Invoicing companies based in Spanish and working with suppliers based in Spain - sole trader UK
Thread poster: Nicholas Isard
Nicholas Isard
Nicholas Isard  Identity Verified
Spain
Local time: 14:25
Member (2020)
Spanish to English
+ ...
Mar 13, 2021

Hi,

So I am planning on moving back to the UK. I currently live in Spain. I work with Spanish companies and outsource work to suppliers based in Spain and a few others EU countries. My understanding is that I won't have to apply VAT on my invoices to my clients, however where I'm really confused is what will happen with the suppliers I work with in the EU. Will anything change? My understanding is that it won't as they will be B2B transactions. Is that right? Will the suppliers have
... See more
Hi,

So I am planning on moving back to the UK. I currently live in Spain. I work with Spanish companies and outsource work to suppliers based in Spain and a few others EU countries. My understanding is that I won't have to apply VAT on my invoices to my clients, however where I'm really confused is what will happen with the suppliers I work with in the EU. Will anything change? My understanding is that it won't as they will be B2B transactions. Is that right? Will the suppliers have to be VAT registered? Will I have to be VAT registered?

Thanks,
Nick
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Tom in London
Tom in London
United Kingdom
Local time: 13:25
Member (2008)
Italian to English
so? Mar 13, 2021

Nicholas Isard wrote:

Hi,

So I am planning on moving back to the UK. I currently live in Spain. I work with Spanish companies and outsource work to suppliers based in Spain and a few others EU countries. My understanding is that I won't have to apply VAT on my invoices to my clients, however where I'm really confused is what will happen with the suppliers I work with in the EU. Will anything change? My understanding is that it won't as they will be B2B transactions. Is that right? Will the suppliers have to be VAT registered? Will I have to be VAT registered?

Thanks,
Nick


There seems to be something missing from the beginning of your post (which begins with the consequential "so") but never mind, your question is understandable.

Stop worrying, because in returning to the UK you will find yourself in a very straightforward, clearly explained tax system.

The essential facts are:

Once you become resident in the UK for tax purposes, it doesn't matter who you work with or where they are; the only tax authority to which you are responsible is HMRC and with HMRC you don't have to register for VAT (unless you want to) unless you expect your annual turnover to exceed £85,000.

Assuming you choose NOT to be VAT registered, you will invoice your suppliers as you would invoice anyone else. Whether or not they are VAT registered is no concern of yours. You should not attempt to comply with the tax requirements of any other country, including Spain.

(Depending on how long you have been living there you may have accumulated pension entitlements. Do not sniff at these; in years to come, you may be glad of them. If so, any Spanish pension income would be declared to HMRC as Foreign Income.)

There is very little point for a sole trader working as a translator in the UK to be VAT-registered, since there are very few VAT-liable things you can purchase that are tax-deductible. The only exceptions would be the occasional big-ticket items such as a computer, office chair, etc.

But in general, in my opinion being VAT-registered as a translator in the UK is more hassle than it's worth because the only tax-deductible things you will be purchasing will be small items like paper, printer cartridges, etc. However you can change from being non-VAT registered to VAT-registered any time you like.

If you are able to do your own bookkeeping and make sure all your paperwork is in order should the taxman ever want to come and check, you may not even need an accountant. Your invoices (by the way) should of course be in English although if you wish you can make them bilingual (although the English version is the one that counts).

The first thing you'll need to do is this:

https://www.gov.uk/set-up-sole-trader

And apply for a National Insurance number unless you already had one before you went to Spain.

Everything else is explained, clearly and straightforwardly, on the other parts of the same website. Perhaps having lived in Spain, you had forgotten how simple these things are in the UK



[Edited at 2021-03-13 21:27 GMT]


Nicholas Isard
Josephine Cassar
 
Nicholas Isard
Nicholas Isard  Identity Verified
Spain
Local time: 14:25
Member (2020)
Spanish to English
+ ...
TOPIC STARTER
B2C Mar 14, 2021

Hi Tom,

Thanks for taking the time to reply. Am I right in thinking that the only change is in B2C transactions then? My understanding is that a UK-based sole trader wanting to sell his/her services to a consumer based in the EU would have to register for VAT in the consumer's country.

Best,
Nick

Tom in London wrote:

Nicholas Isard wrote:

Hi,

So I am planning on moving back to the UK. I currently live in Spain. I work with Spanish companies and outsource work to suppliers based in Spain and a few others EU countries. My understanding is that I won't have to apply VAT on my invoices to my clients, however where I'm really confused is what will happen with the suppliers I work with in the EU. Will anything change? My understanding is that it won't as they will be B2B transactions. Is that right? Will the suppliers have to be VAT registered? Will I have to be VAT registered?

Thanks,
Nick


There seems to be something missing from the beginning of your post (which begins with the consequential "so") but never mind, your question is understandable.

Stop worrying, because in returning to the UK you will find yourself in a very straightforward, clearly explained tax system.

The essential facts are:

Once you become resident in the UK for tax purposes, it doesn't matter who you work with or where they are; the only tax authority to which you are responsible is HMRC and with HMRC you don't have to register for VAT (unless you want to) unless you expect your annual turnover to exceed £85,000.

