VAT Charges for Belarus Freelancers and Agencies

[Lena E]

Starting March 1st, Upwork will begin charging VAT on our fees to freelancers and agencies in Belarus. A Value Added Tax law was introduced in Belarus which applies to fees charged for electronic services from non-Belarusian businesses (like Upwork) to Belarusian consumers.

If you are a freelancer or agency on Upwork who is operating as a separate legal entity in Belarus, Upwork will not charge you VAT. To confirm whether or not you are a legal entity, we will begin asking freelancers and agencies in Belarus to enter their Taxpayer Identification Number (TIN).  We will be notifying all freelancers and agencies in Belarus via email. You will also see a notification when logging in.

• For freelancers and agencies that have entered a valid taxpayer identification number for the legal entity, Upwork will verify your TIN and will send you an email within 3 days letting you know if the information has been validated or declined. If validated, Upwork will not charge this tax and you will see “VAT Reverse Charged” on your invoice.

• For freelancers and agencies using Upwork as an individual entrepreneur and not for a legal entity, a 20% VAT will be applied to the fees we collect beginning March 1st (e.g. Upwork service fees, membership fees, or purchases of additional Connects). Per Belarusian law for digital services, the 20% VAT will be added to the applicable Upwork fees and will appear on your invoices as one bundled fee.

Here’s a simple example of how it would work, assuming the a 20% Upwork service fee:

Your contract amount	$100.00
Upwork service fee (including VAT) Upwork’s service fee is $100 x 20% = $20      E-services VAT to be paid to the Belarus government by Upwork is $20 x 20% = $4 Total fees including VAT is $20 + $4 = $24	-$24.00
Take-home earnings after service fees and VAT	$76.00

In other words, considering the example above, the user will only be charged VAT on the $20 freelancer service fee, so 20% of $20 means they will be charged $4 for VAT. These amounts will appear on invoices and in your Transaction History and will be calculated in U.S. Dollars.

If you have questions regarding your tax obligations, please consult your tax advisor.

For more information on Upwork charging VAT, see this help article.

For more information on VAT laws in Belarus, see here.

Let us know if you have any additional questions.

[Aleksandr S]

Not that I'm willing to pay more fees and taxes, but I hope you'll soon introduce similar rules for Russian freelancers as well.

[Igor L]

WIll upwork share personal info (login/name) with Ministry of Taxes and Duties of Belarus?

[Vladimir G]

Hi Aleksandr, thanks for raising this question, this is definitely on our immediate roadmap. 

Our team is working on updating the system and will be enabling VAT for customers located in Russia. We will be following up with an update once this goes live.

[Vladimir G]

Hi Igor,

I apologize for the delay in responding to your question. We report the VAT amounts we collect to the Belarusian government under Upwork’s name only. We will not share any of your individual information with the Belarusian government unless required by law or government regulation.

[Yuri H]

Not the best news. I have seen already deductions from my account.

The Tax Law in Belarus is called “VAT by foreign companies supplying cross-border online services to private consumers in the Republic of Belarus”. The foreign company is UpWork. Not me. Why the freelancers need to pay this tax? So, the correct example need to be:

Contract amount -  $100.00

Upwork’s service fee is $100 x 20% = $20     

E-services VAT to be paid to the Belarus government by UpWork is $20 x 20% = $4

Total fees including VAT is $16 + $4 = $20

Take-home earnings after service fees and VAT - $80.00

It kills the idea of remote working. You need to pay about a quarter of your income. That’s mean you work one week for nothing. Plus, some bank, wire transfer, debit cards fees… May be it will be more profitable to find clients in your own city or country.

I work as a legal entity for about couple of years. I am not a private consumer. I have sole proprietorship or individual entrepreneurship (Индивидуальный предприниматель). I have tried to add my TIN (УНП) but it was declined. I don’t know why.

[Vladimir G]

Hi Yuri,

I'm sorry about the way this update impacted you. To clarify the charge you're seeing on your end, a law was passed in Belarus where VAT is now charged to Belarusians when they purchase electronic services from non-Belarusian businesses (like Upwork). To comply with this law, we need to collect VAT on the services we provide to freelancers and agencies and forward this tax to your tax authorities. These include Upwork Service Fee and payments for Membership and Connects.

We checked and can confirm the TIN you provided cannot be verified as a legal entity. Only legal entities or representatives of legal entities are reverse charged VAT. Please consult a local tax advisor to understand your specific VAT responsibilities. Note that you'll be able to repeat the process once you're ready to provide a TIN of your business or a business you represent.

[Yuri H]

I see. Thank you.

[Anatoli B]

I refuse to support the government of the Belarus that tries to remain in power by applying terror and violence after failing to win the elections by vote counting in August 2020. As this is my personal choice, I would like to deal with this myself. Can you exclude me from your VAT processing agreement?

[Andrea G]

Anatoli, thanks for sharing your concerns. Upwork is required to collect VAT (a consumption tax assessed on Upwork’s supply of digital services) if you are using Upwork as an individual entrepreneur and not for a legal entity, and pay it to the appropriate government agency. Only if the freelancer validates their legal entity information, Upwork is not required to collect VAT from that freelancer. Otherwise, we aren't able to provide an exemption. If you don’t think you should be subject to VAT, please consult a tax advisor to discuss the matter.