Jun 30, 2015 11:53:53 AM by Quang N
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?
Oct 25, 2015 02:50:48 PM by Joachim M
@Egor S wrote:
@Joachim M wrote:
@Egor S wrote:Hi Joachim,
Thank you for your informative posts. You mentioned in your previous posts that elance provides enough documents / information in case both parties are from EU. What are the process and applicable taxes (if freelancer and client do their business via elance) in case the client is outside of EU (the USA for example) and freelance is from EU (Germany for example)?
Hi Egor, with the freelancer in Europe and the client in the US (or any other country not member of the EU) no VAT is to be charged. On Elance most clients allow for their full address to be displayed on the invoice issued by Elance. I have to say most, as Elance does permit clients to hide their details and only their handle to be displayed. At the start of a fixed price job you can view the proforma invoice issued for the funding of escrow. If the information displayed doesn't suffice you can ask your client to provide all necessary details (the full address is sufficient).
Problem is, Elance is being wound down, no new clients can register and soon now new jobs can be posted.
Kek, what we are supposed to do when elance will be closed? 😕
I'm doing the same Margarete suggested, write my own invoices. At present I simply quote including VAT and tell the client I can reduce the price accordingly if he either provides his VAT ID incl. address (resident in an EU member state) or only his full address (resident outside the EU). I don't check the address if outside the EU and if within the EU I merely check the VAT ID provided with VIES. I turn down jobs from EU members without VAT ID as I would then have to charge VAT and (possibly starting January) pay it in the client's country of residence. A no go for me, I'm not going to deal with 28 different tax offices.
Oct 25, 2015 03:02:36 PM Edited Oct 25, 2015 03:03:53 PM by Anonymous-User A
@Joachim M wrote:
I'm doing the same Margarete suggested, write my own invoices. At present I simply quote including VAT and tell the client I can reduce the price accordingly if he either provides his VAT ID incl. address (resident in an EU member state) or only his full address (resident outside the EU). I don't check the address if outside the EU and if within the EU I merely check the VAT ID provided with VIES. I turn down jobs from EU members without VAT ID as I would then have to charge VAT and (possibly starting January) pay it in the client's country of residence. A no go for me, I'm not going to deal with 28 different tax offices.
To be honest, I mainly follow Joachim's advice. He explained before how he handles the invoice problem. In the beginning I had absolutely no idea how to behave. At the end of the day we will see if the tax authorities will be happy with this solution. However, as Upwork charges the invoice to the client, I think there should be a remark on the invoice that it has already been paid to Upwork?? How do you handle this, Joachim?
Oct 25, 2015 03:42:12 PM by Egor S
Hi Margarete and Joachim, thank you for your answers. Just one more question appeared in my mind. In what currency (dollars or euro) do you issue invoices?
Oct 25, 2015 04:39:20 PM by Anonymous-User A
@Egor S wrote:Hi Margarete and Joachim, thank you for your answers. Just one more question appeared in my mind. In what currency (dollars or euro) do you issue invoices?
Egor, in my case the bid was in USD, the client from UK had to pay USD, in my invoice I converted USD in EUR and added to the invoice that the amount already had been paid. I do not know, if this is the best way to deal with the invoice and so I do not recommend anybody to do the same.
Oct 26, 2015 07:29:13 AM by Joachim M
@Egor S wrote:Hi Margarete and Joachim, thank you for your answers. Just one more question appeared in my mind. In what currency (dollars or euro) do you issue invoices?
The bid being in US$ I invoice in US$. Direct clients, outside of Upwork, I invoice in either Euro, US$ or GBP (UK clients). This will be agreed with the client beforehand. All direct clients resident in the EU pay by bank transfer anyway, it's the cheapest way. Everybody else pays by PayPal or Skrill.
Oct 26, 2015 07:21:03 AM by Joachim M
@Margarete M wrote:
To be honest, I mainly follow Joachim's advice. He explained before how he handles the invoice problem. In the beginning I had absolutely no idea how to behave. At the end of the day we will see if the tax authorities will be happy with this solution. However, as Upwork charges the invoice to the client, I think there should be a remark on the invoice that it has already been paid to Upwork?? How do you handle this, Joachim?
