VAT Charges for Russia Freelancers and Agencies

[Lena E]

UPDATE 4/18/19:  Upwork will begin collecting Value Added Tax (VAT) from all freelancers and agencies who use Upwork in Russia on April 25, 2019. No action is needed on your part. Individual freelancer data will not be provided when Upwork remits VAT.  

Hi everyone,

As an update to Russian freelancers and agencies on Upwork, we will soon begin collecting 20% Value Added Tax (VAT) on our fees to all freelancers and agencies in Russia. This change is due to a new law passed in Russia that requires Value Added Tax (VAT) be applied to sales of electronic services from non-Russian businesses (like Upwork) to all Russian consumers and businesses.

The 20% VAT will only apply to fees collected by Upwork. This includes service fees on contracts, membership plans, and the purchasing of Connects. The 20% fee DOES NOT apply to withdrawal fees or your contract earnings.

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

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

In other words, considering the example above, you will only be charged VAT on the $20 freelancer service fee you pay, meaning you will be charged $4 for VAT. These amounts will appear on your invoices and Transaction History and will be calculated in U.S. dollars. Invoices will also be updated to include Upwork’s INN number.

We will update Russian freelancers and agencies directly through email with the timing on when we will begin charging VAT. If you have questions regarding your tax obligations, please consult your tax advisor.

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

[Mikhail P]

Hi Lena.
Accroding Russian Tax Rules, we must declare full amount of our income (including Upwork fees) as Tax calculation base.
Will be changes in confirmation of service signed document with this last changes for VAT calculation?
Will be possible to see 4 numbers in this doc: full earning amount, upwork fee, VAT amount, withdrawal amount?

[Valeria K]

Sorry about the delayed response, Mikhail.

We don't have any plans to add those items to Confirmation of Services. VAT is shown on your invoice, which can be found under Reports > Transaction History. If you have any questions on how to report your Upwork earnings, we would recommend that you contact your local tax advisor

[Anton V]

Hello,

What should I enter in VAT section in VAT number field in profile Tax Information page?

In Russia we have:

Tax payer ID - INN - 12 digits number;

Legal company unique ID - 15 digits number.

Which one do you actually need?

Thanks,

Anton.

[Valeria K]

Hi Anton,

You don't need to enter any numbers on the Tax Information page. The field you are referring to was displaying for short amount of time due to a technical issue and shouldn't be showing anymore.

Sorry about any confusion this has caused.