Name on a received invoice?

[#1]

I have a quick question on the invoices you receive from Upwork. As a client, when receiving an invoice from Upwork whose name and address is shown on that invoice? Is it Upwork itself or is it the name and address of the freelancer that was hired by you? So who are you paying according to the invoice, Upwork or the freelancer?

[#2]

5 days I'm waiting for an issue before getting start with upwork... or jumping to an other one...

Thanks for your positive issue for EU companies.

[#3]

any forecast about this?

[#4]

Silence more than two weeks now...

[#5]

i feel that the decreased number of people posting in this discussion is directly related by the decreased hope for a win win solution. As told, scouting here, and awarding otherwhere, will be the most adopted solution by anyone has a continuative relationship with a developer. and this is stupid, cause are exactly the kind of relationship that generate more $ volume 

[#6]

Maybe. But there is another reason: All communication with Upwork seems to be asymmetrical. Always announcements of changes people do not like and in regard of this topic "invoices" the company has stopped communicating weeks ago and maybe even stopped listening.

[#7]

Lena, can you please update us? It's now September.

[#8]

Hi Krisztina and others,

The update for invoices is about to be implemented. It's been delayed due to certain issues. Rest assured, however, that the team is working to make sure it's fixed as soon as possible.

[#9]

There was a lot of written about who is the client, the buyer and the seller, with references to the terms and conditions of the Upwork service. But the ToS are probably irrelevant, as the reality is completely different. Let me present my point of view:

1. A tax review will check if invoices and bank transfers match. As a freelancer, all my bank transferes are on behalf of Upwork (not the client). As a result, If I make-up an invoice to a client, it has nothing to do with the real money transfer, both in terms of amount and name, and will create a lot of problems with the tax authorities. Conclusion: I will issue an invoice where Upwork is my client. And I will have to pay a VAT on this amount, as I am based in EU and Upwork is based in US. 

2. For this invoice I need the tax number of Upwork. After long exchange of mails, finally I have a California tax ID, which is not the same as the IRS tax ID; still I have official communication with Upwork to show and Tax ID to put on my invoices.

3. If I decide to declare the full value of the contract with the client and reducie it with the fee paid to Upwork, I will have to present an invoice issued by Upwork to me. This has never happen, so it will not be accounted as a cost, As a result, in reality, Upwork is not a service provider to me, it is my client that resells my services to the clients. I guess any judge will take this decision based on the real flow of money and documents (or lack of documents). And in this case Upwork will have to pay VAT on ALL services sold through its platform, not only on the 10% fee charged. And this may ruin it completely. . 

4, I will only appreciate if Upwork can get valid EU company registration with tax ID. Under EU rules, export of services is VAT free (if the client is registered with EU databse for intracommunity services) and I shall not charge VAT on my invloces to Upwork. It will not matter where my clients are based, as in reality my client is Upwork - they are the guys that pay me and that never issue an invoice for the 10% feen (I mean, legal invoice, both with my name, address and tax id, as well as with its name, address, tax id, service amount, vat charged (or not), etc.)

[#10]

Todor, I do not know in which European country you live. If we send invoices from Germany to a client in US this is not taxable and therefore without VAT. If Upwork would have a European base and be obligded to pay taxes in Europe than invoices send to Upwork would be added by 19% VAT.

In specific cases you may be eligible to do reverse charge. That means the client (Upwork) has to pay VAT in the country of its European base, maybe Ireland instead of Germany, but the service is not VAT-free, the VAT is only paid in different countries. Please be aware that I describe the situation from a German point of view, the situation may be different in other European countries. Taxes and especially VAT is rather complicated, therefore large companies use specialists to deal with these problems. 

[#11]

Hi Margarete, I think there is EU Directive that regulates the VAT taxation on services within EU. You can check it also on the EU website "If you sell goods to another business and these goods are sent to another EU country, you do not charge VAT - if the customer has a valid VAT number." Please check 

http://europa.eu/youreurope/business/vat-customs/cross-border/index_en.htm 

The key here is for your client 1) to be based in another EU country and 2) to have been registered for VAT purposes in the VIES database. The link to the dabatase to check if your client is registered is:

http://ec.europa.eu/taxation_customs/vies/ 

I have problems with some clients that are not registered in the VIES database, so I have to charge VAT in this case. 

I have to check how it work on exporting services to US, as I am preparing to start "invoicing" Upwork.

[#12]

Hi Todor, Yes I know that but goods are not same like services. I already make use of not charging VAT to clients in European countries (outside of Upwork and Elance), but each case has to be checked individually. I do not apply VAT for services but the client has to pay VAT for this in his country. At least you need the help of a tax consultant, but they are not always able to answer all questions. It is sometimes difficult to find out everything you need to know. That is why many companies use the help of specialists to clarify the tax regulations for all the different markets. Good luck!

[#13]

The VAT regulations are very complex, but my this is my understanding.

These are UK regulations, but as they are based on EU regulations I would imagine that they are standard throughout the EU.

1. If you are VAT registered, and I would suggest that most freelancers on Upwork are not, or need not be, registered, when supplying services to business customers it is their location that counts as the place of supply.