Well, normally my invoice shows my bank account and the email address for PayPal and Skrill, all of it in the footer. For payments via Upwork I just add a single line right below the final amount: Payment via Upwork/Elance Escrow Service. That's it. It is anyway is transferred from Upwork to my PayPal account and from there to my bank account. I honestly doubt that I will ever be inspected anyway.
And if anybody thinks all of this is far too complicated with Upwork, well, why not found a small business in Belize. Everything you earn beyond the borders of Belize is tax free and if the income is sufficiently high you can get a nomal credit card from your bank there.
Nov 2, 2015 08:49:48 PM by Wim J
Well, normally my invoice shows my bank account and the email address for PayPal and Skrill, all of it in the footer. For payments via Upwork I just add a single line right below the final amount: Payment via Upwork/Elance Escrow Service. That's it. It is anyway is transferred from Upwork to my PayPal account and from there to my bank account. I honestly doubt that I will ever be inspected anyway.
And if anybody thinks all of this is far too complicated with Upwork, well, why not found a small business in Belize. Everything you earn beyond the borders of Belize is tax free and if the income is sufficiently high you can get a nomal credit card from your bank there.
It should be this: (or just the link to Upwork Terms & Conditions:
Nov 2, 2015 08:45:03 PM by Wim J
@Margarete M wrote:To be honest, I mainly follow Joachim's advice. He explained before how he handles the invoice problem. In the beginning I had absolutely no idea how to behave. At the end of the day we will see if the tax authorities will be happy with this solution. However, as Upwork charges the invoice to the client, I think there should be a remark on the invoice that it has already been paid to Upwork?? How do you handle this, Joachim?
As I mentioned in my earlier post; the way of payment to the escrow service Elance should be written on the invoice given to the client in the freelancers name.
If you make your own, look to my post and just copy the text. You can read there who is the 3rd party escrow company clients pay to and you receive from.
Nov 2, 2015 08:41:32 PM by Wim J
I'm doing the same Margarete suggested, write my own invoices. At present I simply quote including VAT and tell the client I can reduce the price accordingly if he either provides his VAT ID incl. address (resident in an EU member state) or only his full address (resident outside the EU). I don't check the address if outside the EU and if within the EU I merely check the VAT ID provided with VIES. I turn down jobs from EU members without VAT ID as I would then have to charge VAT and (possibly starting January) pay it in the client's country of residence. A no go for me, I'm not going to deal with 28 different tax offices.
I totally agree, and for that reason, you will see Upwork will come ith a system that allows the freelancer and the client both to show each VAT ID.
Europe is a big market for them, not just one Country they can ignore.
Oct 28, 2015 07:22:02 PM Edited Oct 28, 2015 07:28:47 PM by Joachim M
Today I received the following email from Upwork:
Quote
Hi Joachim,
To better support our local markets, Upwork is introducing VAT charges for Upwork service fees, memberships and additional Connects. Please enter your VAT number on Upwork by November 30th, 2015 to avoid VAT charges by Upwork.
If a VAT number is not entered, we will automatically calculate and apply your country-specific VAT to the Upwork service fee, memberships and additional Connects after November 30th.
If you do not have a VAT number, you can continue working on Upwork as usual. The only change is that VAT will be charged on the Upwork service fee, memberships and additional Connects and appear in your transaction history.
Unquote
No word about whether we as freelancers will now receive a legal copy of the invoice sent to the client on our behalf, no word on us receiving the client's VAT ID. What will happen? The client will file a report with our VAT ID. We can't file a report with the clients' VAT IDs, hence the cross checking by the various revenue services will sound the alarm bells. A sure way to see the tax inspector on your doorstep 😞
Oct 28, 2015 08:41:20 PM by Anonymous-User A
@Joachim M wrote:Today I received the following email from Upwork:
Quote
Hi Joachim,
To better support our local markets, Upwork is introducing VAT charges for Upwork service fees, memberships and additional Connects. Please enter your VAT number on Upwork by November 30th, 2015 to avoid VAT charges by Upwork.
