| Vom Thema belegte Seiten: [1 2] > | Paying taxes as freelancers Initiator des Themas: Marija Cvetkovic
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Hi!
I was wondering what's it like, being a freelance translator in your country, regarding tax obligation matters. I feel in my country, Croatia, it's a very grey area and many freelancers are not paying anything to the government.
Here's an example: you got 100 EUR from abroad for a translation you had done. You don't have an agency, you work as a freelancer. Do you have to register somewhere? How much of those 100 EUR do you get to keep?
Thank you!
| | | | Samuel Murray 
Niederlande
Local time: 04:14
Mitglied (2006)
Englisch > Afrikaans
+ ...
| You pay tax on your income, no? | Nov 12, 2013 |
Marija Cvetkovic wrote:
Here's an example: you got 100 EUR from abroad for a translation you had done. You work as a freelancer. Do you have to register somewhere? How much of those 100 EUR do you get to keep?
In my original country (South Africa), freelancers who work as freelancers pay tax on their actual income, which they must declare to the tax man. You can, of course, declare less than you actually received, but if the tax man should ever ask you about all that money that you did not declare (which will be reflected on your bank statements, for example), and then you'd be in a lot of trouble.
As a freelancer, you can also create a business and be your own employee, in which case the business pays tax on the profit and you pay tax on your employee income (which amounts to roughly the same amount of money as you'd pay if you simply declared your income as a freelancer). For a translator in South Africa, there is very little advantage to be gained from operating as a business, because the only advantage you'll get is the ability to get VAT back, and... come one, just how often do translators really buy stuff for which they can get so much VAT back that it starts making sense?
In my current country (the Netherlands) you don't pay tax on your actual income but on your invoiced income (which amounts to the same thing, except that the bookkeeping is a little different, and if your clients take very long to pay, you may have to pay tax on income that you haven't actually received yet, which makes bookkeeping a lot more complex).
Either way, you have to declare your income. You can choose not to declare it, but then you run the risk of getting caught out. You mention an international payment -- just how traceable is that money? In my original country, international payments always go through banks, so there is *always* a trail of it. It would be easier to non-declare local income than international income.
Isn't Croatia now also an EU member? If so, then you have to take into account VAT rules when working for EU clients.
| | | | Joakim Braun
Schweden
Local time: 04:14
Deutsch > Schwedisch
+ ...
A gray area? Not at all. If you earn money, you need to pay tax, period. Probably a fairly universal system.
Speaking for Sweden, money earned abroad is treated no differently from a tax perspective than money earned at home. Which means paying about 32% social contributions and then (in most cases) 30-40% tax on the remainder. If that sounds like a lot, it works out to slightly less than the contributions and taxes of an ordinary worker (who doesn't see those first 32% on his month... See more A gray area? Not at all. If you earn money, you need to pay tax, period. Probably a fairly universal system.
Speaking for Sweden, money earned abroad is treated no differently from a tax perspective than money earned at home. Which means paying about 32% social contributions and then (in most cases) 30-40% tax on the remainder. If that sounds like a lot, it works out to slightly less than the contributions and taxes of an ordinary worker (who doesn't see those first 32% on his monthly pay slip, but his employer pays them).
You could run an agency as a freelancer, the tax burden is the same (unless you run an LLC, when it gets a lot more complicated).
With cross-EU reporting requirements for banks coming fast it's probably a bad idea not to report income earned in the EU. You could presumably get away with cheating on non-EU income for some time, but sooner or later you'll face a routine tax investigation... ▲ Collapse
| | | | Joakim Braun
Schweden
Local time: 04:14
Deutsch > Schwedisch
+ ...
More precisely about the Swedish tax system: For individual freelancers, tax is assessed in advance based on the preceding year's assessed income. The tax is then paid monthly, regardless of what you actually earn (you can adjust your tax burden by filing a new pre-assessment for the year whenever you like).
VAT was formerly part of the monthly tax assessment, but is now paid in as a lump sum early the following year.
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Marija Cvetkovic
Kroatien
Local time: 04:14
Englisch > Kroatisch
+ ...
THEMENSTARTER | How about social security tax? | Nov 12, 2013 |
I pay just an income tax, but various accoountants vary in their opinions! And many freelancers, I repeat, pay nothing to no one.
Do you pay social security tax, do you deduct it from the foreign income in your countries?
| | | | David Wright
Österreich
Local time: 04:14
Deutsch > Englisch
+ ...
