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quankiquanki
Community Member

Name on a received invoice?

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?

237 REPLIES 237

@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?

 


@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?

 


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.

[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?


@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?


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. 

jmeyn
Community Member


@Todor V wrote:

@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.

 

 


 Hi Mark,

 

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

 


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.

kugrin
Community Member

Still no invoices, Upwork?

5c00ec2f
Community Member

Just jumping in here to say that there's more people out there waiting to get proper invoices.

 

Krisztina, Margarete and Joachim have been bang on about this matter (props for explaining things to Upwork so tirelessly again and again!). As a client, this is an extremely frustrating experience and I hope Upwork get's it right with the upcoming "improvements".

 

Anyone thought of creating an "Eigenbeleg" as an alternative?

Anonymous-User
Not applicable

Hi Michael,

To produce another document in order to replace that kind of "invoice" that is issued by Upwork at the moment is not a good idea. Then two invoices will exist (one Upwork invoice, part of the US economomic system) and another that is part of the the country where the client or freelancer lives in Europe. 

Finally, there will be two different invoices for the same thing, that must never happen and will falsify the balance of trade as well.

If Upwork will not change the invoices according to European laws the Europeans will not be able to use the platform in the future in order to prevent that they come in conflict with their tax and/or legal authorities.

 

88cc0fc9
Community Member

probably they had serious issues with speed latest week, lets also consider that, but really here we're all waiting for something more than promises ๐Ÿ˜• 

Anonymous-User
Not applicable

Hope dies last.

Invoices have been updated to include addresses, you should see this reflected on your current invoices created after Sept. 15

 

-Lena

 

Untitled

just checked my invoices generated on sept 21th but nothing has changed. maybe it will need some time to propagate. lets see.

tnx

HI Gabriele,

 

It will take sometime to propagate as your freelancers will be notified to provide an address for the invoice. 

Untitled
Anonymous-User
Not applicable

Lena, The freelancers have filled in their addresses in Upwork already, why should they provide their address for the invoice? You did not mention how Upwork intends to handle the 19% VAT that are due for work between clients and freelancers from Europe. 

jmeyn
Community Member


@Lena E wrote:

HI Gabriele,

 

It will take sometime to propagate as your freelancers will be notified to provide an address for the invoice. 


Lena,

 

What about the clients? Will they also be notified to provide a full address and a VAT ID (if located within the EU), so that the freelancers receive a legal invoice compliant with EU regulations? 

lenaellis
Community Member

Clients already have the option in their information section to display their VAT ID. 

Untitled
jmeyn
Community Member


@Lena E wrote:

Clients already have the option in their information section to display their VAT ID. 


I know, but the freelancers so far don't receive a copy of a legal invoice displaying the address and VAT ID of the client. The client on the other hand will also need that freelancers' VAT IDs. BOTH VAT IDs have to be displayed on the invoice and the invoice has to be available for freelancer and client. 

Hey guys, to further clarify my response about addresses. Freelancers will now have an option to add their address to invoices by completing information in their account settings, the box will look like this:

 

invoice address box.png

If you do not see your freelancers address on the invoice, simply as them to complete the information on their account and it will sync over.

 

Hope this helps,

 

Lena

Untitled
jmeyn
Community Member


@Lena E wrote:

Hey guys, to further clarify my response about addresses. Freelancers will now have an option to add their address to invoices by completing information in their account settings, the box will look like this:

 

invoice address box.png

If you do not see your freelancers address on the invoice, simply as them to complete the information on their account and it will sync over.

 

Hope this helps,

 

Lena


Hi Lena,

 

first of all this ought to be compulsory before a freelancer can accept a job. What about the freelancer's VAT ID? Secondly what about the invoice copy for the freelancer?  The freelancer needs a complete invoice too.

Thanks Lena, Upwork is slowly going in the good direction, as it was already on Elance.


On top of the freelancers address:

regarding the VAT or TAX nr: I have noticed that Upwork has been added an option for some freelancers to provide their VAT ID in their account settings.

Good almost finished.


how can they get that data also show up to the invoices the client can download?


thanks,


Wim


PS.: to compleet the invoice, it would be good that there is written that the invoice is given by the freelancer has as payment method: to "EEC": Elance Escrow Corporation, a Delaware corporation and wholly owned operating subsidiary of Upwork Inc., that provides the Escrow Services pursuant to the User Agreement and the applicable Escrow Instructions.


by this the payment of the client to (Upwork) corresponds with the invoice the freelancer gives via the download system of Upwork.

jmeyn
Community Member


@Wim J wrote:

Thanks Lena, Upwork is slowly going in the good direction, as it was already on Elance.


