VAT liability


I have recently changed from being an Autoentrepeneur having exceeded the threshold and am informed by new accountant that I have to pay VAT on my 2016 earningss. However, I am a freelance translator and cannot charge VAT because I work through agencies, so they post a job, say translate 1000 words for 100 euros and the only choice I have is whether to accept the job or not, I can’t charge the agency VAT.
I thought you only paid VAT if you’d charged it to your clients…am I sadly deluded?

All advice gratefully received.



I don’t think that computes.A lot of freelance translators charge VAT, in fact it’s only micro entrepreneurs who are allowed not to. In my experience, this is one of the questions that agencies usually ask about when you first start working with them. Occasionally they don’t ask and send me their first bon de commande including VAT, and I have to send it back and ask them to knock the VAT off, so the fact that by default they put it on, suggests that it’s more common for translators to charge it than not to. It’s no skin off the agency’s nose, they will simpy reclaim it.

EDIT: Here’s a recent thread on Proz about this very question, I thought I remembered oneépassement_de_seuil_quel_statut_adopter.html

  • as someone points out, it would only be if you worked for a private client that it would make any difference to the cost. As long as you work for a TVA-registered business, be it an end client or an agency, they can reclaim the TVA. And every agency is going to be TVA registered.

Thanks Anna, I’m probably being thick and I know that the agency will have charged the client VAT, but how am I liable for paying it? Surely it’s only the end client that pays it. I don’t see how I fit into the loop. From reading the stuff on Proz, I’d need to ask the agency how much of the fee that I get paid is VAT, is that right?

Every business whose turnover exceeds a certain level is obliged to charge VAT on every invoice they issue (unless they’re exempt because they’re an association or a charity or something), that’s the law. The maximum threshold for auto entrepreneur is specifically set at exactly the minimum VAT threshold, and that is why auto entrepreneurs are exempted from charging, because by definition they are below the VAT threshold. Once you exceed the AE threshold, that means that you’re earning too much to qualify for the VAT exemption any longer.

You don’t pay it, you charge it, or to put it a different way, you collect it on behalf of the taxman. The agency charges the client, and you charge the agency. Then you all hand over the VAT you’ve collected to the VAT man, and claim back the VAT you’ve paid. It’s a set rate, I think it’s 20%. It has to appear on a separate line on the invoice.

I’m no expert on VAT but I think it goes something like this:
Job is worth 100€. Agency adds their commission and charges 150€ plus 20% TVA. Client pays 180€. Agency keeps 150 and hands 30€ to the VAT man. If client is VAT registered they subsequently reclaim that 30€ so they have paid 150.

As an AE you invoice the agency 100€, they pay you 100, there is no VAT involved.

As a VAT registered business you invoice 100 + 20%, the agency pays you 120. You keep your 100€ and hand over the extra 20€ to the taxman so you have earned 100. Agency subsequently reclaims 20 so they have paid 100.

The only time the taxman gets to keep the VAT is when somewhere down the line a non-VAT registered purchaser is involved, because they pay it and can’t claim it back. As long as it’s all business to business transactions, it’s just paper pushing and it all balances out, you neither gain nor lose. But in fact you will probably gain by being TVA registered because you’ll be able to reclaim TVA on all your business purchases - computers, software etc - which at present, you can’t.

I may have this entirely arse over tit (because when I see 32000€ starting to loom, I stop work for the year - no way am I ever going to go there) and if that’s the case, I’m sure Fabien or some other helpful person will come along and explain it properly.

Thank you for taking the time to reply in such detail, Anna. I clearly need to speak to the agency. The invoice that they send me each time I withdraw my earnings shows Vat as 0%…so I’m very confused.

Why does the agency send you an invoice for work you’ve done??? Surely you should be sending them an invoice???

I really don’t know!! That’s the way it’s always been, I’ve been working for them since 2012.

Surely what they send you is a remittance advice not an invoice? Is this a UK agency or a French agency? Hard to believe that a French agency would operate this way.
Is it an online platform? If so, I presume when you registered initially you gave your siret number etc and ticked a box according to whether you charge VAT or not? So when you came off of AE you would need to amend your profile, otherwise they won’t know the situation has changed.

You do issue your own invoices for the papertrail even if you don’t send them, don’t you, to cover your back as per the requirements for AE? There aren’t many paperwork obligations for AE but you need to be able to show a full set of invoices issued by you, correctly dated and numbered, with all the mentions légales on them - one of which if you don’t charge TVA, is “TVA non applicable, article 293 B du CGI”. Now you’ve come off AE, you obviously you can’t keep quoting article 293B for TVA exemption since it no longer applies to you.

Hi Anna,

Thanks for all the advice. I’m delighted to say that my accountant has the answer, because the agency is in Belgium and I’m in France, the VAT cancels itself out, I don’t charge it, so I don’t have to pass it on to the French authorities, I just have to modify my invoices to include the words ""Autoliquidation : article 242 nonies a 13° du C.G.I” plus my EU VAT number and that of the agency. What a relief!

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Makes sense, I thought it couldn’t be a French agency :wink:

I’m not entirely convinced your accountant is 100% correct that you as the provider don’t have to do anything, because I thought you have to declare the value of intracommunity transactions to the French customs each month (so that they can add it in to their calculations of France’s GDP):

"- Le prestataire est établi en France :

il facture sa prestation de services HT,
il effectue une déclaration européenne des services (DES) au plus tard le 10ème jour ouvrable du mois suivant la facturation sur le site internet, rubrique DES"

But perhaps your accountant is going to do this for you.

I’ll ask her!