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International VAT

Discussion in 'Accounting and Legal' started by Smithy Books, Jun 19, 2020.

  1. Smithy Books

    Smithy Books New Member

    Hi everyone,

    Completely new here, but have had a bit of a dig around for an answer already. Not successfully!

    I'm British but live in France and am a registered freelancer but not VAT registered. My question is relevant to all freelancers, though.

    I provide a range of author services for fiction writers. This can be in all forms, from teaching to editing or putting together submission packages to agents and publishers.

    Most of this work occurs over email/messenger/video chat, though I do also run an online classroom.
    Most of my clients are either hobby writers, so not businesses, or self-publishing authors (a business, effectively).

    I just got a potential new client who is based in the middle east. Not a business but an end user of my services. It's a small job for now, but it came to my attention that where they live requires any business to charge VAT from the first sale. PLUS it needs to be registered for VAT or have an agent who can report and pay the tax. Otherwise the responsibility lies with the tax resident of the state in question but there's no information on how a personal end user (non-business) would file and pay those taxes.

    It seems upon further digging that this applies to Russia and S.Africa, amongst others, too. Mostly, it seems to refer to digital products but also e-services, which I think applies to me.

    Most advice on this subject refers the EU VAT rules surrounding automated downloadable digital products, which is a separate issue.

    How do freelancers servicing mostly personal users abide by all these different international rules and pay the taxes?

    Yes, I've looked into using freelancer platforms, but they require a lot of hoop-jumping and certain payment structures that won't suit some of my services (teaching in particular). Also, some of them freeze your account if you don't reach a certain activity level. I want somewhere I can send my international clients so they can pay and the VAT details will be automatically dealt with, without either of us having to learn a whole new platform to accomplish it. And without it costing more than the job earns.

    It seems this type of system has only been constructed for digital downloads so far.

    So, sorry it's long-winded, but I'm pulling my hair out on how to deliver my services worldwide and operate within all the laws. It's only a small job now, and I mostly have clients from countries that don't have this non-threshold rule, but I don't want to have to turn future work away if this comes up again.

    Anyone know about this?

  2. Lupita

    Lupita Member

    Smithy, what country in the ME is it? Israel, perhaps?
    FreelanceUK is looking into getting an expert to offer you some guidance -- in an article which will be published on the FreelanceUK frontpage, but the expert needs to know which country, specifically, you're referring to!? Please let me know (here or at simon@moorenewsltd.com if you prefer).
  3. Smithy Books

    Smithy Books New Member

    Thanks for your reply. The country in question is Lebanon, but TBH this is a general query because there are many countries that are doing the same - VAT from first sale.

    I seem to have been mistaken on whose responsibility it is - seems it would be mine where the final consumer is the customer, it would seem.

    Thanks - I'll look forward to the article.
  4. Lupita

    Lupita Member

  5. Smithy Books

    Smithy Books New Member


    I read it but I'm afraid it wasn't much help. Mostly because my question wasn't specific to Lebanon but rather on how to deal with this issue for any client who comes up as resident in ANY country that follows this VAT-on-first-sale paradigm. That aspect wasn't touched on at all. It's not reasonable for a freelancer to have to research individual tax rules for individual countries each time a new client crops up, and that is the problem that needs resolving as more countries start to look at charging VAT for online businesses in the country of delivery/receipt. Many online entrepreneurs don't seem to be aware of it, which is worrying. I'm sure it will crop up more and more over the next couple of years.

    I appreciate your effort to answer the question and manage to tailor it to your audience, but I'm afraid it didn't provide any workable solution to the problem. The part at the end about VAT registration in France has no bearing on the issue of global VAT for online businesses selling outside of the EU, which doesn't necessarily recognise if you are non-VAT registered.

    I found a potential solution in the meantime and am exploring that, which means selling through a third party who is VAT registered globally and can deal with it for me. It adds cost to the client but that's better than getting into any legal hot water. Maybe you could add that to the article and expand it as a more global solution, rather than region specific?

    Thanks anyway. Not meaning to gripe - just offering some feedback!


  6. Lupita

    Lupita Member

    Thanks for the feedback Smithy. I've gone back to the expert in question, and had a chat.

    I've also checked with a second expert and they both agree: if you substitute Lebanon for ANY other country imposing VAT in a similar way, the answer is still the same.

    It makes no sense for you to register for VAT in all these places and appoint a legal representative and so, it falls on the client to manage the VAT themselves. As the original expert stated, for the small sums you're looking at, do see if the client will pay you offshore.

    But the short (frustrating!) answer is; you need to register in each country and appoint a legal representative accordingly.


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