Adding multiple companies to one profile

Sergei P · ‎01-03-2021

1. I really miss the ability to add multiple companies to my profile. This is necessary in many situations, but the main one is tax optimization. I have a company in the EU and Delaware. It would be very convenient to serve US customers in a European company, and EU customers in Delaware where the tax is 0%. In addition, when a certain turnover is exceeded, companies in the EU are required to become VAT payers by adding VAT to each invoice, which is not supported by Upwork - invoices are issued excluding VAT - as a reverse charge. There is an option to register two companies and dividing the profits between the companies does not become VAT payers. Or redesign each invoice manually by adding VAT to the invoice for European clients, losing profits. If there was an opportunity to manually add VAT to certain customers, as well as the ability to choose a company for a specific company, it would be just fine.

2. Before receiving the first invoice, there is no way to find out the customer data. Some are individuals for whom I need to pay VAT in their country of residence through the MOSS system. Some, despite the European country in the profile, make payments from a company in the United States. The tax that I have to pay largely depends on this. The support answered me that I myself should find out this information from the client before starting work, but often clients have no idea whether they are VAT payers. The cost of the contract depends on this, but it is possible to find out only after the first invoice, which is not very convenient. It is very convenient to see the name of the company/reg id, VAT number and country of registration of the company before starting a contract in order to make a correct offer to the client.

Martina P · ‎01-03-2021

Sergei P wrote:
1. I really miss the ability to add multiple companies to my profile. This is necessary in many situations, but the main one is tax optimization. I have a company in the EU and Delaware. It would be very convenient to serve US customers in a European company, and EU customers in Delaware where the tax is 0%. In addition, when a certain turnover is exceeded, companies in the EU are required to become VAT payers by adding VAT to each invoice, which is not supported by Upwork - invoices are issued excluding VAT - as a reverse charge. There is an option to register two companies and dividing the profits between the companies does not become VAT payers. Or redesign each invoice manually by adding VAT to the invoice for European clients, losing profits. If there was an opportunity to manually add VAT to certain customers, as well as the ability to choose a company for a specific company, it would be just fine.

2. Before receiving the first invoice, there is no way to find out the customer data. Some are individuals for whom I need to pay VAT in their country of residence through the MOSS system. Some, despite the European country in the profile, make payments from a company in the United States. The tax that I have to pay largely depends on this. The support answered me that I myself should find out this information from the client before starting work, but often clients have no idea whether they are VAT payers. The cost of the contract depends on this, but it is possible to find out only after the first invoice, which is not very convenient. It is very convenient to see the name of the company/reg id, VAT number and country of registration of the company before starting a contract in order to make a correct offer to the client.

But you know you have to pay income tax in your country of residence, right? You can't just record income in any country that you wish to do for tax evasion purposes. The tax people really don't like that.

Sergei P · ‎01-03-2021

Making a profit for a company in another country is not a violation of the law. If I am a founder, then I will pay only dividend tax in my country. It is also not a violation to register several companies in your country. For example, to separate types of business. One firm provides programming services and the other provides translation services. The profile splitting functionality is already available in the upwork. But there is still no way to add multiple companies to the profile. This would be very much in demand for many.

Now, if, after receiving the first invoice, my client turns out to be an individual from Hungary, then, in addition to taxes in my country, I must pay VAT in the client's country in the amount of 27%. As a result, it turns out that I have to pay about 50% of the received payment in the form of tax (income tax, VAT on upwork services, VAT in the client's country). And I know about it only after the first invoice. I don’t think it is good for the client to estimate that the cost per hour will triple after a week of work.

Christine A · ‎01-03-2021

Sergei P wrote:

Now, if, after receiving the first invoice, my client turns out to be an individual from Hungary, then, in addition to taxes in my country, I must pay VAT in the client's country in the amount of 27%.

Why would you have to pay VAT in the client's country?

Sergei P · ‎01-03-2021

Such a law. If the client is not a company (does not have a VAT number), then you must pay VAT for him in his country. If the client provides the VAT number to the upwork, then it is not required with the reverse charge invoice - the client will pay VAT himself. But as I already wrote, the client's payment data (company name, VAT number, etc.) can be reliably found only after receiving the first invoice.

Christine A · ‎01-03-2021

Sergei P wrote:
Such a law. If the client is not a company (does not have a VAT number), then you must pay VAT for him in his country. If the client provides the VAT number to the upwork, then it is not required with the reverse charge invoice - the client will pay VAT himself. But as I already wrote, the client's payment data (company name, VAT number, etc.) can be reliably found only after receiving the first invoice.

The client pays me and I pay taxes in my own country, so why would I have to pay VAT in his country? This has never been required of me, and I've been freelancing for over 20 years. Is this only if you make over a certain amount of money? In Britain at least, we do not have to charge European customers VAT for business services, only for "physical" services like manufacturing.

Sergei P · ‎01-04-2021

And if your client is an individual from the EU without a VAT number? Won't you pay VAT? You are required to include VAT in the cost of services for such a client in accordance with the tax rate in his country and pay using the MOSS system.

Martina P · ‎01-04-2021

Sergei P wrote:
Such a law. If the client is not a company (does not have a VAT number), then you must pay VAT for him in his country. If the client provides the VAT number to the upwork, then it is not required with the reverse charge invoice - the client will pay VAT himself. But as I already wrote, the client's payment data (company name, VAT number, etc.) can be reliably found only after receiving the first invoice.

Reverse charge means that nobody pays any VAT on that invoice, it is just a factor in reporting VAT, but there is no payment connected to it.

Sergei P · ‎01-04-2021

Reverse charge means that the client will report on VAT instead of the freelancer. If an EU client hires a freelancer from the United States, then he will have to pay VAT in his country on such an invoice.

If both firms are located in the EU, then yes, there will be no VAT payment. But not all clients are in the EU.

And what happens if your client is an individual from other countries who have not provided their VAT number to upwork? In this situation, you must pay VAT in his country for the client. In some countries this tax can be very high.