| 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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Angela Rimmer wrote:
...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.
What the UK client is failing to appreciate is that whenever she buys something for her business in the UK, printer cartridges, paper, postage, pays her phone bill, internet, etc., she pays VAT on all those goods and services too and is unable to recover it as she is not VAT-registered.
Samuel's idea of invoicing the client x% less, the X corresponding to the rate of VAT, well, that still means that you are covering the fact that your client is not registered for VAT and reducing your invoice by a significant amount.
[Edited at 2018-12-18 14:06 GMT]
| | | | | Oops, but... | Dec 18, 2018 |
Thomas T. Frost wrote:
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.
You're right. But I also know there are situations where a customer the EU has to pay VAT in their own country on services provided by a supplier in a third country, so might this apply the other way around after Brexit, with OP's customers still having to pay UK VAT even if OP doesn't charge any?
| | | | | The other way is different | Dec 18, 2018 |
Chris S wrote: Thomas T. Frost wrote:
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. You're right. But I also know there are situations where a customer the EU has to pay VAT in their own country on services provided by a supplier in a third country
Correct. That's a different situation. The consumer is in the EU and consumes their services or goods in the EU. The third-country seller therefore has to collect VAT on behalf of the EU (the EU legislates for the entire world on this point) or, in the case of selling to a VAT-registered entity, verify the buyer's VAT number and use the reverse-VAT procedure.
As for tangible goods, the buyer pays VAT and duty as applicable, and subject to any minimum amounts, when receiving the goods.
Chris S wrote:
so might this apply the other way around after Brexit, with OP's customers still having to pay UK VAT even if OP doesn't charge any?
That will be up to the UK to decide, subject to any agreement they may sign with the EU. As we all know, the British government is making quite unparalleled progress in the Brexit question and is vigorously defending itself against any accusations of being nebulous.
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Thomas T. Frost wrote:
As we all know, the British government is making quite unparalleled progress in the Brexit question and is vigorously defending itself against any accusations of being nebulous.
It's not us, it's them!
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Samuel Murray 
Netherlands
Local time: 11:35
Member (2006)
English to Afrikaans
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| @Thomas and @Kaspars and @Nikki | Dec 18, 2018 |
Thomas T. Frost wrote: Samuel Murray wrote:
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.
I'll be happy to read any resources you have found on this. I may also have said this before, but I find no distinction between intellectual and non-intellectual services in the official Dutch tax guidelines (that's not to say that it isn't there).
I may also have mentioned this before, but Dutch tax law does treat "composers, authors (including translators), cartoonists and journalists" differently in that they do not (or can choose not to) charge VAT (regardless of who the client is or where the client is) (see here). However, this exception relates only to book translators (i.e. literary translators), not business-to-business translators. Do you know if other EU countries have a similar exception?
VAT is a tax on consumers in the EU. Hence, it makes no sense to charge VAT to anyone outside the EU.
However, this page says "The supply of services between businesses (B2B services) is in principle taxed at the customer's place of establishment, while services supplied to private individuals (B2C services) are taxed at the supplier's place of establishment" (although the document does mention some exceptions to that). It is not specifically said that VAT does not apply to clients outside the EU, but the fact that there is a paragraph detailling specific instances where non-EU clients do not have to pay VAT seems to imply that non-EU clients do sometimes have to pay VAT.
Kaspars Melkis wrote:
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?
Well, you have to ask "whom do I have to prove it to", and the answer it: you local tax department. So whenever you decide whether to treat a client as a business or a non-business, you just have to make sure you do it in a way that the tax auditor will agree with. You'd also have to decide in how much trouble you'd be if you misidentify someone -- will you get away with simply having to submit an updated tax return, or will you be subject to a hefty fine as well?
Nikki Scott-Despaigne wrote:
In France, even when we are not registered for VAT, we can still get a VIES intracommunity VAT number.
That sounds very odd. How sure are you about this? Too bad I don't speak French.
[Edited at 2018-12-18 13:01 GMT]
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Samuel Murray wrote: Nikki Scott-Despaigne wrote:
In France, even when we are not registered for VAT, we can still get a VIES intracommunity VAT number. That sounds very odd. How sure are you about this? Too bad I don't speak French.
Absolutely.
Two examples of French logic:
1) I'm not registered for VAT in France and for the clients I have outside France, various formalities require them to enter my VIES number. I simply contacted my tax office who gave me my VIES number.
2) Another example, that of the "casier judiciaire" (= criminal record) in France. Everyone in France can obtain a copy of his/her criminal record as a means of proving there is nothing on the record.
UK logic in the same situations:
1) If you are not registered for VAT in the UK, you do not have a VIES number, nor can you obtain one.
2) If you have not been found guilty of a crime, you will not have a criminal record. In the UK, it is not possible to obtain a criminal record with nothing on it. Having a criminal record means you have been found guilty of a crime.
These are everyday niggly details that show that harmonization has some way to go!
[Edited at 2018-12-18 14:44 GMT]
| | | | Kaspars Melkis
United Kingdom
Local time: 10:35
English to Latvian
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| Is it really true? | Dec 18, 2018 |
Nikki Scott-Despaigne wrote:
2) If you have not been found guilty of a crime, you will not have a criminal record. In the UK, it is not possible to obtain a criminal record with nothing on it. Having a criminal record means you have been found guilty of a crime.
I personally have the certificate about clean criminal record from Disclosure and Barring Service which is a form required by certain employers. It might not be exactly the same form as in other countries but basically it shows your criminal record with nothing on it.
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The DBS was introduced in 2012. When I applied for French nationality in 1992, there were over 50 police authorities and no nationally centralized file. It was theoretically possible for each of the authorities to be contacted and even then, the information would have been so insignificant to be of no use whatsoever. The DBS must make a number of administrative things easier nowadays! The French authorities accepted a letter confirming how the whole caboodle was organized and I had that translat... See more The DBS was introduced in 2012. When I applied for French nationality in 1992, there were over 50 police authorities and no nationally centralized file. It was theoretically possible for each of the authorities to be contacted and even then, the information would have been so insignificant to be of no use whatsoever. The DBS must make a number of administrative things easier nowadays! The French authorities accepted a letter confirming how the whole caboodle was organized and I had that translated for my application. So it's finally been sorted... just in time for Brexit. Great.
[Edited at 2018-12-18 14:50 GMT] ▲ Collapse
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Lidia Morejudo
United Kingdom
Local time: 10:35
English to Spanish
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| Criminal checks background in Uk | Nov 18, 2019 |
There has been criminal checks in the UK a lot longer than 2012. In 2012 they changed the name to DBS, which is what you are talking about, but the checking and barring system existed at least 10-15 years before that. Before 2012 it was called "CRB".
It is the same thing but with different name. I know, because I got my first one to do teaching training in 2007.
| | | | Tom in London
United Kingdom
Local time: 10:35
Member (2008)
Italian to English
| They have to pay | Nov 18, 2019 |
Eleanor Staniforth wrote:
..... My client says that as a sole trader, she shouldn't be required to pay VAT....
Anyone in the UK who is not registered for VAT has to pay it, no matter whence it comes. Whether they buy a computer, a pen, or a service such as the one discussed here, they have to pay the VAT - as Nikki said.
That's the downside of not being VAT-registered.
[Edited at 2019-11-18 16:58 GMT]
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