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VAT Europe for Companies (Clients)

Active Member
Simone S Member Since: Nov 13, 2019
1 of 8

Hello,

here is the problem.

 

There is a company based in Europe. The company buys a service from a freelancer based in Europe, but in a different country. 

The invoice between the freelancer and the company does not show the VAT number of the freelancer. Therefore, VAT reverse change mechanism can't be applied. Therefore, the company MUST pay VAT in his country  and it will NEVER get it reimbursed. 

 

Easy (but technically wrong) solution: the company accounts for the receipt of Upwork as invoice instead than the one of the freelancer. Upwork is considered the service provider and VAT reverse charge apply (since Upwork is based outside Europe). 

 

Is there another viable solution (techincally correct)?

Moderator
Goran V Moderator Member Since: Mar 24, 2017
2 of 8

Hi Simone,

One of our team members will reach out to you via ticket as soon as possible and assist you further. Thank you.


Untitled
Active Member
Simone S Member Since: Nov 13, 2019
3 of 8

Hi Goran,

 

Thanks, but you should write here about the solutions. And, please, instruct your support center to read the questions in deep and not just answering ALWAYS the same pre-made answers. 

 

There are hundreds of companies and freelancers asking about this topic and complaining since years, and still, no answers from Upwork. 

Moderator
Vladimir G Moderator Member Since: Oct 31, 2014
4 of 8

Hi Simone,

 

Thanks for sharing your request in the Community, we do understand the rationale you shared and have forwarded your feedback to our Product team, along with similar feedback we received from other clients located in the EU.

 

A bit of background, we have a dedicated team working on improving invoices so they are compliant in as many countries as possible. As other experienced freelancers and clients located in the EU already shared as a workaround, freelancers and clients can consult with their local accountant or a tax adviser and you as a client may consider asking the freelancer in that scenario you proposed to send a separate invoice, using the information provided on Upwork and with the appropriate VAT charge. 

Community Guru
Rene K Member Since: Jul 10, 2014
5 of 8

Since Eu located providers have field to input their VAT number, why don't you guys just add it on the invoice? This is the way it worked on Elance and everybody was happy.

 

 

 

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"Where darkness shines like dazzling light"   —William Ashbless
Active Member
Simone S Member Since: Nov 13, 2019
6 of 8

I would be very straightforward to solve this issue for Upwork. But, since it's over 5 years that the problem exist and there is no solution to it, I guess that Upwork does not want to solve the problem. 

 

I understand that there is a workaround by issuing a tax complaint invoice between the freelancer and the company. But it's nightmare if you work with tens of freelancers. Moreover, if the freelancer is based in your country, he should add VAT on top of the service, which can't even be paid and claimed back, since there is Upwork in between, 

 

With such admininistrative mess, it's easier to leave Upwork than spending days doing reconciliation of VAT and sending back and forth invoices with freelancers. 

Community Guru
Bojana D Member Since: May 2, 2011
7 of 8

Simone S wrote:

I would be very straightforward to solve this issue for Upwork. But, since it's over 5 years that the problem exist and there is no solution to it, I guess that Upwork does not want to solve the problem. 


They do not. I've been complaining for years for the lack of a simple field where we can add business address, number and other company info on the invoices - both those to clients and those from Upwork to freelancers. Now you can add the company name but if you're not VAT registered (like me), that invoice still does nothing for my paperwork and taxes. So yes, workarounds it is. 

Active Member
Simone S Member Since: Nov 13, 2019
8 of 8

I've sorted it out and honestly I must say that Upwork is not 100% of the problem. 


The reality is that there are a lot of Upwork's users (for sure freelancers, but also clients I guess) that don't have a VAT number and are not registered as business/sole trader/freelancer, and on top of that don't understand how it works.


This is why Upwork does not force the introduction of VAT number as mandatory.  Which is a real pain in the ass for companies and freelancers who must do VAT declarations. I've spend the last week just asking freelancer to send us invoices and 80% of them don't even know what an invoice is. 

 

However, the address (including the country) should be mandatory. At least, for all the transactions between EU and not-EU based business, Upwork's invoice would be complaint. 

And, there should also be a visible "flag" on the profile of freelancers who have introduced a VAT number or not, so that clients are aware of this. Instead of spending half of our time explaining what VAT is and ending up paying 20% more on top of the price just because freelancers are not VAT registered.

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