Re: Name on a received invoice? - Page 3

Quang N · ‎06-30-2015

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?

Joachim M · ‎07-08-2015

@Quang N wrote:

After that is done, I think the best temporarily solution is to give the freelancer access to the invoice that the client is getting from Upwork. That way, the freelancer will have their clients Name, Address and VAT-ID and the freelancer can then create their own invoice that satisfies their EU tax laws. The freelancer can then directly send the invoice to their client and tell the client that Upworks invoice is invalid. Even though Upwork creates the invoices, it falls down to the freelancer to make sure that the invoices with their names on them are compliant to their tax laws.

That's the way it is done on Elance. Both parties can enter the VAT ID into their profile which is then displayed with both addresses on the invoice. And, both parties have access to the invoice. One of the reasons I always try to move jobs on Upwork to Elance.

Pawel K · ‎07-08-2015

Not all freelancers on Upwork are a business. Consider that you hire a freelancer who is not a business and additionally lives outside of the European Union. What kind of implications does it bear for EU clients? This is a serious question, frankly I don't know. I often work with Ukrainian or Russian freelancers who don't have a firm, before I was able just to book the invoice as if oDesk / Upwork was the seller (they get their cut).

Joachim M · ‎07-08-2015

@Pawel K wrote:
Not all freelancers on Upwork are a business. Consider that you hire a freelancer who is not a business and additionally lives outside of the European Union. What kind of implications does it bear for EU clients? This is a serious question, frankly I don't know. I often work with Ukrainian or Russian freelancers who don't have a firm, before I was able just to book the invoice as if oDesk / Upwork was the seller (they get their cut).

Pawel, this is a common misunderstanding. From the EU's point of view everybody selling a service for money and issuing an invoice for this is considered a business. Provided the invoice has the name and address of the seller from outside the EU on it (e.g. Russia) there is no problem. The EU client just has to pay importation VAT in his country of residence, that's it.

Gabriele D · ‎07-08-2015

you dont consider this:

in italy, if I pay $ 1.000 to a subject, my country want to know exactyl who is the subject that has taken $ 1.000, and why

so, also if that subject take $ 50 and forward the remaining $ 950, i need to justify exactly WHO is taking the inital $ 1.000 - we dont care about the rest, about where there goes part of total of that money

thats why ENVATO, from an initial moment where billed correctly only their part (the $ 50 ) has switched to a new legally valid whay where they again provide and invoice of $ 1.000 , detailing in it that $ 950 will go to someone else.

but the point is that they emit a valid invoice for $ 1,000. and thats all.

Joachim M · ‎07-08-2015

@Gabriele D wrote:
you dont consider this:

in italy, if I pay $ 1.000 to a subject, my country want to know exactyl who is the subject that has taken $ 1.000, and why

so, also if that subject take $ 50 and forward the remaining $ 950, i need to justify exactly WHO is taking the inital $ 1.000 - we dont care about the rest, about where there goes part of total of that money

thats why ENVATO, from an initial moment where billed correctly only their part (the $ 50 ) has switched to a new legally valid whay where they again provide and invoice of $ 1.000 , detailing in it that $ 950 will go to someone else.

but the point is that they emit a valid invoice for $ 1,000. and thats all.

Dear Gabiele,

Please don't forget that with the invoices the way they are today you will also have to pay Italian VAT to your tax office for every single Dollar revenue here on Upwork. As you can't prove that your client is outside the EU or in a different member state your VAT is due. What's the VAT percentage in Italy?

Gabriele D · ‎07-09-2015

i'm not the seller, i'm the BUYER

your case doesnt apply. and still for the fact i'm the buyer, if my company do a payment of $ 1,000, italian fiscality want to know exactly WHO is getting that money (and that "who" has to be a recognizable - name, address, vat id - company)

Pawel K · ‎07-08-2015

I just read an article about hiring foreign freelancers and it confirmed how I view this setup. Because Upwork gets a commission for all the work performed by freelancers and additionally serves as a payment gateway (we are charged by Upwork, not the freelancer), technically Upwork is the seller for us:

Client/Upwork = buyer/seller

Freelancer/Upwork = seller/buyer

Client/Freelancer = no relationship for the purposes of payments & taxation

It would be different if Upwork simply connected a client with a freelancer, took a one time commission and then stepped aside. Then, of course, client would be paying the freelancer directly and they'd have their own agreement and would be responsible for invoicing and taxation. But that is not the case. Upwork takes an active part in this and gets paid for every single hour the freelancer has worked. It also charges clients' credit cards (Upwork is on the bank statements) and sends money to freelancers (again, Upwork is denoted as the sender on bank statements). Essentially it is viewed as an agency and freelancers are its subcontractors.