If a VAT number is not entered, we will automatically calculate and apply your country-specific VAT to the Upwork service fee, memberships and additional Connects after November 30th.
- If you have entered a valid VAT number, VAT will not be charged and you’ll simply see “VAT Reverse Charged” on your invoice.
- Separately, if your client also has a VAT number and is located in a different EU country than you, Upwork will print “VAT Reverse Charged” on the invoice from you to your client.
- If you provide services to a client in the same EU member state, you should consult your tax advisor to determine if you must separately send a VAT invoice to your client.
If you do not have a VAT number, you can continue working on Upwork as usual. The only change is that VAT will be charged on the Upwork service fee, memberships and additional Connects and appear in your transaction history.
Unquote
No word about whether we as freelancers will now receive a legal copy of the invoice sent to the client on our behalf, no word on us receiving the client's VAT ID. What will happen? The client will file a report with our VAT ID. We can't file a report with the clients' VAT IDs, hence the cross checking by the various revenue services will sound the alarm bells. A sure way to see the tax inspector on your doorstep 😞
_______________________________________________________________________________________
1. Reverse Charge has to approved in each case and cannot just be applied automatically.
2. It is mentioned that Upwork is sending an invoice from us to the client. That is new. It is our invoice but we do not see it?
Oct 29, 2015 07:38:55 AM by Joachim M
@Margarete M wrote:
2. It is mentioned that Upwork is sending an invoice from us to the client. That is new. It is our invoice but we do not see it?
That's not new. Upwork is doing this all the time. Problems were the invoices didn't display the freelancers details and they were not compliant with EU regulations. It looks like Upwork is now at least addressing the clients' problems in parts.
Nov 2, 2015 08:59:31 PM by Wim J
_______________________________________________________________________________________
1. Reverse Charge has to approved in each case and cannot just be applied automatically.2. It is mentioned that Upwork is sending an invoice from us to the client. That is new. It is our invoice but we do not see it?
NEW?
I am telling you that already for weeks. You did not believed me then?
Nov 2, 2015 09:08:39 PM by Anonymous-User A
@Wim J wrote:_______________________________________________________________________________________1. Reverse Charge has to approved in each case and cannot just be applied automatically.2. It is mentioned that Upwork is sending an invoice from us to the client. That is new. It is our invoice but we do not see it?NEW?
I am telling you that already for weeks. You did not believed me then?
Wim, I believe you. They send an invoice with my name but I am not the sender of the invoice. The sender is probabely Upwork.
Nov 3, 2015 08:02:47 AM by Joachim M
@Margarete M wrote:
@Wim J wrote:_______________________________________________________________________________________1. Reverse Charge has to approved in each case and cannot just be applied automatically.2. It is mentioned that Upwork is sending an invoice from us to the client. That is new. It is our invoice but we do not see it?NEW?
I am telling you that already for weeks. You did not believed me then?
Wim, I believe you. They send an invoice with my name but I am not the sender of the invoice. The sender is probabely Upwork.
The sender is Upwork but they do it in your name i.e. your name and address is supposed to appear on it.
Nov 2, 2015 08:57:15 PM by Wim J
@Joachim M wrote:Today I received the following email from Upwork:
Quote
Hi Joachim,
To better support our local markets, Upwork is introducing VAT charges for Upwork service fees, memberships and additional Connects. Please enter your VAT number on Upwork by November 30th, 2015 to avoid VAT charges by Upwork.
If a VAT number is not entered, we will automatically calculate and apply your country-specific VAT to the Upwork service fee, memberships and additional Connects after November 30th.
- If you have entered a valid VAT number, VAT will not be charged and you’ll simply see “VAT Reverse Charged” on your invoice.
- Separately, if your client also has a VAT number and is located in a different EU country than you, Upwork will print “VAT Reverse Charged” on the invoice from you to your client.
- If you provide services to a client in the same EU member state, you should consult your tax advisor to determine if you must separately send a VAT invoice to your client.