Basically, as a freelancer you are probably working for other businesses. They will file tax returns that include an expenditure "translations, paid to xxx". The tax office in question will on a random basis or systematically arrange for this to be checked against your tax return. SO: The taxman knows about most of your income. You can't hide it Income from another EU state undergoes the same process. The German tax authority will tell - in my case - the Austrian tax authority that my customers... See more Basically, as a freelancer you are probably working for other businesses. They will file tax returns that include an expenditure "translations, paid to xxx". The tax office in question will on a random basis or systematically arrange for this to be checked against your tax return. SO: The taxman knows about most of your income. You can't hide it Income from another EU state undergoes the same process. The German tax authority will tell - in my case - the Austrian tax authority that my customers are claiming payments to me as an expenditure.
It might be possible to hide money earned from non-commercial customers (if they exist!), and it might be possible to hide money from non-EU countries. Since I don't have either type of client, all me earnings get taxed. And I guess that applies to most of my EU colleagues. ▲ Collapse
| | | | Joakim Braun
Schweden
Local time: 04:14
Deutsch > Schwedisch
+ ...
| social security tax | Nov 12, 2013 |
I assume social security tax is what in other countries is called "social contributions"? For healthcare, pensions, unemployment insurance and so on.
In the Swedish case, it's as I wrote. Disregarding the pre-assessment aspect for the moment: If I earn €100 abroad, I declare it, pay about 32% social contributions, then (say) 35% on the remainder. I get to keep about 47% of the original amount.
These contributions and taxes are paid on net income (after business costs, which ... See more I assume social security tax is what in other countries is called "social contributions"? For healthcare, pensions, unemployment insurance and so on.
In the Swedish case, it's as I wrote. Disregarding the pre-assessment aspect for the moment: If I earn €100 abroad, I declare it, pay about 32% social contributions, then (say) 35% on the remainder. I get to keep about 47% of the original amount.
These contributions and taxes are paid on net income (after business costs, which are typically low for translators).
If the freelancer pays nothing to no one, then he works in the black economy and is presumably a criminal, facing several years in jail if caught. (Not even entering into the moral aspects of letting other people pay for your healthcare and pension...) ▲ Collapse
| | | | Tom in London
Vereinigtes Königreich
Local time: 03:14
Mitglied (2008)
Italienisch > Englisch
Marija Cvetkovic wrote:
.......... many freelancers, I repeat, pay nothing to no one.
In the end, they will pay. If you know anyone who is doing this, you should report them.
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Erik Freitag
Deutschland
Local time: 04:14
Mitglied (2006)
Niederländisch > Deutsch
+ ...
Marija Cvetkovic wrote:
And many freelancers, I repeat, pay nothing to no one.
Sure, as well as there are people who rob gas stations. You shouldn't take criminals as your role models...
| | | | Samuel Murray
Niederlande
Local time: 04:14
Mitglied (2006)
Englisch > Afrikaans
+ ...
| Whether you pay or not depends on local laws | Nov 12, 2013 |
Tom in London wrote:
Marija Cvetkovic wrote:
...many freelancers, I repeat, pay nothing to no one.
In the end, they will pay.
It really depends on local laws. Some countries have an income threshold below which you need not pay any taxes and below which you don't even need to declare your income at all. Different countries look at part-time work differently -- in some countries you have to declare every cent, and in others you only need to declare it if you exceed a certain number of hours and/or if it becomes your main source of income. If you hear about other freelancers who pay nothing, do not assume that their situation applies to you -- instead, find out from a tax accountant.
| | | | Sheila Wilson
Spanien
Local time: 03:14
Mitglied (2007)
Englisch
+ ...
| You couldn't hide every cent for 30-40 years | Nov 12, 2013 |
David Wright wrote:
it might be possible to hide money from non-EU countries.
You might be able to hide some of it for some of the time, but not all of it forever. And when your tax office finds out about one undeclared payment, would they stop there? Of course not! You would become their target for a meticulous audit. Your bank, PayPal and other similar accounts would all be thoroughly checked. Every cent that had come in that was not declared would be added trouble.
Personally, I wouldn't think it was worth it. Maybe if you were just translating for one summer before going to university, or something like that, but it's no way to make a career.
In some countries (e.g. France and Spain) freelancers have to register; in the UK, the US, and in many other countries, you don't have to register as such. But in almost every country in the world you are required to pay taxes on earned income. Each one of us needs income to run our own home or family; the government needs income to run the country.
| | | | Marija Cvetkovic
Kroatien
Local time: 04:14
Englisch > Kroatisch
+ ...
THEMENSTARTER | Sure foreign income is traceable | Nov 12, 2013 |
I had written a big response earlier but my computer froze, $%#
So about, is the foreign income traceable. Of course it is. The day I got my 1st foreign money 5 years ago, I got a call from a bank clerk who asked what the money was for. I had to run to the bank, open a dedicated account (giro) and report the income to my tax office.