Assuming you choose NOT to be VAT registered, you will invoice your suppliers as you would invoice anyone else. Whether or not they are VAT registered is no concern of yours. You should not attempt to comply with the tax requirements of any other country, including Spain.

(Depending on how long you have been living there you may have accumulated pension entitlements. Do not sniff at these; in years to come, you may be glad of them. If so, any Spanish pension income would be declared to HMRC as Foreign Income.)

There is very little point for a sole trader working as a translator in the UK to be VAT-registered, since there are very few VAT-liable things you can purchase that are tax-deductible. The only exceptions would be the occasional big-ticket items such as a computer, office chair, etc.

But in general, in my opinion being VAT-registered as a translator in the UK is more hassle than it's worth because the only tax-deductible things you will be purchasing will be small items like paper, printer cartridges, etc. However you can change from being non-VAT registered to VAT-registered any time you like.

If you are able to do your own bookkeeping and make sure all your paperwork is in order should the taxman ever want to come and check, you may not even need an accountant. Your invoices (by the way) should of course be in English although if you wish you can make them bilingual (although the English version is the one that counts).

The first thing you'll need to do is this:

https://www.gov.uk/set-up-sole-trader

And apply for a National Insurance number unless you already had one before you went to Spain.

Everything else is explained, clearly and straightforwardly, on the other parts of the same website. Perhaps having lived in Spain, you had forgotten how simple these things are in the UK



[Edited at 2021-03-13 21:27 GMT]


 
Christopher Schröder
Christopher Schröder
United Kingdom
Member (2011)
Swedish to English
+ ...
VAT Mar 14, 2021

So I work in the UK for business clients in the EU, EEA and beyond, and yes you treat them all exactly the same (no VAT).

I’m also VAT-registered. I think it’s a no-brainer (unless you work B2C). It will earn you far more than you possibly could translating. 15 minutes of paperwork per quarter to save 15% (soon to be more) on almost all of your business expenses.

Not just PC and chair and paper and toner (although that would still be worthwhile) but broadband, mobil
... See more
So I work in the UK for business clients in the EU, EEA and beyond, and yes you treat them all exactly the same (no VAT).

I’m also VAT-registered. I think it’s a no-brainer (unless you work B2C). It will earn you far more than you possibly could translating. 15 minutes of paperwork per quarter to save 15% (soon to be more) on almost all of your business expenses.

Not just PC and chair and paper and toner (although that would still be worthwhile) but broadband, mobile, accountant, software, PC guy/gal if you need one, subscriptions, memberships, electricity, heating, etc, etc.

Plus, as you’re dealing with Spain, you get that all-important VAT number that will avoid the seemingly endless hassles faced by non-VAT-registered freelancers that you will find documented at length in countless other threads on here.

PS Our posts crossed. No idea about B2C. Wait for Robin to come along. He knows everything about VAT. Not all others here do.

PPS I missed the bit about your subcontracting. Also wait for Robin.

[Edited at 2021-03-14 08:05 GMT]
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Maria Teresa Borges de Almeida
Dan Lucas
 
Tom in London
Tom in London
United Kingdom
Local time: 13:25
Member (2008)
Italian to English
No Mar 14, 2021

Nicholas Isard wrote:

My understanding is that a UK-based sole trader wanting to sell his/her services to a consumer based in the EU would have to register for VAT in the consumer's country.



No. Your understanding is not correct. If you are resident in the UK for tax purposes you should not be registered for any tax purpose (including VAT) in any other jurisdiction.

That said, discussions regularly come up in these forums about the strange requirements postulated by some badly-informed Spanish accountants, who appear to believe that people not resident in Spain, and not working in Spain, are somehow required to register for Spanish VAT, and comply with Spanish VAT regulations, every time they work for a Spanish customer.

That is manifestly not correct. If it were, then every country in the EU would have the same requirement, leading to bureaucratic nightmares. Every service provider (e.g., a translator) would have to be registered for VAT in every country where they have clients. In my case, for example, I would have to be VAT registered in Italy, France, Germany, Spain, Belgium, and the Netherlands. What fun I could have keeping up to date with my bookkeeping and VAT returns, in all the different languages!

My invoices always state clearly that in compliance with UK tax regulations, I am *not* VAT-registered. This has never been raised by anyone as an issue (including in Spain).

But if your Spanish clients know you are VAT-registered in the UK, this is liable to cause endless confusion in their minds. For that reason alone, I would advise against becoming registered for VAT, at least initially. Then at a later stage, when everything has settled down and you have established a modus operandi with your Spanish clients, you can register for VAT if you think it's worth your while.

It's important for you to get clarity about this because as I understand it, most of your present and future clients will be in Spain. For that reason I think it would be prudent, before you begin trading, to consult a UK (not a Spanish) accountant; none of us here are tax experts and the opinions we offer are only for guidance.


 
Michele Fauble
Michele Fauble  Identity Verified
United States
Local time: 06:25
Member (2006)
Norwegian to English
+ ...
It’s time you learned this Mar 14, 2021

Tom in London wrote:

There seems to be something missing from the beginning of your post (which begins with the consequential "so") ...