If you do not have a VAT number, you can continue working on Upwork as usual. The only change is that VAT will be charged on the Upwork service fee, memberships and additional Connects and appear in your transaction history.
Unquote
No word about whether we as freelancers will now receive a legal copy of the invoice sent to the client on our behalf, no word on us receiving the client's VAT ID. What will happen? The client will file a report with our VAT ID. We can't file a report with the clients' VAT IDs, hence the cross checking by the various revenue services will sound the alarm bells. A sure way to see the tax inspector on your doorstep 😞
Yep Joachim, as I told you some weeks ago. Upwork will start working with your VAT to cover there back. And yes, they will need to start charging VAT in the EU.
But if I see VAT reverse charge on my invoices give in the name of the freelancer.
UPWORK, I really need to see also the valid VAT ID of the freelancer.
If not, we as clients will get in big trouble, buying without VAT of a person or business we have not there VAT printed on the invoice.
Remeber Joachim, your client can alsways sent you the copies he downloaded. Yes it is extra work and Upwork should do it automatic.
Oct 28, 2015 09:01:22 PM Edited Oct 28, 2015 09:42:34 PM by Valeria K
The e-mail was referring to VAT assessed on Upwork services - the 10% service fee, memberships and connects. This is not referring to VAT assessed for your services with clients.
Oct 28, 2015 09:08:37 PM by Maksym S
The email says different:
Separately, if your client also has a VAT number and is located in a different EU country than you, Upwork will print “VAT Reverse Charged” on the invoice from you to your client.
And the most important thing, How can I get the copies of invoices that were sent to clients from "me" by Upwork???
Oct 28, 2015 09:09:07 PM by Steven S
From the mail:
"Separately, if your client also has a VAT number and is located in a different EU country than you, Upwork will print “VAT Reverse Charged” on the invoice from you to your client."
And:
"If you provide services to a client in the same EU member state, you should consult your tax advisor to determine if you must separately send a VAT invoice to your client.".
Except, the information I get from Upwork doesn't really help me to identify the client in such a way that I can also send him or her an invoice. There isn't even an address.
Oct 29, 2015 07:45:19 AM Edited Oct 29, 2015 07:47:25 AM by Joachim M
@Lena E wrote:The e-mail was referring to VAT assessed on Upwork services - the 10% service fee, memberships and connects. This is not referring to VAT assessed for your services with clients.
Lena, this is not correct. You may want to reread the email you sent.
This sadly reminds me of the topic IRS. Upwork immediately said that Upwork is complying to IRS regulations in full. That was never questioned. The question was is Upwork providing everything necessary that clients and freelancers can comply with the IRS. Upwork communication stopped at that point. Now we have a nearly identical situation. Upwork will comply with EU regulations. But, will Upwork provide all necessary data and files for freelancers and clients to comply? So far the answer is clearly no.
Nov 2, 2015 09:19:49 PM by Wim J
@Lena E wrote:The e-mail was referring to VAT assessed on Upwork services - the 10% service fee, memberships and connects. This is not referring to VAT assessed for your services with clients.
thanks Lena,
I can see that Upwork covers there back as I predicted some weeks a go.
But please take note, yes you are charging the freelancer. And yes all the income Upwork earns are paid by the freelancer.
but the start of all that money comes from the client.
If business clients start to get trouble with invoices printed on "VAT Reverse Charged"
but no VAT ID at all of the freelancer is written on that.
What means the client is evading VAT, criminal charges are on that.
The accountant department of the clients will advice to stop spending on Upwork. At least in the EU. And big parts of the money flow will dry up.
= No work for the freelancers, no commissions to charge on.
Some geographical lessons:
we are with 508 million people and 28 member states.
https://en.wikipedia.org/wiki/Demographics_of_the_European_Union
That are a lot of potential clients to miss out.
Please, look also to the clients that keep this business running. It is a great business model, but if the law starts to forbit us, there is no way then to follow it. Even if we like it a lot.
