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Do I need a VAT number to invoice EU clients from the UK?
Persoa que publicou o fío: Diana Edmond

Maria S. Loose, LL.M.  Identity Verified
Belgium
Local time: 04:27
German to English
+ ...
Thank you Dec 13, 2016

Thank you Michael W., Michael B. and Diana for your extensive answers to my question. It's great to have a network of experienced translators to whom I can turn in cases of doubt. Upon reflection, the UK system seems to be great for freelancers, but how does it contribute to fighting VAT fraud? I know that this shouldn't be our concern as translators but still this question keeps haunting me. Under the reverse charge procedure it is the UK translator's foreign client who has to pay VAT to his/he... See more
Thank you Michael W., Michael B. and Diana for your extensive answers to my question. It's great to have a network of experienced translators to whom I can turn in cases of doubt. Upon reflection, the UK system seems to be great for freelancers, but how does it contribute to fighting VAT fraud? I know that this shouldn't be our concern as translators but still this question keeps haunting me. Under the reverse charge procedure it is the UK translator's foreign client who has to pay VAT to his/her foreign tax administration. If the client doesn't pay how would his/her national tax administration know that this transaction took place. Between all other EU Member States tax administrations exchange VAT data. But if UK based translators don't have to file the recapitulative statement mentioned in the 6th VAT Directive how would the UK administration know that a transaction took place and then pass this information on to the client's tax administration. Sorry to ask this question. I am fully aware of the fact that it goes far beyond the scope of a translators' forum.

[Edited at 2016-12-13 13:35 GMT]
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Annamaria Amik  Identity Verified
Local time: 05:27
Romanian to English
+ ...
Ask the tax administration? Dec 13, 2016

I'm not familiar with UK procedures, but shouldn't VAT be handled in the same way in the EU?
The term VAT number is a bit confusing, because it implies you're liable to pay VAT, although in some cases you don't actually pay, you just do paperwork.

Here in Romania, you need to get an EU VAT number before doing business with companies in other European Member States. This requirement is based on the EU Directive and relating Regulations, not just national laws.

It d
... See more
I'm not familiar with UK procedures, but shouldn't VAT be handled in the same way in the EU?
The term VAT number is a bit confusing, because it implies you're liable to pay VAT, although in some cases you don't actually pay, you just do paperwork.

Here in Romania, you need to get an EU VAT number before doing business with companies in other European Member States. This requirement is based on the EU Directive and relating Regulations, not just national laws.

It doesn't matter if you are liable to pay VAT in Romania:
- if you are a VAT payer in Romania [I suppose the same applies to any other MS], then your Romanian VAT number will be your EU VAT number, as well, in most cases
- if you are NOT a VAT payer in Romania, for various reasons, such as staying below the VAT registration threshold, you STILL need to apply for an EU VAT number if you want to do business with companies from other MS. In this case, you won't be paying any VAT, but your client will. In fact, your client will not pay any VAT either, only report the amount of VAT on paper, both as input (paid for goods you purchase) and output (charged by you) VAT.
A bit of an explanation: normally, a VAT payer declares output VAT, i.e. the VAT it charges on its own invoices, and input VAT, i.e. the VAT it pays to other suppliers who charge it - the difference will be the amount this VAT payer has to pay in to the budget.

Like Maria said, in the case of intra-EU transactions, this is probably for transparency reasons, as no VAT is actually paid by anyone.
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Dan Lucas  Identity Verified
United Kingdom
Local time: 03:27
Membro (2014)
Japanese to English
What is the greater good? Dec 13, 2016

Maria S. Loose, LL.M. wrote:
But if UK based translators don't have to file the recapitulative statement mentioned in the 6th VAT Directive how would the UK administration know that a transaction took place and then pass this information on to the client's tax administration.

I think it was Microsoft that (at least at one point) did not require its employees to provide proof when claiming expenses incurred on company business. Management's rationale was simple: they assumed that, without asking employees for proof of expenses, some employees would take advantage of the system and fraudulently claim some money every year. This would result in higher costs for the company. Let's call the total cost of this fraud "X".

