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Is a residence certificate needed in EU if I have a valid EU VAT number?
Thread poster: Andrei Albu
Thomas T. Frost
Thomas T. Frost  Identity Verified
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Carried out Dec 18, 2014

Dr. Matthias Schauen wrote:
Translation is a service that we are supplying, and this is different from the supplying of goods. The German language in the German VAT Act makes this clearer by using different words for the two types of supply - Ausführung (carrying out) vs. Lieferung (delivery).


The EU VAT Directive specifically states that the place of supply of 'intellectual' services is at the customer's premises (although VAT is due in the supplier's country if the customer is a private person). Goods don't come into the picture at all.

I'd say the German wording confuses it, as "supply" is not the same as "carry out" (Ausführung), and the EU VAT Directive does not use wording that could make it sound as if the work is carried out at the customer's premises. But you didn't quote the whole German phrase, and if it says something like VAT is due at the customer's premises as if the work were carried out there, then it would be clear enough.


 
2GT
2GT  Identity Verified
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Foreign entities in Greece Dec 18, 2014

Andrei Albu:
Thomas Frost:
The person you are dealing with doesn't have a clue what he or she is doing. You need to get hold of someone higher up in the food chain.


This is the reply I just got from them:

"Dear Andrei

As I mentioned without this certificate we are obliged to deduct fees 20% for the tax office"

I am considering making a negative Blue Board entry if I do not come to terms with them. What would you think?


Andrei, maybe you should read this webpage (last paragraph).

"Interestingly, according to the new provisions as interpreted by a Circular of the Ministry of Finance (POL 1120/2014), the imposition of withholding tax on payments received for the provision of technical, administrative, consultative or other relevant services from foreign entities in Greece (including the services provided to their affiliated Greek entities) depends on the existence of a local permanent establishment.
In particular, only a foreign entity with a permanent establishment rendering such services in Greece shall be subject to withholding tax, which is credited against its year-end corporate income tax liability."


Are you permanently established in Greece?

Cheers
Gianni

[Edited at 2014-12-19 14:20 GMT]


 
Andrei Albu
Andrei Albu
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No Dec 18, 2014

2G Trad wrote:

Are you permanently established in Greece?

Cheers
Gianni

[Edited at 2014-12-18 17:35 GMT]


If I win big on the lottery, I would love to buy a house in beautiful Greece (or perhaps Italy) and settle there for my golden years. But no, I am not established in Greece, either temporarily or permanently. I trade as a company with its legal domicile in Romania. Proven by a valid EU VAT No.

[Edited at 2014-12-18 17:42 GMT]


 
Kirsten Bodart
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Withholding tax Dec 18, 2014

Portugal has that too, as does the US, and some agencies ask for a certificate to exempt them from having to deduct. Others don't.

I think it depends on a) how clued up the people at the agency are and b) how clued up the tax office is. Because some tax offices don't even know how their own rules work. The one official tells you a and the other b and eventually you are the one who is in trouble, even if they got it wrong.

In most cases, though, a national insurance numb
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Portugal has that too, as does the US, and some agencies ask for a certificate to exempt them from having to deduct. Others don't.

I think it depends on a) how clued up the people at the agency are and b) how clued up the tax office is. Because some tax offices don't even know how their own rules work. The one official tells you a and the other b and eventually you are the one who is in trouble, even if they got it wrong.

In most cases, though, a national insurance number or whatever (number at the tax office, not a VAT number) is sufficient. Although maybe the Greek tax office is trying to crack the whip a little and doesn't accept things like VAT numbers (which should be proof of your residence elsewhere than in Greece already anyway).
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Maria Teresa Borges de Almeida
Maria Teresa Borges de Almeida  Identity Verified
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Nothing to do with VAT Dec 18, 2014

and all to do with Double Taxation Conventions signed by several countries. I have two clients who every year ask for this certification (Mod. 21-RFI) from the tax authorities where I live (Belgium): one is a Portuguese company (direct client) and the other one a Greek company (translation agency).

 
Steven Segaert
Steven Segaert
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Not personal residence - tax residence Dec 19, 2014

While VAT and social security are coordinated within Europe, income tax is not.

Where you are taxed for your income or profit (both as an individual and as a company) depends on the laws of your own country, and of the country where that income or profit was earned. Just about every country in the EU has a treaty with just about any other country in the EU, to avoid both non-taxation and double taxation. Romania and Greece also have
... See more
While VAT and social security are coordinated within Europe, income tax is not.

Where you are taxed for your income or profit (both as an individual and as a company) depends on the laws of your own country, and of the country where that income or profit was earned. Just about every country in the EU has a treaty with just about any other country in the EU, to avoid both non-taxation and double taxation. Romania and Greece also have such a treaty (https://static.anaf.ro/static/10/Anaf/AsistentaContribuabili_r/Conventii/Conventii.htm).

To apply that treaty (= to NOT to tax you in Greece), the Greek authorities (the place where the one who pays for the services is located) need a paper stating that you (or your company) are a tax resident in Romania (or, not in Greece). "Tax residence" means that you are taxed in that country - that doesn't have to be the place you live in.

