| Pages in topic: [1 2] > | Is there any way to avoid charging VAT on an invoice to a client in UK not registered for EU VAT? Thread poster: Eleanor Staniforth
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Hi all,
I am registered as self-employed in Spain and am also on the VIES. I need to invoice a client who is self-employed in the UK but who is not on the VIES as the threshold for VAT registration in the UK is quite high (there is no such threshold in Spain). As far as I understand, Spanish tax law (and possibly that of other European countries) states that if either the client or translator do not have an EU VAT number, then VAT must be charged. My client says that as a sole trade... See more Hi all,
I am registered as self-employed in Spain and am also on the VIES. I need to invoice a client who is self-employed in the UK but who is not on the VIES as the threshold for VAT registration in the UK is quite high (there is no such threshold in Spain). As far as I understand, Spanish tax law (and possibly that of other European countries) states that if either the client or translator do not have an EU VAT number, then VAT must be charged. My client says that as a sole trader, she shouldn't be required to pay VAT. Does anyone have any experience with invoicing clients in the UK who are not VAT registered (from Europe)? Or can any freelance translators located in the UK who outsource work to translators elsewhere in Europe cast some light on this?
Thanks in advance!
Eleanor ▲ Collapse
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Yes she has to pay VAT.
Being a sole trader has no bearing on whether you pay VAT.
| | | | | UK VAT number | Dec 17, 2018 |
As far as I know, the self-employed person in the UK would have to request a VAT number for such purposes even if they don't have to charge VAT.
I have to report VAT numbers and amounts annually to the German tax authorities for all reverse-VAT billing in the EU, and I have to verify all such VAT numbers in the VIES system and request a printed confirmation (they still use paper in Germany). If I could not justify any VAT number for such a client, I would just end up having to pay t... See more As far as I know, the self-employed person in the UK would have to request a VAT number for such purposes even if they don't have to charge VAT.
I have to report VAT numbers and amounts annually to the German tax authorities for all reverse-VAT billing in the EU, and I have to verify all such VAT numbers in the VIES system and request a printed confirmation (they still use paper in Germany). If I could not justify any VAT number for such a client, I would just end up having to pay the German VAT myself.
The instructions from my accountant is that if a business in another EU Member State cannot provide a VAT number, I have to add German VAT.
My impression is that the Spanish authorities are no less strict.
What I don't understand is that when such self-employed persons decide not to register for VAT, they know very well, or should know, that they cannot get any VAT back paid on expenses, so why do some of them expect VAT-free services from other Member States? They have to pay UK VAT on everything they buy in the UK. It's as if they want to have their cake and eat it. ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 15:23
Member (2008)
Italian to English
| Chris is correct | Dec 17, 2018 |
Chris S wrote:
Yes she has to pay VAT.
Being a sole trader has no bearing on whether you pay VAT.
Chris is right. I am a sole trader in the UK and I am not registered for VAT.
When I buy anything - a material good or a service - I have to pay the VAT on it and I can't claim it back. That's the down side of not being VAT-registered.
So, Eleanor, your client in the UK has to pay the VAT. If she doesn't understand that she shouldn't be running a business !
End of story.
[Edited at 2018-12-17 20:13 GMT]
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The only way I see to avoid charging VAT to a client in the UK is to wait patiently for the Brexit mess to be over…
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Teresa Borges wrote:
The only way I see to avoid charging VAT to a client in the UK is to wait patiently for the Brexit mess to be over…
Edited to remove incorrect advice
[Edited at 2018-12-18 09:37 GMT]
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Teresa Borges wrote:
The only way I see to avoid charging VAT to a client in the UK is to wait patiently for the Brexit mess to be over…
Yes, I thought the same thing! It would be the only advantage of the whole mess, that it would make invoicing simpler...
| | | | | Not in Spain | Dec 17, 2018 |
Chris S wrote: Teresa Borges wrote:
The only way I see to avoid charging VAT to a client in the UK is to wait patiently for the Brexit mess to be over… You’ll still have to charge her VAT even then. Whether or not she’s in the EU is neither here nor there.
In Spain we don't have to charge VAT to any clients outside the EU, whether they're private individuals or companies. Is this not the same elsewhere?
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| No VAT for third countries | Dec 17, 2018 |
Chris S wrote: Teresa Borges wrote:
The only way I see to avoid charging VAT to a client in the UK is to wait patiently for the Brexit mess to be over… You’ll still have to charge her VAT even then. Whether or not she’s in the EU is neither here nor there.
No, you're wrong there. VAT is only due if the client is based in the EU's VAT area. Anybody outside, whether an individual or a company, does not pay VAT.
| | | | Samuel Murray 
Netherlands
Local time: 16:23
Member (2006)
English to Afrikaans
+ ...
| @Eleanor, Thomas and Eleanor | Dec 17, 2018 |
Eleanor Staniforth wrote:
In Spain we don't have to charge VAT to any clients outside the EU, whether they're private individuals or companies. Is this not the same elsewhere?
Thomas T. Frost wrote:
VAT is only due if the client is based in the EU's VAT area. Anybody outside, whether an individual or a company, does not pay VAT.