2. All the work done on here can be classified as 'Intangible'

3. The regulations for digital platforms state;

If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer.

4. Therefore, as Upwork sets the terms and conditions and authorises payment, they are responsible for VAT to the client.

I would suggest that all work done through Upwork is a digital service. But I'm sure that this could be argued

As Upwork is outside the EU all services/goods supplied are zero rated but should be accounted for on the VAT return.

[#14]

I had doubts if we should comment on the VAT topic here or at another thread, but as the general topic is the invoicing from/to Upwork and between freelancers and clients, I think the VAT forms important part of each invoice. As a result, the tax location of Upwork and the issue if it invoices the clients or not might have serious impact on the total cost to the clients.

Another aspect is that, if you want to make a living as a freelancer, probably in most of the countries you should register as a business, in order to avoid problems with the tax authorities. Not that much on the personal income tax (as the freelancer may not reach the non-taxable minimum), but as the tax authorities always ask for the VAT.

With regard to the VAT, traditionally, it was difficult to prove that the supplier exported the service, as it is indivisible from the person/entity that provides it. Most services were considered produced and delivered within the country of origin, and therefore almost all invoices for services (exported or not) had to include VAT. The only exception was when the service provider traveled to the client’s country – than the services was considered exported.

With the creation of the common market this approach started to create problems for the free market of services. As a result an EU Directive 2008/8 was adopted, regulating the place of provision of services and their taxation.

http://admin.interact-eu.net/downloads/1621/Directive_2008_08_EC_on_Place_of_Supply_of_Services.pdf

Let me try to briefly present the current state of the VAT for services within EU (quotations from the above Directive):

1. “For all supplies of services the place of taxation should, in principle, be the place where the actual consumption takes place”. In practical terms it means, all services are treated as exported, and no VAT shall be included in the invoice. Nevertheless, there are some rules and exceptions on not including VAT in the invoices
2. “For supplies of services to taxable persons, the general rule with respect to the place of supply of services should be based on the place where the recipient is established, rather than where the supplier is established “. It means that your client should be a business entity, with tax number, in order to put a 0% VAT on the service provider invoice.
3. “Where services are supplied to non-taxable persons, the general rule should continue to be that the place of supply of services is the place where the supplier has established his business.” The only way to prove that the client is taxable person is to check the VIES database; if it is not included, it is not a taxable person, and the service provider should include VAT in its invoice. The link to the VIES database is in my previous posting.
4. The VIES database is “a single point of electronic contact for VAT identification”
5. The suppliers of the services should always declare within the invoice that it charges no VAT due to the EU Directive 2008/8, and attach a copy of the printout from the VIES database demonstrating that the clients with the same tax ID is registered (existing). This is practical advise, not written regulation. 
6. There are some exceptions, as some services are still considered provided where the supplier is established (intermediation, real estate, etc.). I think these exceptions do not apply to 99% of the people working on Upwork.

In practical terms, what it means for clients and freelancers on Upwork:

1. If we are within EU, and the document flow is for the freelancer to invoice the client, we should not include VAT
2. The best is for Upwork to have subsidiary in EU with tax registration, so that all intra-EU operations could be free of VAT, both from freelancers to Upwork as well as from Upwork to clients.
3. I am not sure how the export and import of services to/from US is treated, but the most probable is the “traditional” approach – impose VAT in the country of origin.
4. Having in mind the current mess of Upwork with the invoicing, this could be a huge issue, mainly for Upwork for not charging VAT….or for not paying it to the tax authorities

Hope this helps  

[#15]

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@Mark C wrote:

3. The regulations for digital platforms state;

If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer.

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 Hi Mark,

Great piece of regulation! This is what all freelancers need! Could you please provide a link to the source?

[#16]

https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-b...

[#17]

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@Ela K wrote:

https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-b...

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 There is a further link in the document you provided the to: 

Please have a look at the definition of services: https://whitehall-admin.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/...

Nothing we provide via Upwork or Elance is affected. We provide digital goods not services/e-services. The same procedure/regulations are valid throughout the European Union.

[#18]

Edited - I just noticed that Ela posted the same link

[#19]

Thanks to both of you. I think that it is becoming very clear that Upwork should invoice the clients, and the freelancers should invoice Upwork. 

Upwork not only imposes the terms and conditions and manages the payments, it also facilitates the work through chat rooms, solves disputes, delivers the work (the freelancer could deliver it through the platform in case the client is not willing to pay), tracks the time, etc. 

And, seeing some other discussions with regard to how Upwork manages the proposals to the clients, it seems that it ranks the freelancers for each job posting based on its own algorithms, recommends freelancers for the jobs, etc, In general, Upwork acts on its own when selling the services of the freelancers, much more than a simple point of contact between clients and freelancers . 

[#20]

(quoting) Thanks to both of you. I think that it is becoming very clear that Upwork should invoice the clients, and the freelancers should invoice Upwork. 

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Nobody is saying it, but this is what has always been happening in my country.

I and my fellow Italian "upworkers" simply consider oDesk/UpWork as the final client. There are no alternatives.