The form they use to ascertain that fact, is this one - https://www.google.ee/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http://www.steuerliches-info-center.de/cae/servlet/contentblob/52890/publicationFile/696/025_Griechenland_Form_E230.pdf&ei=zs6TVMe3BeLNygP51YCQBg&usg=AFQjCNGNcMNPiR5Mux07B3prnwW-5SZHuQ&sig2=VCxSArQdlZO4KpC6WUeu0g

Your Greek client is obliged to provide the authorities with that information, or to withhold Greek income tax for what they pay you (after which you are welcome to sort it out with the Greek authorities).

You can have that form filled and stamped at the tax office in your own country. I mailed ahead to make sure they could accommodate that, and it turned out to be no problem. I suggest you check with your own tax office to confirm this.

Hope this helps!
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Andrei Albu
Andrei Albu
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VAT versus Income Tax Dec 19, 2014

As stated a couple of times already, I trade as a company. The company is legally registered in Romania and certainly cannot pay income tax in another country. Should it have been an offshore, it would have been a different situation. But since this is not the case, I shall not bother to waste my time and money queuing up at the local tax office to get that certificate. I know the form can be downloaded, but I still have to go there for the darn signature and stamp. Plus that I have to buy a fis... See more
As stated a couple of times already, I trade as a company. The company is legally registered in Romania and certainly cannot pay income tax in another country. Should it have been an offshore, it would have been a different situation. But since this is not the case, I shall not bother to waste my time and money queuing up at the local tax office to get that certificate. I know the form can be downloaded, but I still have to go there for the darn signature and stamp. Plus that I have to buy a fiscal stamp. I shall wait for my payment, and if it is not made in full, I shall place a Blue Board entry. Thanks everyone for your opinions and help, and Merry Christmas to you all!Collapse


 
Steven Segaert
Steven Segaert
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Your call Dec 19, 2014

Andrei Albu wrote:

As stated a couple of times already, I trade as a company. The company is legally registered in Romania and certainly cannot pay income tax in another country. Should it have been an offshore, it would have been a different situation. But since this is not the case, I shall not bother to waste my time and money queuing up at the local tax office to get that certificate. I know the form can be downloaded, but I still have to go there for the darn signature and stamp. Plus that I have to buy a fiscal stamp. I shall wait for my payment, and if it is not made in full, I shall place a Blue Board entry. Thanks everyone for your opinions and help, and Merry Christmas to you all!


It's up to you, but I feel there are some flaws in your logic.

1) Your company has to oblige to the applicable laws. The tax law of a country in which you do business is part of that set of laws, as is the tax treaty your country has with Greece. One of the provisions in that legislation is that you don't get taxed for a job in Greece IF you can show that you are taxed for that job in Romania. Having a VAT number or a registration isn't enough to show that.

2) You are faulting your client for adhering to the laws of their own country.

I understand it is a nuisance (I also didn't particularly appreciate having to go to the tax office for this, and I would have factored it into the price if they had told me beforehand), but unless you want to take it up with the Greek tax office, I would suggest you just get the form.


 
Thomas T. Frost
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Which law? Dec 19, 2014

Steven Segaert wrote:

1) Your company has to oblige to the applicable laws. The tax law of a country in which you do business is part of that set of laws, as is the tax treaty your country has with Greece. One of the provisions in that legislation is that you don't get taxed for a job in Greece IF you can show that you are taxed for that job in Romania. Having a VAT number or a registration isn't enough to show that.


Which law actually says each and every supplier of services to a company in Greece must provide such a form for every single client in Greece? I cannot read the language of that double tax treaty, but double tax treaties usually do not contain such a detailed documentary requirement. The US is perhaps an exception with their new FATCA requirements for W-8BEN forms, but even the W-8BEN does not list the client, so the same form can be reused for many clients, and it is not necessary to get it certified by the local tax authorities.

It is becoming a bureaucratic nightmare to trade across borders. We're told we need to encourage business in the EU, but all the bureaucrats do is to make it more and more difficult, tedious and time-consuming. That's not Greek companies' fault if indeed it is written in a law there is such a requirement, but we are yet to see the documentation for that.


 
Steven Segaert
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Law versus administration Dec 19, 2014

Thomas, I'm not able to provide a full legal analysis of this issue. But the bottom line is: the Greek company will have to withhold the tax based on the Greek rules. The way to avoid that is to show that they don't have to do that, which is via the form.

As a lawyer, I fully appreciate the idea that one can poke a lot of holes in this procedure, but that would require an interaction with the Greek tax authorities.

So the choice here is to either oblige and get the form
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Thomas, I'm not able to provide a full legal analysis of this issue. But the bottom line is: the Greek company will have to withhold the tax based on the Greek rules. The way to avoid that is to show that they don't have to do that, which is via the form.

As a lawyer, I fully appreciate the idea that one can poke a lot of holes in this procedure, but that would require an interaction with the Greek tax authorities.