It's different in the Netherlands, at least. As a Dutch tax resident, 1) I have to charge VAT to (a) any non-business outside the EU, (b) any business or non-business inside the EU who is not registered for VAT, and (c) any business or individual in the Netherlands, regardless of whether they are registered for VAT; 2) I don't charge VAT to businesses outside the EU; and 3) I "shift" VAT to businesses or individuals within the EU (but outside the Netherlands) who are registered for VAT. This means that 1) currently, I charge VAT to businesses and individuals in the UK who are not registered for VAT, and I "shift" VAT for businesses and individuals in the UK who are registered for VAT; but 2) after Brexit, I would charge no VAT to businesses in the UK (regardless of whether they're registered for VAT in the UK), and I would charge VAT to individuals in the UK.
Eleanor Staniforth wrote:
My client says that as a sole trader, she shouldn't be required to pay VAT.
I agree with the other repliers here: she has to pay VAT. However, if you're really really keen on keeping this client happy, you could choose to absorb the VAT yourself, by reducing the invoice amount and adding fake VAT to it, so that the grand total is the original total. In other words, if the quoted amount is €1000, then instead of charging €1000 + €210 (i.e. 21% VAT), you can choose to charge €826.45 + €173.55 (i.e. 21% VAT). However, as you can see, this quickly gets expensive with higher amounts.
It is also good practice to mention the "VAT inclusive" final amount in any estimate or quotation for anyone who would have to pay VAT, because the VAT could come as a surprise to people who are not used to paying VAT extra.
[Edited at 2018-12-17 22:10 GMT]
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Silly question from the back of the class here. I suppose you are asking this question because you are VAT registered. Is that the case? (In France, even when we are not registered for VAT, we can still get a VIES intracommunity VAT number). The perhaps not so silly point I wish to make is that if you are not registered for VAT then you won't charge it anyway.
Sorry to sound silly but the question has been asked before by someone who was not registered for VAT. ... See more Silly question from the back of the class here. I suppose you are asking this question because you are VAT registered. Is that the case? (In France, even when we are not registered for VAT, we can still get a VIES intracommunity VAT number). The perhaps not so silly point I wish to make is that if you are not registered for VAT then you won't charge it anyway.
Sorry to sound silly but the question has been asked before by someone who was not registered for VAT. ▲ Collapse
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Nikki Scott-Despaigne wrote: Silly question from the back of the class here. I suppose you are asking this question because you are VAT registered. Is that the case? (In France, even when we are not registered for VAT, we can still get a VIES intracommunity VAT number). The perhaps not so silly point I wish to make is that if you are not registered for VAT then you won't charge it anyway. Sorry to sound silly but the question has been asked before by someone who was not registered for VAT.
Yes, I am registered. Unfortunately in Spain you're registered automatically to collect VAT as soon as you register as self-employed, regardless of income or any other considerations. It makes things rather complicated with tons of different declarations on sometimes piddling amounts. The thing which is optional is registering on the VIES, although obviously this is necessary if you have to collect VAT...
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Samuel Murray wrote:
It's different in the Netherlands, at least. As a Dutch tax resident, 1) I have to charge VAT to (a) any non-business outside the EU
I believe you've said this before. According to what I'd previously found, there is general agreement in tax circles in the EU that translation falls in the category of 'intellectual' services for which the place of supply is where the buyer is based and that no VAT is therefore due if the buyer is based in a third country.
As the EU's VAT Directive is common for all of the EU, my best assessment is that the Netherlands is infringing the EU's VAT Directive on this point, but someone would have to take the Netherlands to court to get it changed.
VAT is a tax on consumers in the EU. Hence, it makes no sense to charge VAT to anyone outside the EU. But some countries just can't collect enough tax, and I'm not just referring to the Netherlands.
| | | | Angela Malik
United Kingdom
Local time: 15:23
German to English
+ ...
| Your client's confusion... | Dec 18, 2018 |
...comes from the fact that the VAT threshold in the UK is extremely high. She doesn't have to register for VAT in the UK until her business's annual turnover reaches something like £85,000. Which means that unless she registers voluntarily, she can't charge VAT to her customers no matter where they are located.
But she still has to pay VAT, as far as I'm aware, on goods and services she buys from other EU states.
And unfortunately for her, I don't think there is a mec... See more ...comes from the fact that the VAT threshold in the UK is extremely high. She doesn't have to register for VAT in the UK until her business's annual turnover reaches something like £85,000. Which means that unless she registers voluntarily, she can't charge VAT to her customers no matter where they are located.
But she still has to pay VAT, as far as I'm aware, on goods and services she buys from other EU states.
And unfortunately for her, I don't think there is a mechanism in the UK for getting a VIES number without just registering for VAT. ▲ Collapse
| | | | Kaspars Melkis
United Kingdom
Local time: 15:23
English to Latvian
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| this can be complicated | Dec 18, 2018 |
Thomas T. Frost wrote:
VAT is a tax on consumers in the EU. Hence, it makes no sense to charge VAT to anyone outside the EU. But some countries just can't collect enough tax, and I'm not just referring to the Netherlands.
Indeed, but even disregarding the legality of it, I was thinking about the problem of distinguishing business from non-business outside EU. A sole trader is definitely a business (one person business). In some countries one can start working as a self-employed and register later. How would you actually prove that the person is a business?
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