[#21]

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@Sara P wrote:

(quoting) Thanks to both of you. I think that it is becoming very clear that Upwork should invoice the clients, and the freelancers should invoice Upwork. 

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Nobody is saying it, but this is what has always been happening in my country.

I and my fellow Italian "upworkers" simply consider oDesk/UpWork as the final client. There are no alternatives.

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Many people actually do this and already said so in this thread. But, it simply is not correct. Upwork, like Elance, PPH, Guru and others, is just an intermediate like an agent or a broker. They are not the client. They provide a service and charge for this service. Among the services rendered is the invoicing. They don't do it correctly but this is part of the services.

Personally I wonder what will happen should they open an office in one of the member states of the EU. Their billing for the commission they charge us is an automated process and IMHO falls under the regulations in effect since January 1st. They propably are obliged to pay VAT in the freelancers country. Should they open an office within the European Union it could happen that they are presented a hefty bill for overdue VAT. 

[#22]

@Joachim

I'm talking here as a freelancer (with an open VAT position): the main problem is the fact that, when payments from this platform hit my bank account, my bank reports the name "oDesk Corporation, USA".

There is no way to legally link money transfers to clients, even if UpWork provided their billing information in a EU-compliant invoice.

Outside this platform, when working with a translation agency, do you bill the agency or the client?

[#23]

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@Sara P wrote:

@Joachim

I'm talking here as a freelancer (with an open VAT position): the main problem is the fact that, when payments from this platform hit my bank account, my bank reports the name "oDesk Corporation, USA".

There is no way to legally link money transfers to clients, even if UpWork provided their billing information in a EU-compliant invoice.

Outside this platform, when working with a translation agency, do you bill the agency or the client?

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Hi Sara,

I always bill the company awarding me the job. On Upwork, just like on Elance and other similar platforms, this is never the platform. Elance provides a neat invoice compliant to EU regulations, I just link this invoice to the payment received on Elance. In accounting I treat Elance just like a bank account. Money arrives and is booked accordingly. The monthly transfer is then handled like a transfer from one bank account to another. No taxation problems involved.

You don't need to link money transfers 1:1 to the client. Upwork provides a list of transactions and that links the job to the payment.  Then, when you withdraw, it's merely a transfer like from one bank to another. I withdraw once a month a single sum to PayPal and from there to my bank account. Moving money from one account to the next has nothing to do with taxation.

[#24]

[quote]I always bill the company awarding me the job.[/quote]

Hi Joachim,

I always bill the party who sends payments.
When preparing the paperwork to file the tax return, I'm required to link money transfers 1:1 to the party who pays.

I need to combine my invoices with my bank account statements. Subjects and figures have to match.

No Italian accountant would accept the solution suggested by UpWork. It's not like PayPal.

Out of curiosity, how do you manage the Euro/Dollar exchange rate fluctuations? Which currency do you use in your invoices? How do you consider the 10% UpWork fee?

[#25]

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@Sara P wrote:

[quote]I always bill the company awarding me the job.[/quote]

Hi Joachim,

I always bill the party who sends payments.
When preparing the paperwork to file the tax return, I'm required to link money transfers 1:1 to the party who pays.

I need to combine my invoices with my bank account statements. Subjects and figures have to match.

No Italian accountant would accept the solution suggested by UpWork. It's not like PayPal.

Out of curiosity, how do you manage the Euro/Dollar exchange rate fluctuations? Which currency do you use in your invoices? How do you consider the 10% UpWork fee?

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Hi Sara,

Linking payment and job is no problem, not on Elance and not on Upwork. After that linking the transfer from Elance/Upwork to PayPal isn't a problem either. Same with the transfer from PayPal to your bank account. I don't see the problem in this.

My invoices are generated by Elance and Upwork so they are in US$. My accounting shows the US$ amount in Euro at the exchange rate of the day the invoice was generated. Fluctuations in the exchange rate between the day the invoice was generated and the transferred amount sometimes weeks later are costs of money exchange. Absolutely normal if working with different currencies in the im- and export business. On top of that are bank fees which may also be reflected in the exchange rate. The 10% commission for Upwork are the no problem at all. Upwork provides a perfect invoice for that fully compliant with EU regulations. This is an area in which Elance fails, they provide no invoice for their fees. I talked to my tax office and they said that using Elance's downloadable Excel file with the individual amounts once a month is fine with them. I just have to pay importation VAT on it. BTW, same of the commission Upwork charges. I merely have to file this for importation VAT.

I really have only one problem, i.e. the lack of a legal invoice to the client on Upwork. Due to this I have to pay VAT for all my revenue on Upwork and neither the client nor the freelancer receive an invoice compliant to EU regulations. This creates unneccessary expenses/taxes. 

[#26]

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@Todor V wrote:

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@Mark C wrote:

3. The regulations for digital platforms state;

If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer.

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 Hi Mark,

Great piece of regulation! This is what all freelancers need! Could you please provide a link to the source?

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Please have a look at the definition of services: https://whitehall-admin.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/...

Nothing we provide via Upwork or Elance is covered by this. We provide digital goods not services. The same procedure/regulations are valid throughout the European Union.