Oct 29, 2015 10:18:40 AM by Edgar F
Hey all,
So I have a similar situation - please tell me if possible - is that the same it's being dealed with above. I have read a few pages, but seems like most of the people having issues are the ones who already have VAT number.
So the thing is that in my country (Lithuania) once you reach 45 000 euros of income during last 12 months you must become a VAT payer. However, I think that I found out that if you are receiving money from countries outside Lithuania - this doesn't count.
In my situation I have clients only from abroad (even outside EU). So logically, I know that all clients are not from EU, but how do I create invoices? If I Invoice Upwork, then logically I could even had Lithuanian clients pay me through there and I would "get away from VAT counter".
However, if I want to invoice clients - then I don't have enough information anywhere on Upwokr. I just had a person to hire me and I did him consulting work = how do I find his details? Upwork provided me with work for which I got paid from.
Regards,
Edgar
Oct 29, 2015 11:19:59 AM Edited Oct 29, 2015 11:23:35 AM by Joachim M
@Edgar F wrote:Hey all,
So I have a similar situation - please tell me if possible - is that the same it's being dealed with above. I have read a few pages, but seems like most of the people having issues are the ones who already have VAT number.
So the thing is that in my country (Lithuania) once you reach 45 000 euros of income during last 12 months you must become a VAT payer. However, I think that I found out that if you are receiving money from countries outside Lithuania - this doesn't count.
In my situation I have clients only from abroad (even outside EU). So logically, I know that all clients are not from EU, but how do I create invoices? If I Invoice Upwork, then logically I could even had Lithuanian clients pay me through there and I would "get away from VAT counter".
However, if I want to invoice clients - then I don't have enough information anywhere on Upwokr. I just had a person to hire me and I did him consulting work = how do I find his details? Upwork provided me with work for which I got paid from.
Regards,
Edgar
Edgar, if your clients are outside the EU you don't charge VAT. If your clients are within the EU you don't charge VAT if you and your client both have a VAT ID. If you/or your client don't have a VAT ID you charge the VAT of your clients country of residence and have to pay it to the tax office in your client country of residence. For imports you pay importation VAT or are charged VAT by the seller (in this case Upwork is the seller) and you either have to pay importation VAT or are being charged VAT by Upwork for the services they provide (fee and commission). Every European business (as y freelancer you are a business) has always been under the obligation to pay importation VAT.
For these services Upwork is already providing a correct invoice. If you have a VAT ID Upwork won't charge VAT to you, you still have to file for importation VAT.
Naturally Upwork is under the obligation to give us access to the invoices they issue on our behalf to the client.
Oct 29, 2015 11:46:15 AM by Edgar F
Hi Joachim,
This is some really useful information. Thank you. Just to be sure:
"If you/or your client don't have a VAT ID you charge the VAT of your clients country of residence and have to pay it to the tax office in your client country of residence." - this is only applied if we are both in Europe. Righ?
If I am in EU and my clients are not - I don't have to worry about VAT at all? In that case - how do I prove that my clients are not from EU?
Oct 29, 2015 12:15:30 PM by Joachim M
@Edgar F wrote:Hi Joachim,
This is some really useful information. Thank you. Just to be sure:
"If you/or your client don't have a VAT ID you charge the VAT of your clients country of residence and have to pay it to the tax office in your client country of residence." - this is only applied if we are both in Europe. Righ?
Right. This is why I'm no longer taking on clients from Europe without VAT ID. On Upwork I don't care at present, as I don't know who the client is and where the client is resident. After talking to my revenue service I simply treat the turnover on Upwork as turnover within Germany and thus it includes 19 % VAT (which I have to pay). Most clients from Europe have a VAT ID and have no problem providing their address and VAT ID, I then write an invoice to them showing both VAT IDs and both of us can file the necessary report.
If I am in EU and my clients are not - I don't have to worry about VAT at all? In that case - how do I prove that my clients are not from EU?
You are right on both. Upwork will have to give us access to the invoices they issue on our behalf. Until then, ask the client for his address and issue your own invoice (for your files only if the client is located outside the EU)