On top of the freelancers address:

regarding the VAT or TAX nr: I have noticed that Upwork has been added an option for some freelancers to provide their VAT ID in their account settings.

Good almost finished.


how can they get that data also show up to the invoices the client can download?


thanks,


Wim


PS.: to compleet the invoice, it would be good that there is written that the invoice is given by the freelancer has as payment method: to "EEC": Elance Escrow Corporation, a Delaware corporation and wholly owned operating subsidiary of Upwork Inc., that provides the Escrow Services pursuant to the User Agreement and the applicable Escrow Instructions.


by this the payment of the client to (Upwork) corresponds with the invoice the freelancer gives via the download system of Upwork.


Wim,

 

Haven't seen any field where I as a freelancer can enter my VAT ID. Where do you enter it? Further, Upwork is far from finished, I don't even receive a reply from Lena regarding legal invoices for the freelancer. The freelancer/contractor also requires legal invoices showing the complete address of the client and the VAT ID. So far all the replies I received from CS say that they won't do it to protect the client. If they stick to this notion, everything they do is in vain.

 

 

Anonymous-User
Not applicable

Never ending story...


@Margarete M wrote:

Never ending story...


Well, it will end the moment Upwork has implemented everything in compliance with EU regulations ๐Ÿ™‚ 

600b15db
Community Member

ok I understand Joachim M,

 

1) then they are probably testing with some freelancers

or

2) they are providing it only for agencies.

 

here are the INVOICE rules for the EU: http://ec.europa.eu/taxation_customs/taxation/vat/topics/invoicing_en.htm

 

still missing is Breakdown of VAT amount payable by VAT rate or exemption.

In most cases the VAT % will be 0 if between EU members from different countries or

the words : "exemption" of VAT if freelancer is a non-EU member, then it is importing of services.

 

But I believe now from 1-10-15 that non-EU companies need to charge the VAT % applied to the clients country and forward that VAT to that country if the client is a NON-business.

When the client has a EU VAT number, then the freelancer is excempt of charging VAT.

Still the words "excempt" or 0% VAT should be mentioned on it.

 

what is your idea about it?

 

 

jmeyn
Community Member


@Wim J wrote:

ok I understand @jmeyn

 

1) then they are probably testing with some freelancers

or

2) they are providing it only for agencies.

 

here are the INVOICE rules for the EU: http://ec.europa.eu/taxation_customs/taxation/vat/topics/invoicing_en.htm

 

still missing is Breakdown of VAT amount payable by VAT rate or exemption.

In most cases the VAT % will be 0 if between EU members from different countries or

the words : "exemption" of VAT if freelancer is a non-EU member, then it is importing of services.

 

But I believe now from 1-10-15 that non-EU companies need to charge the VAT % applied to the clients country and forward that VAT to that country if the client is a NON-business.

When the client has a EU VAT number, then the freelancer is excempt of charging VAT.

Still the words "excempt" or 0% VAT should be mentioned on it.

 

what is your idea about it?

 

 


Wim, I can say how I handle it on Elance. I have a VAT ID and this is displayed on the invoices generated by Elance. If the client within the EU also has a VAT ID I don't charge VAT but file a report every quarter with the tax office in Saarbrรผcken (it is in charge for all of Germany for this) listing the revenue per client VAT ID. As far as I know the tax office in Saarbrรผcken then forwards this to the tax office in the client's country and they check whether or not the client has filed a report for theses purchases as the client has to pay importation VAT. If an EU client doesn't have a VAT ID I charge my local VAT of 19% (doesn't happen often).

Since January this year automated electronic purchases (e.g. eBooks), called e-services, have to charge the VAT of the buyer's country and forward the VAT to the buyer's country. This means that the seller has to handle the tax regulations of 28 member states. Again, if both parties have a VAT ID no VAT is charged just a report has to be filed.

 

I'm not sure about the date but I have also heard that companies located outside the EU have to charge the VAT of the buyer's country and pay it to the tax office in the buyer's country. I just don't have a clue how the EU want's to enforce this.

 

As far as I know the rules applicable for e-services will apply from January 1st, 2016 to all goods and services. This will result in me not accepting EU clients on Elance without VAT ID from January 1st on.

