How do I manage VAT as a freelancer? – Malt

This article explains VAT rules for freelancers on Malt: exemption thresholds, voluntary opt-in, and international rules.

In summary:

As a sole trader you may benefit from VAT exemption subject to revenue thresholds.
2025 service thresholds: €37,500 (base) and €41,250 (upper).
Update your VAT status in My Business as soon as your situation changes.

VAT for United Kingdom 🇬🇧

Do I have to charge VAT as a Sole Trader?
As a Sole Trader, you may be exempt from charging VAT if your turnover is below the threshold.
This means you do not charge VAT on your invoices, and you don’t need to file VAT returns.
However, you cannot reclaim VAT on your business expenses.

The VAT registration threshold is currently £90,000 of taxable turnover over the last 12 months.
If you exceed this limit, you must register for VAT with HMRC within 30 days after the end of the month when you went over the threshold.
From the first day of the second month after exceeding the limit, your sales are subject to VAT.

For example, if you exceed the threshold on May 14, 2024, you must register by June 30, 2024, and charge VAT from July 1, 2024.

What if I think I will temporarily exceed the VAT threshold?
If you expect your sales to temporarily go over the £85,000 limit, you can apply to HMRC for an exception from the VAT registration requirement.
To do this, write to HMRC and provide evidence showing that your turnover will likely be below £83,000 over the next 12 months.
HMRC will review your request and let you know if you qualify for the exception. If not, they will require you to register for VAT.
Can I choose to pay VAT voluntarily even if I am under the threshold?
Yes, you can choose to register for VAT even if your turnover is below the threshold.
You can apply online through your Government Gateway account, by post with a VAT1 form, or through an agent like an accountant.
The VAT registration will take effect from the date you choose.

Should I opt in for VAT?

Pros	Cons
You can reclaim VAT on your business expenses.	You must file VAT returns regularly.
This can improve your professional image and meet client expectations.	VAT charges may increase costs for customers who can’t reclaim VAT, like private individuals or charities.
You avoid penalties for exceeding the threshold without registering.

What should I do on Malt if I exceed the VAT threshold or choose to register for VAT?
First, make sure your legal status is correctly set as Sole Trader or Ltd in your profile.
Then, go to the “Taxes” tab in your profile and enter 20% as your VAT rate.

For ongoing projects where invoices are not yet issued:
• If it’s a fixed-price project, you can edit the quote directly from the project link and update the VAT
• For time-based projects, please contact support@malt.uk to update the job before invoicing.

For completed projects with invoices already issued:
• You need your client’s written approval to reopen and adjust the invoice. Send proof of their acceptance (email or screenshot) and the invoice number to support@malt.uk.
• Malt will then issue a credit note for the original invoice amount and create a new invoice including VAT.

If I run my business as an Ltd or Partnership, do I get VAT exemption?
Companies and partnerships can also qualify for VAT exemption if their turnover is below the same threshold as Sole Traders

VAT for UAE 🇦🇪

Do I have to charge VAT as a Sole Trader?
As a self-employed entrepreneur, you are entitled to VAT exemption.

VAT exemption means that you don't have to charge VAT on your invoices and, in principle, you don't have to file a VAT return.

On the other hand, you will not be able to 'reclaim' VAT on your business expenses.

To qualify for VAT exemption, your turnover (receipts) must not have exceeded AED 375,000 over the previous 12 months.

I operate as a business, can I benefit from VAT exemption?
Yes, the VAT exemption regime is available to all VAT taxpayers, regardless of the legal form of your company, provided that you do not exceed the exemption threshold.

If the threshold is exceeded
If your turnover for the last 12 months exceeds AED 375,000 or if you anticipate that the threshold will be exceeded in the next 30 days, you must register for VAT and obtain a tax registration number (TRN).

Leaving the basic VAT exemption scheme has the following effects:

You must register within 30 days of exceeding the threshold
The first transaction in which the threshold is exceeded is subject to VAT.
In principle, you can deduct VAT on your business expenses incurred from the same date.

If I do not exceed the threshold, can I voluntarily opt for VAT payment?
Yes, it is entirely possible to change your VAT taxation regime and leave the exemption regime, provided that your turnover or the amount of your expenses for the last 12 months (or if you anticipate that this amount will be exceeded in the next 30 days) is at least AED 187,500.

You must register on the tax authority's website. For more information on the VAT registration procedure, click here.

Warning! Once you voluntarily opt for VAT payment, you are bound by this option for a period of 12 months.