By the way, if I hire a software developer from Ukraine, apart from their full name and address I'd need their certificate of residency, otherwise I'm obliged to take 20% of their earnings (on top of what Upwork already takes) for tax. I bet they'd be happy about that. 🙂

Twan C · ‎07-09-2015

Pawel, you're probably from Poland?

I'm based in Poland and my accountant also notified me that I was required to obtain the certificate of fiscal residency of Upwork Inc otherwise I'd have to pay an additional 20% tax. Upwork refuses to help me obtain it, after doing my own research it seems such certificate has to be requested at the IRS for USD 85... every year!

I hope Upwork will at least put their company data back on the invoice, because if they will be issuing the invoices on behalf of the freelancers only.. I can't imagine chasing all of them to send me their certificate of residency.. Headache!

Joachim M · ‎07-09-2015

@Pawel K wrote:
I just read an article about hiring foreign freelancers and it confirmed how I view this setup. Because Upwork gets a commission for all the work performed by freelancers and additionally serves as a payment gateway (we are charged by Upwork, not the freelancer), technically Upwork is the seller for us:

Client/Upwork = buyer/seller
Freelancer/Upwork = seller/buyer
Client/Freelancer = no relationship for the purposes of payments & taxation

It would be different if Upwork simply connected a client with a freelancer, took a one time commission and then stepped aside. Then, of course, client would be paying the freelancer directly and they'd have their own agreement and would be responsible for invoicing and taxation. But that is not the case. Upwork takes an active part in this and gets paid for every single hour the freelancer has worked. It also charges clients' credit cards (Upwork is on the bank statements) and sends money to freelancers (again, Upwork is denoted as the sender on bank statements). Essentially it is viewed as an agency and freelancers are its subcontractors.

By the way, if I hire a software developer from Ukraine, apart from their full name and address I'd need their certificate of residency, otherwise I'm obliged to take 20% of their earnings (on top of what Upwork already takes) for tax. I bet they'd be happy about that

Pawel,

I don't agree. Upwork is a service provider (intermediate) between the client and the contractor. The services provided cover:

- A platform to post jobs and make bids

- Escrow for fixed price jobs

- Handling the payment services

- Issuing the invoices on behalf of the contractor and in the name of the contractor

- A messaging platform for the communication between client and contractor

- and more

For these services they charge a fee of 10%. The contractor is free to state his own price, delivery time etc. The client decides which contractor he will use if any. If Upwork were the buyer Upwork would make these decisions. Receiving an ongoing commission for all business for a limited period of time is nothing unusual in sales.

For now it's the buyer's responsibility to pay importation VAT. This will change as of January 1st, 2016. Then the seller will be responsible for paying the VAT in the buyer's country. This can be avoided if both parties have a VAT ID. I've dealt with all these VAT problems on Elance for more than 1 1/2 years with my tax office. Nearly everything with regards to VAT is solved on Elance but not on Upwork. Upwork is focused entirely on the US, far from being an international company. The current situation for EU clients and contractors with Upwork forces the contractor to add his local VAT to the price offered as he has to pay VAT in his country. At the same time the buyer has to pay importation VAT on his purchase. So just because Upwork is incapable of providing an invoice compliant to EU regulations VAT has to be paid twice. The legal situation will be worse in 2016.

Quang N · ‎07-09-2015

I agree with Joachim, currently Upwork is the one that connects the contractor with the client. For that, Upwork charges the contractor a 10% fee.