 

BTW, it doesn't make sense to NOT register for VAT ID. If a freelancer is small enough to be exempt from charging VAT (in Germany the threshold is 17,500 Euro annual turnover) he still has to pay VAT and the VAT ID will make life a lot easier for his clients. IMHO it doesn't even make sense to be exempted from charging VAT. If you apply for this exemption you are no longer allowed to deduct the VAT you paid. 99% of my turnover is generated by clients outside of Germany, meaning I don't charge VAT. But, I can still deduct the VAT I paid e.g. on petrol, on train tickets, on office equipment etc. Hence, at the end of the year my tax office will return all the VAT I paid on purchases to me.

 

If your date of October first for non-EU countries is correct Upwork will have to file reports with the EU member states and pay VAT to them. Will be interesting to see how the EU is going to enforce that.

600b15db
Community Member

Thanks Joachim,

 

the VAT rule for countries outside the EU as the VS, I have seen already on large VS domain sellers as name.com and Godaddy.

 

They told me starting 1-10-15

 

Now Upwork totally changed to an escrow service, where Elance Escrow Corporation ("EEC") is collecting the funds in the other parties name.

 

So why is Upwork not allowing VAT nr on the invoice to still protect them self?  I presume that is the only reason, to protect them self from all different country rules.

 

Upwork needs to charge EU VAT to the freelancer on the 10% commission they charge the freelancer.  Probably for that reason, (they have created the VAT field for the freelancers, to eventually not needing to pay VAT on the 10% commission they get.  

That VAT field is not created for the freelancer and for the client.

 

(I have seen many other companies that work on %, working the same)

jmeyn
Community Member


@Wim J wrote:

Thanks Joachim,

 

the VAT rule for countries outside the EU as the VS, I have seen already on large VS domain sellers as name.com and Godaddy.

 

They told me starting 1-10-15

  

Upwork needs to charge EU VAT to the freelancer on the 10% commission they charge the freelancer.  Probably for that reason, (they have created the VAT field for the freelancers, to eventually not needing to pay VAT on the 10% commission they get.  

That VAT field is not created for the freelancer and for the client.

 

(I have seen many other companies that work on %, working the same)


 Wim, I'm not sure about Upwork having to add the VAT on the commission invoice. My tax advisor told me that this regulation only applies to companies from outside of Europe selling directly to consumers. We as freelancers are viewed as businesses, regardless of the size of our business!

 

jmeyn
Community Member

Wim,

 

here is the database to verify VAT IDs: http://ec.europa.eu/taxation_customs/vies/faq.html?locale=en

 

lenaellis
Community Member

Thanks Joachim! We hear you guys and appreciate your patience as we work to make these changes. We are working to improve our invoices and have plans to add freelancer VAT Ids where applicable and for freelancers to receive invoices as well. I dont have an exact timing on when these changes will be available on the site but will update you guys when we do. 

Untitled
jmeyn
Community Member


@Lena E wrote:

Thanks Joachim! We hear you guys and appreciate your patience as we work to make these changes. We are working to improve our invoices and have plans to add freelancer VAT Ids where applicable and for freelancers to receive invoices as well. I dont have an exact timing on when these changes will be available on the site but will update you guys when we do. 


Well Lena, you have a working process on Elance, why not use that? Okay, it's not 100% perfect but 90% is covered. Why don't you use that? The remaining issues with the process on Elance:

 

  • Clients can still hide their address details
  • Clients can still have incomplete addresses
  • Freelancer and client don't know whether or not a VAT ID is available, they ought to know before quoting or inviting
  • Elance doesn't provide invoices for the commission and the fee

Everything else is working.

Anonymous-User
Not applicable

Still not concrete...

Anonymous-User
Not applicable


Well Lena, you have a working process on Elance, why not use that? Okay, it's not 100% perfect but 90% is covered. Why don't you use that? The remaining issues with the process on Elance:

 

  • Clients can still hide their address details
  • Clients can still have incomplete addresses
  • Freelancer and client don't know whether or not a VAT ID is available, they ought to know before quoting or inviting
  • Elance doesn't provide invoices for the commission and the fee

Everything else is working.


Joachim, From my point of view Upwork has a fundamental problem to change the invoices. The invoices they issue at the moment increase their sales dramatically (10% invoiced to the freelancer and 90% invoiced to the client). In the Elance system their sales only cover  8.75% Elance fee charged to the client, 91.25% are the freelancer's sales. Not to forget the unsolved VAT problem and European finance minsters that may expect from Upwork to pay VAT and maybe other taxes for their sales in Europe. Am I right?

