Translation income classification
Translation and interpretation are service income. The location where you perform the work determines where it's primarily taxable. If you translate documents while sitting in Spain for a German client, Spain has the primary taxing right under most treaties.
Agency vs direct client work
Many translators work through agencies (Gengo, TransPerfect, SDL) and directly with clients. Agency payments are simpler — one client, one country. Direct international clients create multiple country-pair obligations. Track income by client country.
Interpretation and travel
Unlike translators, interpreters sometimes travel to the client's country. Working physically in another country — even for a few days — can create tax obligations there. Check the business visitor provisions in the relevant tax treaty before traveling.
Literary translation and royalties
Translating books, films, or other creative works may generate royalty income if you negotiate ongoing royalties rather than a flat fee. Royalty income often receives favorable treaty treatment with reduced withholding rates.
Translator deductions
Deduct: CAT tools (SDL Trados, MemoQ, Wordfast), dictionaries and reference materials, terminology databases, professional memberships (ATA, ITI), continuing education, specialized keyboards, and interpretation equipment.