So the choice here is to either oblige and get the form, or to have the percentage deducted and to take it up with the tax office in Greece.

[Edited at 2014-12-19 14:31 GMT]
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Thomas T. Frost
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Laws Dec 19, 2014

@Stephen

Okay; you just gave me the impression that you knew there was such a legal disposition. So at this stage, we don't know if such a requirement is stipulated in Greek law or not. Difficult to apply laws we don't know about. It is not because a company wants that document that the law automatically says it is a requirement. Some people seem to have the attitude 'let's just ask for some more documents, just in case', and as they are inconveniencing someone else, it doesn't matt
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@Stephen

Okay; you just gave me the impression that you knew there was such a legal disposition. So at this stage, we don't know if such a requirement is stipulated in Greek law or not. Difficult to apply laws we don't know about. It is not because a company wants that document that the law automatically says it is a requirement. Some people seem to have the attitude 'let's just ask for some more documents, just in case', and as they are inconveniencing someone else, it doesn't matter to them.

At least we have learnt that we have to be careful dealing with Greek companies (and perhaps companies in other countries), as they may require all sorts of red tape, and it's a good idea to ask about this up front, depending on how difficult it is to obtain the required paperwork locally. Spending three hours to get a form (in Romania - I would imagine some other countries are more efficient) required to be paid for one hour's work is hardly worth the trouble, and in that case, it may be better to decline the job.
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Steven Segaert
Steven Segaert
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To clarify Dec 19, 2014

Thomas Frost wrote:

@Stephen

Okay; you just gave me the impression that you knew there was such a legal disposition. So at this stage, we don't know if such a requirement is stipulated in Greek law or not.


To clarify: from what I have researched myself, I assume to know that there is a Greek law that says that someone doing business in Greece will have to pay income or company tax IF there is a link with Greece (i.e. a reason to pay taxes in Greece).

That would not be a problem if the Greeks also didn't stipulate that this tax is to be paid by means of withholding it from any payment made. The tax you would owe were you to have a link with Greece is in other words levied immediately, and by the one who pays.

That is not necessary if the one who pays can show that you have no fiscal link with Greece, which is what the form is about.

If you don't provide the form, the tax will be withheld and sent to the Greek tax office. One is of course free to afterwards claim it back from these authorities, but I somehow think it will be easier to just comply and get the form.

This information was obtained from various sources (including the tax office in my own country), and I am satisfied that it is correct. But you asked me in which particular law one can find this. And to that I must answer that I can't pinpoint the precise law for you and that I therefore can't provide you a full legal analysis of all the ins and outs of the requirement.

I agree that it would have been nicer to know this beforehand. Unfortunately, these things seem to pop up only after invoices are sent out.

[Edited at 2014-12-19 15:05 GMT]


 
2GT
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Laws, diligence, and assumptions Dec 19, 2014

Steven Segaert:
Your Greek client is obliged to provide the authorities with that information, or to withhold Greek income tax for what they pay you (after which you are welcome to sort it out with the Greek authorities).


In my previous post I have reported the following new provisions (from a circular of the Greek Ministry of Finance, POL 1120/2014):
"In particular, only a foreign entity with a permanent establishment rendering such services in Greece shall be subject to withholding tax"

Andrei has not a permanent establishment in Greece, so he's not subject to withholding tax.

This client is way too diligent. They are assuming that all their foreign freelance translators have a permanent establishment in Greece even if living abroad, and thus must provide evidence to the contrary.

Foreign person. Living abroad. Foreign VAT number. All these things should ring a bell.

Cheers
Gianni


 
Maria Teresa Pozzi
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I also thought Dec 19, 2014

that VIES would be enough. After all it states that you have a valid EU VAT number.
But at the end I had to go to the tax office and ask for the CFR (certificate of fiscal residence) for a Romanian agency who asked fot it.
At the office they told be it's a certificate you have to ask every year...

Tea


 
Andrea Kowalenko
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Income tax for companies? Dec 19, 2014

Sorry, I just cannot stop myself to chip in... Why would anyone withhold income tax for a company? I mean, a company does not pay income tax, but corporation tax. I cannot imagine that in any country there is a law about withholding corporate taxes. Or is there?

I too live in a country where income tax is withheld (Spain, like Sheila), but I work as a registered company as well and nobody ever withheld anything for me, neither here nor elsewhere.

If you worked in your
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Sorry, I just cannot stop myself to chip in... Why would anyone withhold income tax for a company? I mean, a company does not pay income tax, but corporation tax. I cannot imagine that in any country there is a law about withholding corporate taxes. Or is there?

I too live in a country where income tax is withheld (Spain, like Sheila), but I work as a registered company as well and nobody ever withheld anything for me, neither here nor elsewhere.

If you worked in your own name, it would be more understandable, but else... VIES should suffice.

I can understand your frustration. As the Blueboard gives an indication about willingness to work again, it would be totally justified to make an entry there. I suppose you would not be willing to work with this customer again after losing 20% of your invoice.

Regards,

Andrea
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Is a residence certificate needed in EU if I have a valid EU VAT number?







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