IVA, VAT o Sinpa?! Thread poster: Michael Rice (X)
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Michael Rice (X) 
United Kingdom
Local time: 18:23
Spanish to English
Having read a couple of threads on grasping the fiscal nettle that is IVA/VAT charging between the UK and Spain, I am still no closer to resolving my particular quandary:
I recently invoiced two separate agencies in Spain for work completed, in turn receiving two distinct responses on how the VAT should be charged.
Agency No.1 basically says that as the company being invoiced is based in Spain, that Spanish IVA would normally be applied, but given that I am tech... See more Having read a couple of threads on grasping the fiscal nettle that is IVA/VAT charging between the UK and Spain, I am still no closer to resolving my particular quandary:
I recently invoiced two separate agencies in Spain for work completed, in turn receiving two distinct responses on how the VAT should be charged.
Agency No.1 basically says that as the company being invoiced is based in Spain, that Spanish IVA would normally be applied, but given that I am technically a UK based business, the IVA is not applicable and should be removed from the invoice.
Agency No.2 says completely the opposite, insisting that I include the UK VAT on the invoice before they can make payment.
Points awarded for the most simple, easy to understand response that helps stem the bleeding from my ears.
Many thanks in advance! ▲ Collapse
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UK businesses shouldn't charge VAT on services to foreign countries
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For clients in the EU’s VAT area:
If you are VAT registered in the UK:
- Client is VAT-registered and not in the UK: No VAT to add. You must validate their VAT number in the EU's VIES system, keep the validation and mention their VAT number on your invoice, as well as "Reverse VAT charge".
- Consumer or business client not VAT registered: add UK VAT.
If you are not VAT registered, you obviously never add VAT, but some companies nevertheless expect you to p... See more For clients in the EU’s VAT area:
If you are VAT registered in the UK:
- Client is VAT-registered and not in the UK: No VAT to add. You must validate their VAT number in the EU's VIES system, keep the validation and mention their VAT number on your invoice, as well as "Reverse VAT charge".
- Consumer or business client not VAT registered: add UK VAT.
If you are not VAT registered, you obviously never add VAT, but some companies nevertheless expect you to provide a VAT number. For which purpose I don't know. When you buy services from another EU country, you don't report their VAT number. In some countries, there seems to be a tradition for gold-plating bureaucratic requirements. Or perhaps some outsourcers misunderstand the requirements for the reverse VAT charging and mistakenly think they have to validate your VAT number, whereas they don’t. It is you who have to validate theirs. ▲ Collapse
| | | | Jose Ruivo
Portugal
Local time: 18:23
Member (2007)
English to Portuguese
+ ...
| Meaning of VAT | Mar 13, 2018 |
Agency No.2 says completely the opposite, insisting that I include the UK VAT on the invoice before they can make payment.
Further to what others have said before, agency 2 might just want to know your tax identification, regardless of it being a VAT number or something else which does not involve value added tax payment. Without your tax id, your invoice is probably not considered legal in Spain.
Naturally, you can not charge VAT to a company outside your current country.
Hope this helps,
José
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Sheila Wilson
Spain
Local time: 18:23
Member (2007)
English
+ ...
| They are both right to some extent | Mar 13, 2018 |
Michael Rice wrote:
Agency No.1 basically says that as the company being invoiced is based in Spain, that Spanish IVA would normally be applied, but given that I am technically a UK based business, the IVA is not applicable and should be removed from the invoice.
To understand that response, we need to know if you're registered for VAT in the UK. It assumes that you are NOT registered. The first part is a load of *** though. You aren't "technically" based in the UK - you ARE based in the UK! And as such you are subject to UK tax laws on invoicing. As you are not registered for UK VAT, as is perfectly possible there, clearly you can't add it to the invoice.
Agency No.2 says completely the opposite, insisting that I include the UK VAT on the invoice before they can make payment.
They are assuming that you MUST be registered for UK VAT. This is because every single registered business, including freelancers, must be registered for VAT/IVA in Spain (apart from those of us in the Canary Islands - but that's not important here  ). They can't imagine that any other situation can be possible. You need to convince them that the tax laws are different in the UK. All they need to know to satisfy their tax authorities is that you are fiscally resident in the UK. The problem is that HMRC are reluctant to share such basic information  .
| | | | Michael Rice (X)
United Kingdom
Local time: 18:23
Spanish to English
TOPIC STARTER | I am registered/based in the UK | Mar 13, 2018 |
Sheila Wilson wrote:
To understand that response, we need to know if you're registered for VAT in the UK. It assumes that you are NOT registered.
I am physically and officially UK based but am not VAT registered as I am a sole trader, below the required earnings threshold. In the past I have provided my Unique Taxpayer Reference and National Insurance Number, as well as quoting THEIR Vat number on all invoices. Agency No.2 has put the cat amongst the pigeons with their insistence that I include the VAT.
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Michael Rice wrote:
I am physically and officially UK based but am not VAT registered as I am a sole trader, below the required earnings threshold. In the past I have provided my Unique Taxpayer Reference and National Insurance Number, as well as quoting THEIR Vat number on all invoices. Agency No.2 has put the cat amongst the pigeons with their insistence that I include the VAT.
That you are below the threshold does not mean that you cannot register for VAT. Some choose to register voluntarily, for example to recover VAT paid. I received a VAT refund of €230 for 2016, for example. You lose such refunds if you are not VAT registered, so in some cases it means you pay more tax if you are not registered.
You never include domestic VAT when invoicing a VAT-registered business elsewhere in the VAT area under any circumstances, whether or not you are VAT registered.
| | | | Rachel Fell
United Kingdom
Local time: 18:23
French to English
+ ...
| Not eligible | Mar 13, 2018 |
Can't you just tell them/state that you're not eligible for VAT?
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Michael Rice (X)
United Kingdom
Local time: 18:23
Spanish to English
TOPIC STARTER | Registering voluntarily | Mar 13, 2018 |
Thomas T. Frost wrote:
That you are below the threshold does not mean that you cannot register for VAT. Some choose to register voluntarily, for example to recover VAT paid.
I shall look into that, thanks.
| | | | Michael Rice (X)
United Kingdom
Local time: 18:23
Spanish to English
TOPIC STARTER | Can't you just tell them/state that you're not eligible for VAT? | Mar 13, 2018 |
Rachel Fell wrote:
Can't you just tell them/state that you're not eligible for VAT?
Yes, but evidently the process is different in Spain. It appears that sole-traders would be expected to have a VAT number regardless of income/turnover.
| | | | Sheila Wilson
Spain
Local time: 18:23
Member (2007)
English
+ ...
| You just have to stand firm | Mar 13, 2018 |
Michael Rice wrote:
I am physically and officially UK based but am not VAT registered as I am a sole trader, below the required earnings threshold. In the past I have provided my Unique Taxpayer Reference and National Insurance Number, as well as quoting THEIR Vat number on all invoices. Agency No.2 has put the cat amongst the pigeons with their insistence that I include the VAT.
They can insist all they like, but so can you! Demand to see the written law that states that only a business that's registered for VAT can invoice them. Demand to be paid in full for the services that you've provided, lawfully, as a registered freelancer in another EU member state.
They want you to make life easier for them; you want to get paid! Who has the stronger incentive to get this sorted?
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