VAT on translations done abroad/Umsatzsteuer auf im Ausland gefertigte Übersetzungen


A translation is done for business purposes if it’s done for a freelance translator in another country, and that includes one who is not registered for VAT. So if I, in Germany, do a translation for a UK client, I charge VAT only if the client is a private person.

The diagram is taken from just before section 12 of VAT Notice 741, Place of Supply of Services. There is a list of notices online, but the number is given as 742, which isn’t correct.
HM Revenue & Customs has the notices online. The reverse charge, or tax shift, is described in 15.1.

The reverse charge arises when a translator in the UK, not registered for VAT (they often aren’t, and the threshold above which you have to register is higher), does work for me. It is deemed to be done in Germany, and I have to pay VAT on it. But at the same time I can deduct this VAT payment:

15.4 How does the reverse charge work?
You simply credit your VAT account with an amount of output tax, calculated on the full value of the supply you have received, and at the same time debit your account with the input tax to which you are entitled, in accordance with the normal rules. The partial exemption implications for reverse charge services are explained in Notice 706 Partial exemption.

The relevant parts of the statutes are mentioned in these articles or in the VAT notice.

Value Added Tax Act 1994 (UK)
Umsatzsteuergesetz 1980 (Germany)

Article in English by Kay Fisher at Translatorscafe.

Deutscher Artikel über USt für Übersetzer von Per Döhler auf der ADÜ-Nord-Website.

2 thoughts on “VAT on translations done abroad/Umsatzsteuer auf im Ausland gefertigte Übersetzungen

  1. Neat rundown. The reverse charge also applies OUTSIDE of the EU i.e. for prof./ legal services in the US, Norway & Switzerland supplied into the EU where the EU trader effectively charges hm/herself VAT and reclaims it from HM Customs & Excise – or form the Inland Rev. before long.

    The idea is so as not to disadvantage EU suppliers who have to add punishing VAT rates on their bill. One mutual acquaintance of ours on another list denies the existence of the reverse charge ‘cos his VAT inspector has ‘never mentioned it’.

    I should have written on my Revenue Law exam paper and said to the acountancy lecturer: ‘X from Boreham Wood says it doesn’t exist, so I categorically refuse to answer your question about it’.

  2. Right. So many translators, and in particular agencies, seem to conveniently forget that they have to record both output (import) and input VAT on these transactions with non-EU suppliers. If there’s a VAT audit, they’ll have to stump up the output tax (plus interest and fines), without being able to claim the input tax. The “the VAT inspector never mentioned it” argument is really compelling. Does this fall under the category of “stupidity is no defence”? (or is that now allowable in cool Britannia?)

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