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Frequently asked questions about VAT for EU freelancers

Moderator
Valeria K Moderator Member Since: Mar 6, 2014
31 of 316

Paulo,

 

You can access your support tickets on this page.

~ Valeria
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Community Guru
Joachim M Member Since: Mar 23, 2015
32 of 316

@Andre B wrote:
Hello,

In Portugal, a VAT number is the same as the número de identificação fiscal, which is not provided by thr Portugueses government to EU VIES database, unless you're a company/ a business. Thus, how are you going to validate my VAT number, which is the number I've been using all my working life? I've already checked on in and it retrieves no results, as I'm not a company. I'd suggest you to read how this VAT number works in every single country to avoid charging VAT to freelancers who actually have one, but its not available at VIES database.

Dear Andre,

 

As a freelancer you are a business by EU standards. Apply for a VAT ID but it really won't make much of a difference. If you successfully use the VAT ID, Upwork won't charge VAT to you but print reverse charge on the invoice. At the same time this will be filed via  MOSS. You are then obliged to also file the invoice and pay the VAT in your country. So you will be paying the VAT either way. 

 

I would like to point out that you were obliged to pay importation VAT on Upworks invoices for commission all the time, same with any other service or product you purchased for your business outside of Portugal.

Active Member
Olea M Member Since: Jun 22, 2016
33 of 316
 
Active Member
David G Member Since: Oct 30, 2015
34 of 316

It's similar in France. Most freelancers will be autoentrepreneur professionals, with earnings under 32.000 euro per year. and therefore exempted from VAT and don't get a number either. What this boils down to is that in moving from Elance to Upwork, the service fee has gone from 8.75% to 11.90%, a 36% increase. I have often absorbed the fee for a client, to offer a better price to them, but I can no longer do that.

 

I suggest that one solution would be to have all bids done without the service charges. and for Upwork to advice clients that 11.90% will always be added by Upwork to the freelancer fee, period. That will protect freelancers from losing a significant part of their earnings and make transferring to you a lot more attractive than it is right now!

Active Member
Karine T Member Since: Nov 16, 2015
35 of 316

Hello David,

 

I am also French and an autoentrepreneur. I've been having a conversation with Upwork for a month now about this issue.

Upwork keeps on asking me a VAT number when I've been explaining on and on that autoentrepreneurs CANNOT provide a VAT number since they don't have one (that's the whole point of the autoentrepreneur status) but they keep on asking me for this number again and again.

Any idea about how we, French autoentrepreneurs, can sort this through without having to leave Upwork?

Community Guru
Joachim M Member Since: Mar 23, 2015
36 of 316

@Karine T wrote:

Hello David,

 

I am also French and an autoentrepreneur. I've been having a conversation with Upwork for a month now about this issue.

Upwork keeps on asking me a VAT number when I've been explaining on and on that autoentrepreneurs CANNOT provide a VAT number since they don't have one (that's the whole point of the autoentrepreneur status) but they keep on asking me for this number again and again.

Any idea about how we, French autoentrepreneurs, can sort this through without having to leave Upwork?


Hi Karine,

 

You don't need a VAT ID. Upwork will then charge you French VAT on their invoices for the fee. Frankly the result is identical to having a VAT ID. Also with a VAT ID you would be (and have always been) obliged to pay VAT on Upworks invoice for the service fees. You are not exempted from paying VAT on your purchases only from charging VAT to your clients.

Ace Contributor
Cecilia L Member Since: Oct 28, 2015
37 of 316

Hi Garnor,

 

Thank you for these FAQs. I still have a couple of questions:

 

- You are still not specifying what kind of VAT are you going to apply - standard or reduced? In the list of VAT rates you linked, I can see three different VAT rates for Italy, for example (there are different rates for other countries too.)

 

- Could you give us a date by when the invoices will be available in the Report section? Invoices appeared automatically on Elance.

 

Thank you.

Community Manager
Garnor M Community Manager Member Since: Oct 29, 2014
38 of 316

 


@Cecilia L wrote:

Hi Garnor,

 

Thank you for these FAQs. I still have a couple of questions:

 

- You are still not specifying what kind of VAT are you going to apply - standard or reduced? In the list of VAT rates you linked, I can see three different VAT rates for Italy, for example (there are different rates for other countries too.)

 

- Could you give us a date by when the invoices will be available in the Report section? Invoices appeared automatically on Elance.

 

Thank you.


 Hi Cecilia,

- Standard rate (note: I'm double checking this and will come back if it's anything different)

 

- These reports will be available when VAT begins getting assessed, i.e. starting December 1st (November 10th, for Spain and Ireland).

Active Member
Alex C Member Since: Jun 22, 2015
39 of 316

Dear Upwork,

 

Since the VAT is a tax, I want to know if this will be treated as one. Meaning that my earnings won't be affected for an ongoing contract - EX: Supposely I have a contract where I specified that my earnings (without any fees) will be $10. Now, after this tax collection, I do expect that I still earn $10 for that contract, and you charge the customer for VAT.

 

Because the VAT is always paid by the purchaser of goods/services.

 

 

Many thanks,

Alex

Community Manager
Garnor M Community Manager Member Since: Oct 29, 2014
40 of 316

Hi Alex,

See my answer to #3 above:

 

3. What am I paying VAT on? Will my earnings to-date be assessed VAT by Upwork?

 

VAT is not being charged on your earnings from your clients. That is a separate question and you should consult your tax advisor whether to charge your client VAT for your services. Upwork will only charge VAT on the electronically supplied services (ESS) we provide to you, which are comprised of the following:

 

  1. The service fee you pay to Upwork.
  2. Your purchase of add-on Connects.
  3. Your freelancer membership fee (if you’re on a Premium plan).

 

Here’s a simple example of how it works on one of your contracts:

  1. Your contract is for a total amount of $1,000 and you are paid $100 this week
  2. The Upwork service fee on that $100 payment is 10%, or $10
  3. Your country’s VAT rate is 19%
  4. Upwork will charge VAT in the amount of $1.90, which is 19% of the $10 service fee
  5. This amount, $1.90 will be shown in your Transaction History reports
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