But it seems I was an exception - other freelancers do not have bank clerks who are that thorough.
When I called the tax office, they said I... See more I had written a big response earlier but my computer froze, $%#
So about, is the foreign income traceable. Of course it is. The day I got my 1st foreign money 5 years ago, I got a call from a bank clerk who asked what the money was for. I had to run to the bank, open a dedicated account (giro) and report the income to my tax office.
But it seems I was an exception - other freelancers do not have bank clerks who are that thorough.
When I called the tax office, they said I will have to register a firm and pay all my monthly dues (social contributions, thank you!, and other taxes). But I said, my income will not be steady, I will earn 100 dollars this month, 50 the next, and then two months I will earn nothing.
I don't have a steady flow, this is only my "side activity".
The tax office clerk had no idea what to do. Then I found an accountant who suggested that I pay this income tax, which goes like this: I get 100 USD, I deduct 30% (which leaves me 70 USD) and then I pay 25% of that (17,5 USD) to the government.
Other accountants ae not happy with this, they say I should pay social contributions too. So it depends on the person I talk to.
EVERY SINGLE freelancer in Croatia that I've talked to is not paying anything to anyone. Some of them are students so the rules must be different for them.
Either way, thank you all for sharing the way it is in your country. I think I'll write a letter to my minister of finances.
I asked my tax office about VAT and they said I am not in the VAT system. So what I put on my invoices is just my ID number. I don't pay VAT to my government.
Another question, do you fill out the INTRASTAT?
[Edited at 2013-11-12 10:41 GMT]
[Edited at 2013-11-12 10:42 GMT]
[Edited at 2013-11-12 10:42 GMT]
[Edited at 2013-11-12 10:51 GMT] ▲ Collapse
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Vincenzo Di Maso
Portugal
Local time: 03:14
Mitglied (2009)
Englisch > Italienisch
+ ...
Dear Marija,
there could be a minimum threshold to pay social security, taxes and VAT in Croatia?
It's possibile that these translators you are talking about earn less than this minimum threshold so that they do not have to pay for this. Maybe some or most of them are not paying taxes within the rules as they are not earning a sufficient amount.
Of course if you pass a certain threshold you are due to pay taxes and social securities (don't know about Croatian tax systems and t... See more Dear Marija,
there could be a minimum threshold to pay social security, taxes and VAT in Croatia?
It's possibile that these translators you are talking about earn less than this minimum threshold so that they do not have to pay for this. Maybe some or most of them are not paying taxes within the rules as they are not earning a sufficient amount.
Of course if you pass a certain threshold you are due to pay taxes and social securities (don't know about Croatian tax systems and thresholds).
Of course if they are earning much and do not have to pay taxes, not breaking the law, that would be Paradise... so we'd all move to Croatia ▲ Collapse
| | | | | Austria as an example | Nov 12, 2013 |
Here in Austria you may earn up to 10.000 Euro without the requirement of a tax declaration.
However nobody is able to live with an income of 10.000 Euro/year here.
The tax is not the hardest part of my payments - this is still the social security payment, which is really tough.
All agencies in Europe will ask your for VAT number earlier or later and you get this VAT number from the tax authorities. As soo as you got this number, you have to point out your own VAT numb... See more Here in Austria you may earn up to 10.000 Euro without the requirement of a tax declaration.
However nobody is able to live with an income of 10.000 Euro/year here.
The tax is not the hardest part of my payments - this is still the social security payment, which is really tough.
All agencies in Europe will ask your for VAT number earlier or later and you get this VAT number from the tax authorities. As soo as you got this number, you have to point out your own VAT number and the VAT number of your client (agency) on all invoices and make a quarterly report to the finance authority and you should really never try to hide such an invoice from the authorities, because the amounts can be cross-checked, as said before. ▲ Collapse
| | | | Vincenzo Di Maso
Portugal
Local time: 03:14
Mitglied (2009)
Englisch > Italienisch
+ ...
Capesha wrote:
Here in Austria you may earn up to 10.000 Euro without the requirement of a tax declaration.
However nobody is able to live with an income of 10.000 Euro/year here.
The tax is not the hardest part of my payments - this is still the social security payment, which is really tough.
All agencies in Europe will ask your for VAT number earlier or later and you get this VAT number from the tax authorities. As soo as you got this number, you have to point out your own VAT number and the VAT number of your client (agency) on all invoices and make a quarterly report to the finance authority and you should really never try to hide such an invoice from the authorities, because the amounts can be cross-checked, as said before.
Yes, you get the idea. That's why I supposed that translators Marija is talking about are not necessarily working illegally, but may be working on an occasional basis.
However, whereas tax threshold is not necessarily low for an occasional translator, social security limits use to be considerably low and strict.
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