 

So, at the moment I do not know how the problem can be solved without changing the whole system or establishing a kind of enklave for the Europeans with their own rules.

 

This week EU's highest court declared EU-US "Safe Harbor" data transfer framework invalid. This will affect all US companies, thus Upwork as well and will be the next challenge.

 


@Margarete M wrote:

Well Lena, you have a working process on Elance, why not use that? Okay, it's not 100% perfect but 90% is covered. Why don't you use that? The remaining issues with the process on Elance:

 

  • Clients can still hide their address details
  • Clients can still have incomplete addresses
  • Freelancer and client don't know whether or not a VAT ID is available, they ought to know before quoting or inviting
  • Elance doesn't provide invoices for the commission and the fee

Everything else is working.


Joachim, From my point of view Upwork has a fundamental problem to change the invoices. The invoices they issue at the moment increase their sales dramatically (10% invoiced to the freelancer and 90% invoiced to the client). In the Elance system their sales only cover  8.75% Elance fee charged to the client, 91.25% are the freelancer's sales. Not to forget the unsolved VAT problem and European finance minsters that may expect from Upwork to pay VAT and maybe other taxes for their sales in Europe. Am I right?

 

So, at the moment I do not know how the problem can be solved without changing the whole system or establishing a kind of enklave for the Europeans with their own rules.

 

This week EU's highest court declared EU-US "Safe Harbor" data transfer framework invalid. This will affect all US companies, thus Upwork as well and will be the next challenge.

 

If I'm not mistaken they invoice 100% to the client and 10% to the freelancer so that they can deduct the 10%.

 

Europe will remain a pain in the a.. for them though. The invoice for the 10% ought to include VAT for freelancers in Europe and they would have to hand this to the freelancer's respective country of residence.  I don't see Upwork dealing with 28% different VAT systems in Europe though. On the other hand, I don't see how the EU can enforce this regulation before they open an office in the EU.  For the time being I simply file their invoices with the tax office as import from the US and pay my importation VAT on them. BTW, the VAT problem isn't limited to Europe, Canada, Switzerland and many other countries also use a VAT system.

 

I'm not sure about the abolished Safe Habor agreement affecting them. After all we do hand our data to them being fully aware that the data will be saved and processed in the US.  They don't have an office in the EU so they should never have signed Safe Harbor agreement. 

 

Generally speaking (only for me) I acquire so few jobs on Upwork, it doesn't really affect my business. I do notice that I'm approached directly by formerly unknown clients more often now. I suppose that a fair number of them looked my up in Google after seeing my profile on Upwork. As Upwork does everything to hide the prospective client from the freelancer they at least can't claim I must have known the client. 

 

Edited 16/10/15 to correct the text that is now striked through.

 

According to my tax advisor this applies only to non-EU companies dealing with consumers directly.

As a freelancer, I actually just book the payment I recieve from Upwork and make an invoice for that amount. Upwork is a US-based company, so no VAT. As I declare what I earn to the tax authorities, that works fine.

 

No client (on Upwork, Elance or oDesk) has ever asked me for an invoice.

If I have to start issueing invoices to clients applying the VAT rules per client, and to book separate invoices for Upwork fees, it's really not useful for me anymore to use this platform. In that case, Upwork should give the option to pay a broker fee and not use the escrow service.

For all practical purposes, Upwork pays me. The underlying legal construction determining who actually owes the money (the client), is probably not that relevant.

I would imagine that a client only needs a clear itemised invoice with the necessary data. If clients need to split that per freelancer, that would also not be a happy situation. 


@Steven S wrote:

As a freelancer, I actually just book the payment I recieve from Upwork and make an invoice for that amount. Upwork is a US-based company, so no VAT. As I declare what I earn to the tax authorities, that works fine.

 

No client (on Upwork, Elance or oDesk) has ever asked me for an invoice.

If I have to start issueing invoices to clients applying the VAT rules per client, and to book separate invoices for Upwork fees, it's really not useful for me anymore to use this platform. In that case, Upwork should give the option to pay a broker fee and not use the escrow service.

For all practical purposes, Upwork pays me. The underlying legal construction determining who actually owes the money (the client), is probably not that relevant.

I would imagine that a client only needs a clear itemised invoice with the necessary data. If clients need to split that per freelancer, that would also not be a happy situation. 