If either or both the contractor or client is from EU, you will need to ignore the invoices that Upwork sends to the client in name of the contractor. The contractor will need to manually create their own invoices that is compliant to EU and send those to you. You can then use that invoice in your administration. It is a hassle but until Upwork creates EU compliant invoices this should be the way to go.

Joachim M · ‎07-19-2015

@Quang N wrote:
I agree with Joachim, currently Upwork is the one that connects the contractor with the client. For that, Upwork charges the contractor a 10% fee.

If either or both the contractor or client is from EU, you will need to ignore the invoices that Upwork sends to the client in name of the contractor. The contractor will need to manually create their own invoices that is compliant to EU and send those to you. You can then use that invoice in your administration. It is a hassle but until Upwork creates EU compliant invoices this should be the way to go.

I agree that is a workaround, although the tax office in Germany will not be happy with two documents for the same job. Another question that then comes to mind, what exactly is left of the services we pay Upwork for? In other words, if I have to do all the small paperwork myself anyway, why use Upwork?

Louqmane G · ‎08-17-2016

Yes, that is exactly my Problem. i am in Germany and my freelancer ist in north africa. He ist ready to rwite an EU-Conform-Invoice but it doesnt realy solve the problem.

So i realy dont know what to do.

Joachim M · ‎08-17-2016

@louqmane G wrote:
Yes, that is exactly my Problem. i am in Germany and my freelancer ist in north africa. He ist ready to rwite an EU-Conform-Invoice but it doesnt realy solve the problem.

So i realy dont know what to do.

I'd say problem solved. What are you still missing?

Pawel K · ‎07-10-2015

@Joachim M wrote:

For now it's the buyer's responsibility to pay importation VAT. This will change as of January 1st, 2016. Then the seller will be responsible for paying the VAT in the buyer's country. This can be avoided if both parties have a VAT ID. I've dealt with all these VAT problems on Elance for more than 1 1/2 years with my tax office. Nearly everything with regards to VAT is solved on Elance but not on Upwork. Upwork is focused entirely on the US, far from being an international company. The current situation for EU clients and contractors with Upwork forces the contractor to add his local VAT to the price offered as he has to pay VAT in his country. At the same time the buyer has to pay importation VAT on his purchase. So just because Upwork is incapable of providing an invoice compliant to EU regulations VAT has to be paid twice. The legal situation will be worse in 2016.

Thank you for the insightful posts. You seem to be focusing on EU entities here. What if the client is from the US? What if freelancers are from non-EU countries, like Russia? I wish somebody wrote an article about this.

Joachim M · ‎07-11-2015

@Pawel K wrote:
@Joachim M wrote:

For now it's the buyer's responsibility to pay importation VAT. This will change as of January 1st, 2016. Then the seller will be responsible for paying the VAT in the buyer's country. This can be avoided if both parties have a VAT ID. I've dealt with all these VAT problems on Elance for more than 1 1/2 years with my tax office. Nearly everything with regards to VAT is solved on Elance but not on Upwork. Upwork is focused entirely on the US, far from being an international company. The current situation for EU clients and contractors with Upwork forces the contractor to add his local VAT to the price offered as he has to pay VAT in his country. At the same time the buyer has to pay importation VAT on his purchase. So just because Upwork is incapable of providing an invoice compliant to EU regulations VAT has to be paid twice. The legal situation will be worse in 2016.
Thank you for the insightful posts. You seem to be focusing on EU entities here. What if the client is from the US? What if freelancers are from non-EU countries, like Russia? I wish somebody wrote an article about this.

Pawel, the situation with clients from outside the EU is a tad easier. All you need is an invoice with your and the clients full address on it. This is sufficient proof for the tax office in Germany (other EU member states should not be different) that the client is outside the EU and no VAT is to be charged or due. If the client is in the EU and the contractor outside the EU you need exactly the same type of invoice, you merely have to pay importation VAT on it. I use a small, cheap (29 Euro) tax software and just book accordingly and once a month I file electronically with the tax office. BTW the importation VAT for "imports" into the EU is due even if you have an exemption from charging VAT. This exemption is quite common for small businesses (in Germany less than 17,500 Euro annual revenue). Working on a site like Upwork or Elance they should still apply for a VAT ID.

