Frequently asked questions about VAT for EU freelancers

[Harvie S]

I hope someone can confirm for me,  I live in Thailand (10 months+ of the year) but am a UK citizen. Acorrding the FAQ above I am charged by Thailand VAT.

When I go home to England for the 2 months, I must then change my address to the UK and I'll be charged the UK VAT rate assuming I don't supply my own VAT number.

Is this correct?

Thanks.

[Stephen B]

@Garnor

 "Hi Cecilia,

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

I sincerely hope not. In Ireland standard rate of 23% is for goods, and reduced rate of 13.5% for services. In no way can what Upwork provides be described as a good  - it has to be a service, so it has to be charged at 13.5%. This is just one example of where I don't believe that you will get it right for every one of the EU countries; and while I will pay the VAT grudginglly (though think it should have been absorbed by Upwork), I will be vehemently against paying the wrong rate. I'll just wait to see if they can get it right.

@Garnor again

You've gone some way to clearing up a few things on here. But it begs the question, with respect - why, oh why, could someone not have spent the time preparing this information BEFORE the confusing and mixed-up hald-informed thread released yesterday? It would have saved a lot of worry and consternation (and tired em all the reading...)

[Garnor M]

It's the standard rate for ESS (electronically supplied services) Stephen.

Glad to hear the information shared here helps to clarify. We thought the materials we had prepared already would suffice. Judging by the reaction, it wasn't enough. We certainly want to have clear and sufficient information for all features and policies and we'll continue to try and improve in this regard.

[Garnor M]

Hi Harvie,

VAT is only being assessed in EU countries so if you're registered in Thailand, you should change the location on your profile settings so our system adjusts accordingly. The second part of your statement is correct, that is, "When I go home to England for the 2 months, I must then change my address to the UK and I'll be charged the UK VAT rate assuming I don't supply my own VAT number.." 

[Gabrijela S]

I'm still not sure if I understand, VAT is for Upwork services only so freelancers still have to pay taxes in their own country? 

[Garnor M]

Correct.

[Costin M]

You gave us this example:

"

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

"

We are talking about 2 different things here:

1. Our invoice for the client is $90. We need to be able to send this invoice  to our client using odesk/upwork, but for this we need to know all the information about the client because the invoice must meet some requirements.

2. Odesk fee is $10+VAT ($1.9) = $11.9. We need to gave us your invoice for this amount.

PS. Elance greatest fee is 8.75, how com odesk cannnot use percent which is used by Elance?

[Donia A]

And just when I was beginning to think that this UpWork thing will work you come up with this.

Please explaing to me why will this VAT be charged to us? I already pay you %10 of my work for services inferior to Elance and now you are adding the taxes YOU should pay, not us!

This will only guide more and more freelancers to take their work elsewhere and lose your trust in you. 

At this moement I am absolutely shure that in the future you will add more taxes and service fees. 

[Joachim M]

---

@Donia A wrote:

And just when I was beginning to think that this UpWork thing will work you come up with this.

Please explaing to me why will this VAT be charged to us? I already pay you %10 of my work for services inferior to Elance and now you are adding the taxes YOU should pay, not us!

This will only guide more and more freelancers to take their work elsewhere and lose your trust in you. 

At this moement I am absolutely shure that in the future you will add more taxes and service fees. 

---

Donia, to save Garnor the trouble of answering and I can be blunt, Garnor not. Upwork is just complying to regulations imposed on them by the EU. YOU owe the VAT to your government.  YOU have always owed the VAT to your government. YOU have always been obliged to report your purchase of services from Upwork/Elance to your revenue service and pay importation VAT on it. Extremely blunt now: If you and others didn't do it in the past you are guilty of withholding taxes.

[claudia n]

Thank you Garnor And Joachim for your valuable details .

Can you please also let me know this .

How the information regarding VAT I will be disclosed with our countries' tax offices? I don't recall adding any tax identification numbers to the site, even address wasn't verified in any way. Is it going to be bulked up e.g. monthly transfer between UpWork and Romania/Bulgaria etc , or individually for every single freelancer? 

Thank you and please let me know , 

Claudia N