That’s not the consequential “so”, it’s the incipient use of the discourse marker “so”.


 
Nicholas Isard
Nicholas Isard  Identity Verified
Spain
Local time: 14:25
Member (2020)
Spanish to English
+ ...
TOPIC STARTER
Information from ITI Mar 15, 2021

Are you sure, Tom? This is the information published by ITI:

B2C sales from the UK to the EU

Rules for Business-to-Consumer sales from a UK business supplier direct to an EU consumer have changed as translation and interpreting services now come under special rules for professional services treated as supplies.

According to the ‘Special Rule’, VAT must be charged in the country of the consumer.

Note that these B2C rules also apply when sell
... See more
Are you sure, Tom? This is the information published by ITI:

B2C sales from the UK to the EU

Rules for Business-to-Consumer sales from a UK business supplier direct to an EU consumer have changed as translation and interpreting services now come under special rules for professional services treated as supplies.

According to the ‘Special Rule’, VAT must be charged in the country of the consumer.

Note that these B2C rules also apply when selling services to a non-VAT-registered company, not just individual consumers.

If your business is VAT registered in the UK

B2C sales from a UK VAT-registered business to an EU private client consumer or non-VAT-registered company:
- Out of scope of UK VAT for the supplier (UK business)
- Supplier (UK business) liable to register for and pay VAT in the consumer’s EU member state

If your business is not VAT registered in the UK

B2C sales from a UK non-VAT-registered business to an EU private client consumer or non-VAT-registered company:
- No VAT implications for the supplier (UK business) in the UK
- Supplier (UK business) liable to register for and pay VAT in the consumer’s EU member state
- In order for the supplier (UK business) to get an EU VAT registration, it is likely to have to make a UK voluntary VAT registration
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Dan Lucas
Dan Lucas  Identity Verified
United Kingdom
Local time: 13:25
Member (2014)
Japanese to English
VAT Mar 15, 2021

Chris S wrote:
I’m also VAT-registered. I think it’s a no-brainer (unless you work B2C). It will earn you far more than you possibly could translating. 15 minutes of paperwork per quarter to save 15% (soon to be more) on almost all of your business expenses.

Could not agree more. And these days there's no paper involved.

Dan


 
Tom in London
Tom in London
United Kingdom
Local time: 13:25
Member (2008)
Italian to English
£150 Mar 15, 2021

Dan Lucas wrote:

Chris S wrote:
I’m also VAT-registered. I think it’s a no-brainer (unless you work B2C). It will earn you far more than you possibly could translating. 15 minutes of paperwork per quarter to save 15% (soon to be more) on almost all of your business expenses.

Could not agree more. And these days there's no paper involved.

Dan


My business expenses, only a small proportion of which are VAT-applicable, come to about £150/month. The extra admin work, time, bookkeeping and payments involved in being VAT-registered for those few £ would just not be worth it.


 
Dan Lucas
Dan Lucas  Identity Verified
United Kingdom
Local time: 13:25
Member (2014)
Japanese to English
Fair point Mar 15, 2021

Tom in London wrote:
My business expenses, only a small proportion of which are VAT-applicable, come to about £150/month. The extra admin work, time, bookkeeping and payments involved in being VAT-registered for those few £ would just not be worth it.

Tom, that is an entirely reasonable attitude. in my case I reclaim VAT on my accountant's monthly services, some web software for which I pay a monthly fee, my phone service, stationery, toner, IT bits and pieces, and so on. Typically I make back £100-£200 a quarter. My hearty "could not agree more" to Chris should be seen in that context. I do accept that it doesn't make sense for everybody.

The other issue is that if your revenues are around / over the VAT threshold, you might as well just register in any case.

Regards
Dan


Christopher Schröder
 
Christopher Schröder
Christopher Schröder
United Kingdom
Member (2011)
Swedish to English
+ ...
Sums Mar 15, 2021

Dan Lucas wrote:
Typically I make back £100-£200 a quarter. My hearty "could not agree more" to Chris should be seen in that context. I do accept that it doesn't make sense for everybody.


A glance at my accounts software tells me I've been repaid £17,000 of VAT over 25 years. Although some of that is for two or three translators, it is also net of VAT charged to UK customers, who dominated in the early years, so whether the true figure for me alone is more or less than that, it's far from insignificant.

Given that everything goes into the accounts software anyway, submitting a VAT return literally means about five mouse clicks... Even for £5 back a month, rather than £50, it would be worth it.


 
Dan Lucas
Dan Lucas  Identity Verified
United Kingdom
Local time: 13:25
Member (2014)
Japanese to English
Not bad Mar 15, 2021

Chris S wrote:
A glance at my accounts software tells me I've been repaid £17,000 of VAT over 25 years.

I reckon £3,300 in five years over here. That's the price a new top-of-the-line Thinkpad with on-site support next working day. And the last Thinkpad I bought is nine years old and still going...

Dan


 


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Invoicing companies based in Spanish and working with suppliers based in Spain - sole trader UK







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