Well the tax laws within the EU (you are resident in the EU) say it differently. You will probably get it away with it until the EU decides to look into these freelancers websites/market places. As Upwork is now adding the freelancers details to the client invoice (which is correct), cross-checking by the tax offices might raise problems and especially awareness of the authorities. Upwork is basically charging a broker fee for their services, 10% of the job amount. And, it's not your job to issue invoices to clients, it's Upwork's job, you are paying for this service. 

 

You can work through the VAT regulations here: http://ec.europa.eu/taxation_customs/taxation/vat/topics/invoicing_en.htm or ask your tax advisor but make it clear to him, Upwork is not the client but acts as a broker or middleman.

Tax laws are national and specific to each individual country, with the exception of VAT-rules (which are European).

 

The tax laws in my country require me to work above-board, to have an invoice for each payment and to apply the VAT rules. The invoice needs to identify the payer and to specify what the payment is for.

They don't prohibit someone else (Upwork) to pay the bill for a service rendered to a client, as long as I declare what I am paid. The underlying arrangement, in other words, is of no interest to them (provided it is not illegal and isn't used to hide income).

So, as a freelancer, even though my agreement for providing services is with the clients who receive the service, the issue of payment and billing is a separate one. Upwork pays me, and I declare that payment with an invoice I issue to Upwork.

This mechanism also works for other intermediaries, irrespective of what they choose to call themselves. For example, if I translate a document for a client via a translation agency, I bill the agency - not the client. This is pretty much standard practice and perfectly ok.

Another issue of course is what invoice a client receives from Upwork. The fact that the names of the freelancers are on it, in my view, only relevant in terms of itemizing what is on the invoice. It doesn't create any reporting obligations.


@Steven S wrote:

Tax laws are national and specific to each individual country, with the exception of VAT-rules (which are European).

 

The tax laws in my country require me to work above-board, to have an invoice for each payment and to apply the VAT rules. The invoice needs to identify the payer and to specify what the payment is for.

They don't prohibit someone else (Upwork) to pay the bill for a service rendered to a client, as long as I declare what I am paid. The underlying arrangement, in other words, is of no interest to them (provided it is not illegal and isn't used to hide income).

So, as a freelancer, even though my agreement for providing services is with the clients who receive the service, the issue of payment and billing is a separate one. Upwork pays me, and I declare that payment with an invoice I issue to Upwork.

This mechanism also works for other intermediaries, irrespective of what they choose to call themselves. For example, if I translate a document for a client via a translation agency, I bill the agency - not the client. This is pretty much standard practice and perfectly ok.

Another issue of course is what invoice a client receives from Upwork. The fact that the names of the freelancers are on it, in my view, only relevant in terms of itemizing what is on the invoice. It doesn't create any reporting obligations.


Sorry Steven, you got it all wrong. In your set-up you are viewing Upwork as a reseller of your services. This is not the case, maybe Lena from Upwork can jump in and confirm this once more. She did several times already.

 

Upwork is a service provider. The contract is between you and the client. Upwork merely brokered the business. Very much unlike a translation agency. A translation agency buys your service and sells it to the final client, they act as reseller, buying the service from you and selling it to their client. There is no contract between you and the client and the client doesn't pay you, the translation agency pays you.

 

In the set-up with Upwork as broker/service provider, Upwork brokers a contract between you and the client. The client pays you using Upwork as payment service provider. Upwork then transfers the money to you and charges the commission for the services rendered. Easily to confirm if in hourly jobs you don't use their software to track the hours. Immediately Upwork no longer guarantees the payment. If your client doesn't pay, you don't won't be paid either.

 

So Upwork provides the following services:

 

- a platform where clients and providers can "meet" and negotiate a contract

- an escrow service for fixed price jobs

- a payment guarantee for hourly jobs if their software is used

- services as payment provider 

- issues the invoice to the client on your behalf (there's not Upwork as sender of the invoice printed on it but you)

- should provide a copy of said invoice to you (they are not doing it at present)

 

For all these services they charge you a fee of 10 % for which you actually receive an invoice.

 

This is by no means comparable to the situation of working with a translation agency. BTW, most of my work comes through a translation agency. With a translation agency I don't care if their customer doesn't pay, I still get paid. On Upwork only if you work according to the rules, i.e. with their tracking software.

 

Generally speaking Upwork works in several roles: broker, insurance, escrow service, payment service provider, issuer of invoices.

 

Hence you somehow have to prove to the tax office where your client is located and who your client is. If the client is within the EU you need your clients VAT ID and he yours (if you both have one). 

