Freelancer and VAT tax number

Ilsee

Any chance I could ask for advice here. I am a freelance artist based in Ireland (Sole Trader/remote design services). I got an offer to work remotely as a freelancer, for a company based in another EU country. The contract is for 5 months. But they can't offer a contract without my VAT tax number. Offered payment would be much much smaller, than the VAT tax threshold, so I know VAT tax is not mandatory, but they really need that VAT number.

Do I understand correctly, if I apply for it, it's an extra 23% tax for me? On top of Income tax, PRSI and USC. And do I need to apply for ordinary VAT or Intra-EU VAT? I was searching the info and found there is a chance for Zero rate VAT in some circumstances. Or is it not my case? Many thanks for any advice. :)

Effects

As I understand it, as a business you don't pay vat on goods that you buy, as you claim it back, and you charge vat on your sales, that's then given to Revenue.

But within the EU, vat is usually removed at source between companies, so they wouldn't be paying it, if set up correctly.

You won't just be paying an extra 23% tax on your earnings. Your invoices to the other company would have the 23% vat added on. But that would also leave you having to charge vat to all your customers.

Have you spoken to an accountant? Who prepares your tax returns?

Ilsee

https://www.boards.ie/discussion/comment/118918538#Comment_118918538

Hi Effects! Thank you so much for answering!

My bad, I forgot to mention I am not offering goods but services. I am a graphic designer and it's basically an office job. They just wonna hire me as a self-employed person aka freelancer. So, it looks to me like B2B. They are business "customer" who buy my services, and I am a business seller (self-employed/sole trader), who sells my 8h per day work/5 days per week, working remotely at my home. The problem is in different countries. Me - (seller) have my self-employed taxes in Ireland and they (customer) are located in another EU country and looks like not interested to pay VAT themselves (it's just my guess). I think they agree to pay more, so I declare VAT from my side.

I think I really need a tax adviser consultation, it's just my first steps into freelance and I don't have yet any income for such expensive services :) so I was hoping to figure out myself how it should be done. So far, all the revenue and citizen information web checked. But they have a lot of gabs.

ShelbyInc

In an intra-community B2B scenario, in relation to the supply of services, the place of supply is usually where the receiver of the supply is located. So you'd request their VAT number, invoice them, stating the reverse charge applies, and zero-rate the transactions (charge no VAT). The receiver of the supply would account for VAT on their end and if the receiver of the supply incurred the costs for business purposes then the transaction would be VAT neutral for them.

mrslancaster

If your turnover for services is more than €37,500 in a 12 month period you need to register for Vat.

Effects

https://www.boards.ie/discussion/comment/118919243#Comment_118919243

Still 23% on services. But you can claim vat back on anything you need for the business, such as computers or art supplies.

Ilsee

https://www.boards.ie/discussion/comment/118919312#Comment_118919312

Thank you so so much ShelbyInc!

I will copy and paste your advice and send it to the company, it's so good explanation. Of course if you don't mind. :)

Ilsee

https://www.boards.ie/discussion/comment/118919363#Comment_118919363

Thank you, I saw that information before, my income per 12months would be much much smaller. I just starting my freelance journey :)

Ilsee

https://www.boards.ie/discussion/comment/118919868#Comment_118919868

Thank you. I don't need anything to claim right now unfortunately and the contract would be only for few months. So for me to register VAT won't have any benefits only loos of income :)

Effects

It won't be a loss of income. How do you figure it would be?

Ciaran

https://www.boards.ie/discussion/comment/118921712#Comment_118921712

Just to be sure that you understand: you have to register for VAT to be able to operate as Shelby explained. You charge the same as if you weren't registered and don't have to pay any VAT to revenue. Your only expense is if you have to pay someone to file VAT returns for you.

POBox19

So register for a VAT number with Revenue. All your invoices will include vat at 23% (shown separately). Your EU based customer will be required to provide you with their vat number before you remove vat from their invoice. There is an EU service whereby you can check this online. On the other hand you can reclaim any vat you pay for equipment and supplies for the business. In theory that means your costs are lower. Hopefully you'll be well over that €37,500 level.

I've always found the revenue staff helpful with any queries and their website is comprehensive: https://www.revenue.ie/en/vat/index.aspx

eusap

other option is to go to an agency, they invoice the EU customer and put you on the payroll and deduct your taxes and pay you the net figure ( minus fee ) its a good way to test the water for free lancing