It gets complicated only if both parties are located in the EU and the client doesn't have a VAT ID, e.g. private enduser. In this case I'm oblidged to charge my local VAT (not his, mine). Procedure is then as if the client were in the same country as I am. Amazon abused this loophole by invoicing books to German customers from Luxembourg. VAT on books there was only 4% hence they could undercut any bookshop in Germany just due to a lower VAT.

The charm with a VAT ID if both parties are resident in EU member states is that the seller reports the sale together with VAT of his client to his tax office. The tax office reports to the tax office of the buyers country. The buyer reports the import to his tax office using the sellers VAT ID. Everything else is then handled automatically.

Gabriele D · ‎07-08-2015

Guys, you should simply take example (if you really want to make UE compliants invoices) from the solution adopted by the other big players of the freelancing industry, like ENVATO

this is an example of a perfect invoice, that tutelate their fiscal needings and ours

so, as you can see, companies that "really" want to solve the issue, have found a way to.

Pawel K · ‎07-13-2015

Another week passed, still nothing? @Upwork: couldn't you just revert to the old invoice format while you keep working on it? If it was good before, it could last a bit longer.

Dmitri G · ‎07-15-2015

Are there any other freelance websites that can generate invoices like the "old" Odesk had done it in the past?

Joachim M · ‎07-19-2015

Try their parent company but it will close soon, being merged with Upwork.

Lech B · ‎07-16-2015

When do you plan to

- include address on invoice, and state that upwork is the selelr here (as we pay your company, not freelancers)?

- provide certicate of residency?

BTW: is therer a way to download all invoices at once?

Per Ole K · ‎07-17-2015

I was shocked to receive the updates invoices, it really causes a headache. My bank statement says that upwork has charged our company, and I need an invoice for that - simple as that.

That the change has been made without notifications, for whatever reason, makes it worse - as accounting has no way to do the books with the current invoice format.

I called upwork, got a ticket # and was promised a call-back. I suggest you all do the same. I am also forced to pause all my current contracts until this issue is resloved - which means no revenue for upwork.

Are there any competing sites or companies that offer similar services to odesk/upwork?

Joachim M · ‎07-19-2015

@Per Ole K wrote:
I was shocked to receive the updates invoices, it really causes a headache. My bank statement says that upwork has charged our company, and I need an invoice for that - simple as that.

That the change has been made without notifications, for whatever reason, makes it worse - as accounting has no way to do the books with the current invoice format.

I called upwork, got a ticket # and was promised a call-back. I suggest you all do the same. I am also forced to pause all my current contracts until this issue is resloved - which means no revenue for upwork.

Are there any competing sites or companies that offer similar services to odesk/upwork?

Per, forget it. I've had hot discussions with CS regarding EU compliant invoicing for freelancers and clients. They won't do it, period. What they have seems to be good enough for the US and that's all they are looking at.

Ela K · ‎07-18-2015

@Lech B wrote:
When do you plan to
- include address on invoice, and state that upwork is the selelr here (as we pay your company, not freelancers)?
- provide certicate of residency?

BTW: is therer a way to download all invoices at once?

Upwork is not the seller of the service: the freelancer sets up a contract with a client and gets paid by said client, not Upwork.

Have you ever looked at the user agreement you signed (and which was changed when they rebranded)?

"When a Client pays a Freelancer… EEC will credit the Freelancer Escrow Account and then deduct and disburse to Upwork a 10% service fee that Upwork earns”

Wim J · ‎07-18-2015

yes, it all has changed to an escrow service with 4 paties. Today I wrote here about it.

https://www.upwork.com/info/terms/

8.7 Worker Classification

Client assumes all liability for determining whether Freelancers are independent contractors or employees and engaging them accordingly; Upwork disclaims any liability for such determination or the related Engagement.

And how do we as clients supose to do that? ask all the job post candidates there personal details? That they sent before contracting, sent all there work related documents. Where for each country the law is difference. This will push businesses to hire of there own country, again the push to hire freelancers from the US from US based businesses.

Wim J · ‎07-18-2015

typo: with 4 parties