Should I opt in for VAT?

Pros	Cons
Invoicing VAT allows me to reclaim VAT on my business expenses.	Invoicing VAT will require me to regularly file VAT returns.
Invoicing VAT has a neutral impact on my business relationships with other professionals who can deduct VAT.	Invoicing VAT may increase the cost of my services if the client cannot deduct the invoiced VAT (e.g., an individual, an association, a school, a healthcare facility, etc.).
Invoicing VAT may give clients the impression that I already exceed the exemption thresholds and reinforces my professional image.
Some clients even require their suppliers to invoice VAT.
I don't have to worry about exceeding the threshold.

If I run my business as an Ltd or Partnership, do I get VAT exemption?
Companies and partnerships can also qualify for VAT exemption if their turnover is below the same threshold as Sole Traders

VAT for Netherlands 🇳🇱

Do I have to charge VAT as a Sole Trader?
As a self-employed individual, you can benefit from the VAT exemption scheme (“small business scheme” or “KOR”).
This VAT exemption frees you from charging VAT on your invoices (your invoices must state “invoice exempt from VAT under Article 25, Wet OB 1968”) and, in principle, you do not need to file VAT returns.
In return, you cannot reclaim the VAT on your business expenses.
To benefit from the “KOR” scheme, your annual turnover (collected income) must not exceed €20,000.

I am a business, can I benefit from the VAT exemption?
Yes, the small business scheme is available to all VAT taxpayers, regardless of your company’s legal form.

Choosing VAT exemption
• New business: You can apply as soon as you have received your intra-community VAT number. The exemption will then take effect on the first day of the next quarter (January 1, April 1, July 1, or October 1). The request must be submitted at least 4 weeks before the planned date to your tax office.

You can only benefit from the exemption after your request has been approved and confirmed by the tax authorities. Therefore, until then, you must continue charging VAT and filing VAT returns.

• Existing business: You must submit your request to your tax office within the same deadlines as a new business. Note that having a turnover below €20,000 in the previous year does not guarantee acceptance of the exemption request.

Important! Once your request is approved, you are required to use the scheme for at least 3 years unless your turnover naturally exceeds €20,000.

If you exceed the threshold
If your turnover exceeds €20,000 during the calendar year, you generally lose the right to the exemption and enter the regular VAT regime.
Leaving the VAT exemption scheme has the following consequences:
• You must immediately inform your local tax office by returning the deregistration form
• Charge VAT on the first transaction that exceeds the threshold
• You can deduct VAT on your business expenses from that date
• You cannot use the exemption again for a period of three years

Example: You benefit from the exemption in 2024. On September 15, 2024, your turnover is €19,750. The next day you receive a €500 advance for a new assignment, pushing your turnover beyond €20,000 for the year. This ends your exemption, and from that moment you apply the normal VAT rules and charge VAT for the new assignment.

I use the exemption and do not exceed thresholds but want to start charging VAT again and reclaim VAT on expenses. Is that possible?
Yes, the VAT exemption scheme is optional. If you have requested to apply the Small Business Scheme, you cannot revert to charging VAT before 3 years unless your turnover exceeds €20,000.
Deregistration from the scheme takes effect on the date specified in your deregistration form (usually the first day of the next VAT return period). Make sure to send your request at least 4 weeks ahead.
You will receive an acknowledgment within 15 days and a confirmation letter with the end date of your exemption within 6 weeks.

Should I opt in for VAT?

Pros	Cons
Ability to reclaim VAT on business expenses	Obligation to regularly file VAT returns
Neutral impact on professional relationships with VAT-registered clients	Possible price increase for clients who cannot reclaim VAT (e.g., private individuals, associations, schools, health institutions)
Can reassure clients that you have not exceeded exemption thresholds and enhance your professional image
Some clients require their suppliers to charge VAT
No worry about exceeding the €20,000 threshold

VAT for Belgium 🇧🇪

Do I have to charge VAT as a Sole Trader?
As a self-employed entrepreneur, you can benefit from VAT exemption.

VAT exemption allows you to be exempt from charging VAT on your invoices (your invoices must indicate "VAT Exemption - small business scheme") and generally not have to submit a VAT return.

In return, you will not be able to "recover" VAT on your business expenses.

To benefit from VAT exemption, your turnover (collected income on a cash basis) for the calendar year must not exceed €25,000.

Warning! The threshold calculation is prorated over 12 months in the case of starting activity during the year.
Example: I start my activity on July 1, 2024, so the threshold will be €12,500 instead of €25,000.

