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VAT if providing translating services abroad (From US to Sweden)
Thread poster: stsgal
stsgal
stsgal
United States
Nov 25, 2019

So the problem is as follows.
The company is registered and located in the USA and is a developer of a social network. It plans to provide free access to this social network in Sweden, but also plans to charge a fee for translating services on a social network. The translation service will be carried out remotely in the United States. In that situation seller is established in US, where there is no VAT.

The question: is it necessary to charge VAT on the translation service in ... See more
So the problem is as follows.
The company is registered and located in the USA and is a developer of a social network. It plans to provide free access to this social network in Sweden, but also plans to charge a fee for translating services on a social network. The translation service will be carried out remotely in the United States. In that situation seller is established in US, where there is no VAT.

The question: is it necessary to charge VAT on the translation service in this case?

PS Main rule 2: Sale to private individuals
As the seller you have to charge and report Swedish VAT. When you sell services to private individuals, the services are considered to have been performed in the country where the seller is established, for example in Sweden.

Thanks in advance. ▲ Collapse
 
Tom in London
Tom in London
United Kingdom
Local time: 10:26
Member (2008)
Italian to English
Completely wrong Nov 26, 2019

They are wrong.

When you sell services to private individuals, the services you provide are considered to have been performed in the country where YOU are established.

I should have thought that would have been obvious.

If there is no VAT in your country then it doesn't apply.
 
stsgal
stsgal
United States
TOPIC STARTER
Thanks! Nov 26, 2019

As I thought. Thanks!
 
Eva Stoppa
Eva Stoppa  Identity Verified
Germany
Local time: 11:26
English to German
+ ...
Private individuals? Nov 26, 2019

It is a Company asking your Services, right? So the paragraphe about private individuals doesn't apply here, I would think.
 
Tom in London
Tom in London
United Kingdom
Local time: 10:26
Member (2008)
Italian to English
Clarification of my previous post Nov 26, 2019

When you sell services to ANY INDIVIDUAL, COMPANY, or ANY OTHER ENTITY, the services you provide are considered to have been performed in the country where YOU are established

[Edited at 2019-11-26 10:23 GMT]
 
Eva Stoppa
Eva Stoppa  Identity Verified
Germany
Local time: 11:26
English to German
+ ...
According to my information Nov 26, 2019

a Translation Service provided for a Company outside your Country is being dealt with as provided in your client's Country. Thus, you provide a bill without Tax and the Client has to pay their VAT in their Country of residence. VAT Charge reversed.
 
RobinB
RobinB  Identity Verified
United States
Local time: 04:26
German to English
Caution: VAT may be due Nov 26, 2019

Based on the situation you describe, the US-based company might have to charge VAT on the digital services it provides to consumers (retail customers) in Sweden because of the EU VAT rules governing the supply of digital services (and telecommunication services) by businesses located in third countries (outside the EU) to consumers in the EU (UK companies will also be covered by this regime post-Brexit).

This is a well-known exception to the rule that any VAT liability is normally ... See more
Based on the situation you describe, the US-based company might have to charge VAT on the digital services it provides to consumers (retail customers) in Sweden because of the EU VAT rules governing the supply of digital services (and telecommunication services) by businesses located in third countries (outside the EU) to consumers in the EU (UK companies will also be covered by this regime post-Brexit).

This is a well-known exception to the rule that any VAT liability is normally governed by the country in which the business is established, and it's why many third-country companies are registered for VAT. In the case you describe, the translation services provided by the social network might well be classified by the EU as electronic services (and hence liable for VAT) because they are being hosted by the social network. This contrasts with "normal" translation services where the translations are provided to clients by email, which is not classified by the EU as an "electronic" or "digital" service.

It's also why ProZ charges VAT, although it's a US-based company. See

https://www.proz.com/faq/billing_and_payment.html#why_does_proz_com_collect_vat_the_company_is_not_based_in_the_eu_

There is a simplification, however, called the MOSS (mini one-stop shopping) arrangement, which allows the company to account for VAT in one EU member state only, rather than in each member state separately.

You will find more information e.g. here:

https://europa.eu/youreurope/business/taxation/vat/vat-digital-services-moss-scheme/index_en.htm

and

https://ec.europa.eu/taxation_customs/business/vat/telecommunications-broadcasting-electronic-services/content/guide-vat-mini-one-stop-shop-moss_en

Nothing I have written above should be construed as legal or tax advice and the US company in question should seek expert VAT advice and obtain a written opinion from a tax lawyer before proceeding with its plans. International liability for EU VAT on transactions with EU consumers can be quite a minefield, and it's better to be safe than sorry. ▲ Collapse


Sheila Wilson
Maria Teresa Borges de Almeida
 
stsgal
stsgal
United States
TOPIC STARTER
Many thanks! Nov 26, 2019

Many thanks RobinB and all respondents.
 


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VAT if providing translating services abroad (From US to Sweden)







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