Local time: 15:52
Member (2017)
French to English
+ ...
TOPIC STARTER
I tried the W9 too Sep 2

Emilija Ivanovska wrote:

I just applied for one two weeks ago. For an agency in Spain. At first they agreed to W9 form, but as the volume increased and payment amounts got higher, they insisted on the fiscal residency certificate. I guess there is no way around it.


But I don't think it will be enough. The first job looks to be a big one, so maybe it'll be worth it. Especially if it translates into regular gigs.

Looks like a lot of you have had to do it, only for free. Good for you + thanks for pitching in.


 

Tom in London
United Kingdom
Local time: 14:52
Member (2008)
Italian to English
Ridiculous Sep 2

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 su
... See more
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]
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Kaspars Melkis
Philippe Etienne
Chris S
Christophe Delaunay
Philip Lees
 

Lorena Croci  Identity Verified
Italy
Local time: 15:52
Member (2014)
English to Italian
Greece Sep 2

I have received the same request from a Greek client. Fortunately, in Italy this certificate costs only 3,10 €, but it is very time expensive to get.

Most of all, they told me they needed it after I completed the task, which was kind of 15 €. If I knew that before, I'd never accepted that task, it was not worth doing.


 

Philippe Etienne  Identity Verified
Spain
Local time: 15:52
Member
English to French
Lies Sep 2

MK2010 wrote:
...They also say the VAT rate would be 24%...

Spain VAT rate was 16% before the 2008 crisis, then went up to 18% for a short while, and has been set to 21% for some years now.

A statement of official registration as a business in the US should be enough.
Paperwork is a way of life in some countries, and they might require too much because they don't exactly know what they need. Especially if the accounting department is on holiday. Or they're in bad terms with the tax controller in their area...
But it's not because you're from the US. I was required to provide this type of proof with a multinational with offices in Spain. I sent the request to my accountant, and they dealt with it. I don't want to waste time with this. I learned since that I can get a fiscal residency certificate from the internet in 1 minute, both in Spanish and English, for free, as may times as I want.

Do not hesitate to fight back claiming that it worked perfectly with other Spanish companies, even if it's not true. There are limits to the time and money you're prepared to invest to match requirements for a prospective client with hypothetical work, and which will never show you their payment records or profit returns.

Anyway, if they're rigid with paperwork to the point that any common-sense document is not enough, imagine how they will handle their translation projects.

Philippe

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

[Edited at 2020-09-02 09:30 GMT]


Tom in London
Christophe Delaunay
 

Dr. Matthias Schauen  Identity Verified
Germany
Local time: 15:52
Member (2007)
English to German
Not VAT Sep 2

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... See more
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]
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Philippe Etienne
 

Marina Steinbach
United States
Local time: 10:52
Member (2011)
English to German
Hi MK2010! Sep 2

MK2010 wrote:

I'm being asked to supply this to a client in Europe so they can prove to their tax authorities that I pay my taxes in the U.S.


I am not sure if this information applies to you, but I asked the IRS to assign me an Employer Identification Number back in 2011. This EIN will identify you, your business accounts, tax returns, and documents, even if you have no employees. The EIN is also helpful if you don't want to give someone your Social Security number.

Problem is: it's 85 bucks per year, and (...) I can't even be sure that the volume of work will be worth this ***yearly*** investment!


I didn't have to pay anything for this service.


 

Christophe Delaunay  Identity Verified
France
Local time: 15:52
Member (2011)
Spanish to French
+ ...
That is actually the key to a heachache-free business Sep 2

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!!


Tom in London
 

MK2010  Identity Verified
United States
Local time: 15:52
Member (2017)
French to English
+ ...
TOPIC STARTER
Which form? Sep 2

Marina Steinbach wrote:

MK2010 wrote:

I'm being asked to supply this to a client in Europe so they can prove to their tax authorities that I pay my taxes in the U.S.


I am not sure if this information applies to you, but I asked the IRS to assign me an Employer Identification Number back in 2011. This EIN will identify you, your business accounts, tax returns, and documents, even if you have no employees. The EIN is also helpful if you don't want to give someone your Social Security number.

Problem is: it's 85 bucks per year, and (...) I can't even be sure that the volume of work will be worth this ***yearly*** investment!


I didn't have to pay anything for this service.


Hi Marina,

Thanks for the info. I believe I have an EIN somewhere. What do you mean though when you say you didn't have to pay? For the EIN or for the Fiscal Residency certification? Thanks.


 

MK2010  Identity Verified
United States
Local time: 15:52
Member (2017)
French to English
+ ...
TOPIC STARTER
Not VAT Sep 2

Philippe Etienne wrote:

MK2010 wrote:
...They also say the VAT rate would be 24%...

Spain VAT rate was 16% before the 2008 crisis, then went up to 18% for a short while, and has been set to 21% for some years now.

A statement of official registration as a business in the US should be enough.
Paperwork is a way of life in some countries, and they might require too much because they don't exactly know what they need. Especially if the accounting department is on holiday. Or they're in bad terms with the tax controller in their area...
But it's not because you're from the US. I was required to provide this type of proof with a multinational with offices in Spain. I sent the request to my accountant, and they dealt with it. I don't want to waste time with this. I learned since that I can get a fiscal residency certificate from the internet in 1 minute, both in Spanish and English, for free, as may times as I want.

Do not hesitate to fight back claiming that it worked perfectly with other Spanish companies, even if it's not true. There are limits to the time and money you're prepared to invest to match requirements for a prospective client with hypothetical work, and which will never show you their payment records or profit returns.

Anyway, if they're rigid with paperwork to the point that any common-sense document is not enough, imagine how they will handle their translation projects.

Philippe

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

[Edited at 2020-09-02 09:30 GMT]


My bad, I was going off VAT from another post. I don't know what tax it is, but it's 24%.


Philippe Etienne
 
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