I operate as a business, can I benefit from VAT exemption?
Yes, the VAT exemption regime is available to all VAT payers, regardless of the legal form of your company.

Option for VAT exemption

For new businesses:

If you wish to opt for the VAT exemption regime and meet the conditions, indicate your choice in form 604A.

For existing businesses:

To request the exemption regime, you must submit an amended VAT identification declaration (form 604B) via MyMinfin.

There are two possible entry dates into the regime:

1st of July: you must submit the request before the 1st of June
1st of January: you must submit the request before the 15th of December

More information can be found here: VAT exemption

If the threshold is exceeded
If your turnover for the calendar year exceeds €25,000, you will generally lose the benefit of the exemption regime and switch to the regular VAT regime.

Exiting the VAT exemption regime has the following effects:

You must inform your local administration promptly by registered mail
Submission to VAT for the first transaction following the threshold being exceeded
You can generally deduct VAT on your professional expenses from the same date, and even some past expenses (under certain conditions)
You must file an annual client listing declaration

Example: you exceed the threshold in September 2024. The first VAT return will be for the third quarter of 2024, which must be submitted no later than October 20, 2024.

What if I think I will temporarily exceed the threshold?

If you anticipate an exceptional exceedance, you can benefit from tolerance from the tax authority. In this case, you must inform your local administration by registered mail, stating that you expect this not to exceed 10% (i.e., €27,500) and that it will be exceptional.

I do not exceed the threshold, can I voluntarily opt for VAT payment?

Yes, it is possible to change your VAT taxation regime voluntarily and leave the exemption regime.

Similar to applying for the exemption regime, you must submit an amended VAT identification declaration (form 604B) via MyMinfin.

There are two possible change dates:

1st of July: you must submit the request before the 1st of June
1st of January: you must submit the request before the 15th of December

Attention, if you leave the VAT exemption regime (by voluntary choice or due to exceeding the threshold), you will not be able to return to it until January 1st of the third year following your regime change..

Example: If you leave the VAT exemption regime in July 2024 (due to exceeding the threshold or by choice), you will not be able to re-opt for the exemption regime before January 1st, 2027 (the option must be submitted before December 15th, 2026).

Should I opt in for VAT?

Pros	Cons
Invoicing VAT allows me to reclaim VAT on my business expenses.	Invoicing VAT will require me to regularly submit VAT returns.
Invoicing VAT has a neutral impact on my business relationships with other professionals who can deduct VAT.	Invoicing VAT may increase the cost of my services if the client cannot deduct the invoiced VAT (e.g., an individual, an association, a school, a healthcare institution, etc.).
Invoicing VAT may give my clients the impression that I have already exceeded the threshold for exemption and strengthens my professional image.
Some clients even require their suppliers to invoice VAT.
I don't have to worry about exceeding the threshold of €25,000

What should I do on Malt if I exceed the VAT threshold or choose to register for VAT?
You must change your legal status to the following: "Self-employed / Micro-business with VAT option”

You must indicate 21% in the"Taxes" tab of your profile.
You can then modify your missions as follows:

Ongoing mission (invoice not issued):
- For short missions, you can modify the quote directly from the mission URL and manually adjust the VAT rate to 21%.
- For recurring missions, you will need to contact support@malt.com so that we can update the mission for invoices that have not yet been issued.
Completed mission (invoice issued):

You will need to contact your client to obtain their written agreement to reopen the invoice(s). You must send us an email to support@malt.com with the proof of the client's acceptance (email or screenshot) , along with the invoice number(s) to be modified. We will then issue a credit note for the amount already paid while issuing a new invoice that includes VAT.

International VAT Management
Invoicing a foreign customer
• In a B2B relationship, you do not charge VAT. Your invoice should ideally include your foreign client's valid VAT number and state: “Reverse charge – customer to account for VAT.”
• In a B2C relationship, you generally do not charge VAT for intangible services like consulting.

Receiving an invoice from a foreign supplier (including Malt’s foreign entities)
• If you are a VAT-registered business, the foreign supplier should not charge you VAT.
• Instead, you must apply the VAT reverse charge. This means you pay UK VAT (usually 20%) on the service and report it on your VAT return.
• You can usually reclaim this VAT on the same return, making it cost-neutral.
• If you benefit from VAT exemption, you’ll need to register for VAT with HMRC if you purchase goods or services from EU suppliers.

For more detailed information on international VAT, please refer to official VAT guidance here.

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