At the same time management estimated the total cost of creating systems and diverting people and time to track whether expenses had really taken place - let's call this figure "Y". They found out that the expected cost of fraud X was significantly lower than the cost of preventing that fraud (Y), so on a simple cost-benefit analysis it didn't make economic sense to require proof of expenses.

Maybe the UK takes a similar approach and considers the likely harm caused by requiring (in effect) all businesses, even small ones, to track VAT to be much larger than the harm caused by fraud that is being perpetrated? I don't know, this is just speculation. But as others have said, the current UK environment makes life easier for honest small businessmen like us as well as fraudsters.

Dan


[Edited at 2016-12-13 14:13 GMT]


 

Michael Wetzel  Identity Verified
Germany
Local time: 04:27
German to English
What I perceive as the problem with the UK system Dec 14, 2016

As Dan, Tom and Michael have written, the UK way of doing things makes it very easy for small businesses to very efficiently comply with the VAT regulations. That is good.
The negative side of the UK way of doing things is that it makes it very difficult and inefficient for HMRC and foreign tax services depending on the HMRC's help to detect probable abuse and then to determine with certainty whether or not it has occurred. I guess they would have to almost randomly decide who to contact a
... See more
As Dan, Tom and Michael have written, the UK way of doing things makes it very easy for small businesses to very efficiently comply with the VAT regulations. That is good.
The negative side of the UK way of doing things is that it makes it very difficult and inefficient for HMRC and foreign tax services depending on the HMRC's help to detect probable abuse and then to determine with certainty whether or not it has occurred. I guess they would have to almost randomly decide who to contact and then audit their individual invoices.
That is bad unless, as Dan has suggested, it is simply not worth pursuing. More or less openly giving up on any kind of deterrent might work well with employees padding their income through a part-time job as abusers of expense accounts, but it seems like a problematic response to career criminals who make their living through fraud.
And it should not be forgotten that non-exempt businesses essentially get "paid" for this paperwork in the form of VAT refunds. Now, VAT-exempt businesses also get part of that VAT back, because they can claim it as a business expense, but that means more like 20 or 30% instead of 100%.

Like everyone else I'm speculating on the basis of preconceptions, but I am a genuine believer in the principle that the only thing worse than an unnecessary regulation is an unnecessary exception to an unnecessary regulation.
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Verity Hemp
United Kingdom
Local time: 03:27
Membro (2019)
Russian to English
+ ...
Thank you! Feb 5, 2019

I know that I am very late to this thread, but I would just like to thank everyone that contributed. Thanks to the information here I was able to inform a Spanish agency that I am starting work with that I don't need a VAT number and solve a problem which otherwise could have resulted in hours of research and contact with HMRC, or even erroneously applying for a VAT number!

Tom in London
Deborah do Carmo
 

danifagangma
United Kingdom
This worked for me! Register on the EORI inercommunity regitry via HMRC Apr 11, 2019

Hi there, just been through the same nightmare invoicing from UK with no VAT number, to Spanish clients. Insisting I need an EU VAT number.

I registered in 2 mins for EORI which is the intercommunity trading registry via HMRC basically, it gives you your number there and then, so easy!

https://www.gov.uk/eori

Hope this helps some of you that have found this thread in the sam
... See more
Hi there, just been through the same nightmare invoicing from UK with no VAT number, to Spanish clients. Insisting I need an EU VAT number.

I registered in 2 mins for EORI which is the intercommunity trading registry via HMRC basically, it gives you your number there and then, so easy!

https://www.gov.uk/eori

Hope this helps some of you that have found this thread in the same situation as I was in.

Dxx
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Michael Beijer  Identity Verified
United Kingdom
Local time: 03:27
Membro (2009)
Dutch to English
+ ...
Are you sure about this? Apr 11, 2019

danifagangma wrote:

Hi there, just been through the same nightmare invoicing from UK with no VAT number, to Spanish clients. Insisting I need an EU VAT number.

I registered in 2 mins for EORI which is the intercommunity trading registry via HMRC basically, it gives you your number there and then, so easy!

https://www.gov.uk/eori

Hope this helps some of you that have found this thread in the same situation as I was in.

Dxx


As far as I can tell, an EORI number is only for importing/exporting goods, not performing professional services.

Michael


Tom in London
 
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Do I need a VAT number to invoice EU clients from the UK?

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