 

When I showed what Upwork calls an invoice (see attached) to my tax office they laughed their heads off. Apart from the client's handle/nickname there is nothing to show who the client is, where the client is located etc. They kindly told me, that frankly they see the problems I have with Upwork but until I provide proof they will consider this as revenue made within Germany and what Upwork calls an invoice they will treat as a receipt for work done within Germany and 19% VAT are due to them.

 

Talk to your tax office! I'm neither a tax advisor nor a tax officer, I only put the whole situation to my tax office and my tax officer. Agreed, they needed some time too to comprehend Upwork's role.

Hi Steven,

 

 

I am a client. And before the invoices Odesk did gave us were sufficient.

 

Now Upwork has totally changed to an escrow service, maybe you should read there new terms & conditions.

 

I learned after closing of the 2nd quarter that all the invoices where useless that Upwork gave me.

They told me to get the invoice from the freelancer, according to the T&C.

What I did.

 

Now it takes me a very long time to weed out all those freelancers on a job post that have no official TAX nr in there country.

I have to look up on wikipedia the TAX rules of the country of the freelancer that applied for a job. And find out if that nr given is a correct one.

 

Me as client, according to the EU rules, I need to verify FIRST the valid TAX nr a freelancer gives me. A tax inspector places the responsibility on the client that wants to deduct the invoices as costs.

 

And as a business client, that is the centre point of buying services from others. To balance against the income.

 

If you as a freelancer wants to hide behind the Upwork anonymity and not providing formal invoices to your business clients.

 

Then or you charge so low rates per hour that it doesn't matter what your invoice would be,

(and the business client pays from his personal bank account, not the business account)

or your only client will be after a wile the retail client. That just wants to do a small job on Upwork, but is not planning to spent 10 thousands of dollars a year.

 

The new EU tax rule that Joachim already mentioned here, will even make all the retail clients of the EU, not more interesting for you as clients.

 

Results:

only the ones that delivers good work and have many clients, so they can work official and pay taxes and have a TAX nr, will survive here on Upwork.

The rest will fall in to the black market.

 

I even can not imagine that for the US clients, those new Upwork invoices with no detail as name at all from Upwork, will be accountable. For sure they also will start asking the freelancer to give formal invoices.

 

PS.: freelancer gives an invoice for 100% the client pays.

Upwork give freelancer an invoice for the 10% commission +(VAT of the country of residence in the future if the freelancer lives in the EU and has no VAT nr)

 

Hi Wim,

 

"If you as a freelancer wants to hide behind the Upwork anonymity and not providing formal invoices to your business clients."

 

- I can assure you that I am an established (one-person) registered business with a VAT-number and a strong commitment to do everything above-board. Otherwise, I probably wouldn't care much about this discussion.

 

I also have to say that I am yet to receive an invoice from Upwork for the commission they charge, and that the fact that I book Upwork payments as payments from Upwork (not from separate clients) has never raised eyebrows.


I'm not trying to win an argument here; I'm just saying how I have handled this up until now. For all practical purposes, Upwork is (or has been) an intermediary. I actually very much doubt that the idea of a simple escrow service is actually compatible with the exclusivity they require, and the fact that a client and a freelancer are not enabled to negotiate freely and to contact eachother outside of the platform.

Like everyone in this thread, I am simply trying to find out how the move to Upwork has changed things. As a professional, Upwork is far from my only source of clients, and it is not my most important one. If the "cost of doing business" here becomes too high, then it is simply a matter of no longer offering my services here. That's simple economic logic.

In that sense, I don't think only the established freelancers with a tax number will survive here. I think it rather more likely that we'll be left with a collection of freelancers who perform services in the grey circuit.


@Steven S wrote:

Hi Wim,

  

I also have to say that I am yet to receive an invoice from Upwork for the commission they charge,


 They regularly show up under the reports tag, it's not easy to find though. Follow this route: Reports->More Reports->Transaction History. In the transaction history you will see an item named Service Fee. On the right hand side of this line is a called Ref ID. Click on that and a pop up window will show the transaction details. On the bottom of this window is a link named View invoice. This will then provide a PDF version of the invoice for the commission. Really well hidden, I agree.

 


@Steven S wrote:

 

In that sense, I don't think only the established freelancers with a tax number will survive here. I think it rather more likely that we'll be left with a collection of freelancers who perform services in the grey circuit.


 That's what I'm afraid of too. But, taking Wim's message as a hint I'll modify my profile to confirm that I have a valid VAT ID and to say that I'm perfectly willing to write a full VAT invoice provided the client sends me his details and his VAT ID.

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