Frequently asked questions about VAT for EU freelancers

[Anja B]

Hi,

Im not legally obligated to register for VAT in my country (Ireland) untill I reach the treshold of 33,800E per year, therefore I dont have VAT number yet, should I just leave it blank? 

Thanks in advance for your reply.

Cheers,

Anja 

[Joachim M]

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@Anja B wrote:

Hi,

Im not legally obligated to register for VAT in my country (Ireland) untill I reach the treshold of 33,800E per year, therefore I dont have VAT number yet, should I just leave it blank? 

Thanks in advance for your reply.

Cheers,

Anja 

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Yes, leave it blank. On the invoice for the commission Upwork will then charge the Irish VAT to you.

[Olga B]

Hello Upwork,

I think you need to difereciate the rules on VAT as the EU directive is the GUIDANCE that countries apply DIFFERENTLY ACCORDING TO THEIR NATIONAL LAWS. Repeating the mantra of EU VAT taxation makes you look unprofessional. In the EU, where I work and pay taxes there in NO OBLIGATION FOR SOLE TRADER or SELF-EMPLOYED to register as VAT payer if you did not earn more than £81,000!!! So please do your homework and stop charging people as the money you collect will be not legal - and EU will come to you on that ... Thank you for your consideration, regards, Olga

[Valeria K]

Hi Olga,

Please, note that unless the freelancer adds their VAT number, Upwork is required to charge them VAT for services it provides to them (Service Fee, Membership and Connects purchases) and not on services freelancers provide their clients. Please, check this help article for more information.

[Joachim M]

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@Olga B wrote:
Hello Upwork,

I think you need to difereciate the rules on VAT as the EU directive is the GUIDANCE that countries apply DIFFERENTLY ACCORDING TO THEIR NATIONAL LAWS. Repeating the mantra of EU VAT taxation makes you look unprofessional. In the EU, where I work and pay taxes there in NO OBLIGATION FOR SOLE TRADER or SELF-EMPLOYED to register as VAT payer if you did not earn more than £81,000!!! So please do your homework and stop charging people as the money you collect will be not legal - and EU will come to you on that ... Thank you for your consideration, regards, Olga

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Hi Olga,

Instead of flaming Upwork I suggest you talk to your tax advisor. You are confusing your obligation to charge VAT with your obligation to pay VAT. In your country you are not obliged to charge VAT if you don't earn GPB81,000. You are never exempted from paying VAT. If you buy a car in the US and import it into the UK you have to pay VAT. With Upwork you buy/import a service from an US company, naturally VAT is due. If you don't have a VAT ID Upwork is obliged to charge this VAT to you and pay it to HMRC. If you have a VAT ID, Upwork would not charge it but you would be obliged to report the import and pay directly. So, first get your facts right. 

[Stoyan D]

I'm having serious issues when working through UpWork and trying to make everything legal. Here's the issue.

Regarding the EU laws, when I (my company) receive money I need to invoice the company I'm getting the money from. So there are 2 possible options here :

• Invoice UpWork
• Invoice the "real" client

The first option is impossible because of many reasons, that's obvious.

Now the second option is what seems to be the logical one, right ? Yes, but in reality it's still impossible. UpWork is being invoicing my clients on my behalf (which is another illegal act regarding the EU laws). I had to contact each my client and ask them to send me back the invoices which UpWork has been sending them.

But this again is not working, because of the number invoice. It has to be sequal , I can't declare a "random" invoice number, it's still illegal.

The only "legal" solution I've found is to ask my customers to ignore the invoices that UpWork is sending them and I have to create another invoices, for the same amount but with different invoice number and of course my company details. And it's still far away from the perfect solution.

UpWork, why don't you make it easy for the European Union ? I perfectly realize that your target is USA and Asia but hey, EU is not that small either In the same time the issue I'm talking about is based on one of the most common financial terms of EU so how didn't you find a solution for this ?

I just want to work legally, declare my income and pay taxes. Currently I can't.

[Gary C]

I live in France and submit my tax returns in the UK. I have yet to encounter a problem - or be asked for invoices.

I have simply printed out the "transaction history" on the "contracts" page of "my jobs"

[Joachim M]

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@Gary C wrote:

I live in France and submit my tax returns in the UK. I have yet to encounter a problem - or be asked for invoices.

I have simply printed out the "transaction history" on the "contracts" page of "my jobs"

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 Gary,

The issue may be overrated at present but, IMHO the tax authorities haven't yet caught up with the technology. The hard times will begin once they catch up and realise this is a mulit-billion business and they are missing out on taxes.

[Teri S]

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@Joachim M wrote:

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@Gary C wrote:

I live in France and submit my tax returns in the UK. I have yet to encounter a problem - or be asked for invoices.

I have simply printed out the "transaction history" on the "contracts" page of "my jobs"

---

 Gary,

The issue may be overrated at present but, IMHO the tax authorities haven't yet caught up with the technology. The hard times will begin once they catch up and realise this is a mulit-billion business and they are missing out on taxes.

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I can say that Sweden has already noticed this business and recently contacted me to ask why I didn't register any income from Upwork in my latest personal tax returns (Answer: I work through my limited company, which pays the VAT and taxes and from which I take a registered salary.) They're making me provide pages of evidence to support my claim that I've paid all the taxes and VAT due. I doubt I'm the only one they've contacted.

I've had to explain why I can't access the invoices Upwork issues with my name on. Hopefully they'll accept my solution.

[Sandra L]

I fully agree with you, Stoyan. 

I face the same issue as austrian entrepreneuer and chose for the same solution like you (issuing my own invoices). On top of your described difficulty there is another rotten egg on the side of Upwork:

European business have to invoice services to their clients according to VAT-law, which is applicable differently in each case (B2C, within EU our outside of EU). Upwork fully ignores this fact, and just issues ALL invoices in our names as net revenue with the addition: VAT Reverse Charge applies. This is absolutely wrong, asl VAT Reverse Charge is ONLY applicable as B2B WITHIN EUROPE and only when the client is a valid entrepreneur with VAT Number. In all other cases VAT needs to be added or does not need to be added but then still VAT Reverse Charge does not apply -> Another VAT-law is applicable that shifts taxation to the client but it is not VAT Reverse Charge which is a EU-internal procedure.

Welcome into the jungle...