Applying VAT to Invoices | EU Sellers to Clients.

[yorgie]

Would like to bring this very important topic up for discussion and gather feedback as even accountants have mixed views on this crucial tax topic.

(maybe Upwork can contribute to this topic since maybe they have gathered relevant information on this topic to assist freelancers)

Firstly there are two(2) types of transactions:

a) Service fees (Invoice) from Upwork to sellers (freelancers)

b) Invoices from Sellers (freelancers) to Clients

The a) is clear in terms of Service fees if one provides their VAT Registered # to Upwork, so such get reversed charged.

What is not clear is b), especially to non-EU clients, ie. an EU Freelancer selling services to a USA buyer and if the Invoice should include VAT or not (or in what cases should it include VAT or not), so I can outline some scenarios (ALL including selling to EU clients) and hopefully others can append more info to gather.

1. Client is a non-EU client, that is an individual (thus no way he would of applied a VAT EUxxx
2. Client is a non-EU client, that is a Company (that may have applied for an EU VAT #, maybe via MOSS like Upwork has done so, to be able to remit VAT they collect and have the VAT payments pan-EU remitted.
3. Client is a EU client, not in the same country as the seller, but is an individual
4. Client is a EU client, not in the same country as seller, but is a company, thus most likely has a VAT #
5. Client is also within the EU and same country as seller, and is an indvidial
6. Client is also within the EU and same country as seller, and is a company

So the plan is to ask as many that can contribute to understand what their accountants/tax advisors have recommended they pursue and cross-check against others to guage the different cases across EU that should be very similar across EU countries with some variations potentially.

Hope this compilation will help most freelancers to get their questions asked to some extent and relay this information to their accountants, for them likewise to confirm.

There is confusion and wrong advise surfacing from accountants to a great degree as international & EU VAT tax is a total different basket when compared to local tax practices.

Look forward to hear what your advisors have suggestd and maybe worth to point out which of the above 6 applies to you and advise that has been given.
Worth to point out too, what county you are based in to create such a record eventually.

Any ideas on this approach, feel free to recommend in compiling this information.

Hope this will eventually help many both in the short and long run.

[f957c3ae]

4. Upwork invoice should be enough (reverse charging in case of VAT)

Other questions, i'm not sure

[JoanneP]

Hi Yorg,

While we are unable to confirm any of the information requested, you can refer to this help article. VAT is only applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. Upwork doesn't currently charge VAT on client payments to freelancers or on payment processing fees. All this information is available in the help article linked above. Hopefully, you hear back from other freelancers in the EU.