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Country of residence for Digital Nomads

pdukatz
Ace Contributor

Upwork has changed their fees for Europeans, adding VAT now. 

When I signed up, I was a resident of Germany. In the meantime, I transitioned into being a Digital Nomad. I unregistered in Germany and I am now a so called perpetual traveler, switching location every three months.

Two things:

1. How am I even supposed to switch my location here if I can't really prove it with an updated ID or something like that?

2. I don't see why I should pay VAT if I am not even an EU-resident anymore. 


I strongly urge Upwork to give advice as they always seemed to promote the Digital Nomad development and now they seem to make it so much harder. Please advise immediately.

Philipp

61 REPLIES 61
laherz
Community Leader

Honestly, right now it's all a big mess. I would suggest you contact support and wait it out a little. Unfortunately, you'll have to wait. I hope that in the next couple of days/weeks, things become a bit more clear. Because as it stands right now, the thread at: 

https://community.upwork.com/t5/Announcements/VAT-for-EU-freelancers-amp-agencies/td-p/130320/page/5

 

is full of confusion. I understand that for someone who does not have a "permanent" resident it must be a lot harder with changes like this. 

kochubei_valeria
Community Manager
Community Manager

Hi Philipp,

 

Please make sure you have an appropriate visa type or permit to work in a country you are situated in and pay taxes accordingly. You may need to consult with a legal advisor about it.

~ Valeria
Upwork

You haven't understood the concept of being a digital nomad. We are constantly traveling, not staying put in any country for longer than 3-6 months. Hence there won't be a valid work visa. 

I thought that you would consider this as you have been promoting this lifestyle excessively.

Please check back with your legal department and give me a qualified response on how to best act with regards to this matter. 

Thank you


PS: Another possibility: What if I register a business in a non-EU country. Could I put its adress here?


@Philipp C D wrote:

You haven't understood the concept of being a digital nomad. We are constantly traveling, not staying put in any country for longer than 3-6 months. Hence there won't be a valid work visa.


 Then, in a lot of countries, you are not legally allowed to work (the US for example) even digitally / online.


@Philipp C D wrote:

You haven't understood the concept of being a digital nomad. We are constantly traveling, not staying put in any country for longer than 3-6 months. Hence there won't be a valid work visa.


 Then, in a lot of countries, you are not legally allowed to work (the US for example) even digitally / online.

 

 

This is not true. You cannot accept work as an employee but you can work as a freelancer or self-employed. Maybe not in certain countries but definitely in the US.

That


@Stephen D wrote:

 

 

This is not true. You cannot accept work as an employee but you can work as a freelancer or self-employed. Maybe not in certain countries but definitely in the US.


 That is not true.

 

Activities Permitted under the Visa Waiver Program if coming to the US as a tourist:

 

  • tourism
  • vacation (holiday)
  • visit with friends or relatives
  • medical treatment
  • participation in social events hosted by fraternal, social, or service organizations
  • participation by amateurs in musical, sports, or similar events or contests, if not being paid for participating
  • enrollment in a short recreational course of study, not for credit toward a degree (for example, a two-day cooking class while on vacation)

Source: http://travel.state.gov/content/visas/en/visit/visa-waiver-program.html

 

Activies Permitted under a B2 (Tourism) Visa - if you can't use the Visa Waiver Program

 

  • tourism
  • vacation (holiday)
  • visit with friends or relatives
  • medical treatment
  • participation in social events hosted by fraternal, social, or service organizations
  • participation by amateurs in musical, sports, or similar events or contests, if not being paid for participating
  • enrollment in a short recreational course of study, not for credit toward a degree (for example, a two-day cooking class while on vacation)

Source: http://travel.state.gov/content/visas/en/visit/visitor.html

 

 

jmeyn
Community Guru

@Philipp C D wrote:



PS: Another possibility: What if I register a business in a non-EU country. Could I put its adress here?


 I suggest Belize, no taxes on income generated outside of Belize.

pdukatz
Ace Contributor

Hi Joachim,

there are plenty of options similar to Belize. The question then again would be wether or not the freelancer would have to change his/her location everytime he/she travels. 

Registering businesses in offshore destinations like Hong Kong, Panama or Belize has become somewhat popular recently. 

jmeyn
Community Guru

@Philipp C D wrote:

Hi Joachim,

there are plenty of options similar to Belize. The question then again would be wether or not the freelancer would have to change his/her location everytime he/she travels. 

Registering businesses in offshore destinations like Hong Kong, Panama or Belize has become somewhat popular recently. 


Belize has the advantage of the people really speaking English 🙂 Why would you want to change the location every time you travel? Leave the location of the tax haven and you only have to prove to the authorities of the tax haven that you haven't been in the country. 

pdukatz
Ace Contributor

Belize has a very dubious reputation which might not appeal to new clients. Countries like Panama, and even more so Hong Kong, have a way better standing. That's why I was considering other options. Your point in terms of language is absolutely legit though.

So as of now, I don't know wether Upwork wants or officially requires us to change locations everytime we switch countries. But yeah....I will just leave it as it is...this whole discussion has been more than enlightening already. 

Thanks Joachim.


Philippe CD said

 

You haven't understood the concept of being a digital nomad. We are constantly traveling, not staying put in any country for longer than 3-6 months. Hence there won't be a valid work visa. 

 

Philippe, I don't think you understand the concept of a work visa.  Without a work visa, for countries that require it, you cannot do any work in the country, online or offline, for three months or for three minutes.

 

If you entered the US or UK without a work visa, and told the immigration officer, "I'll be working on a freelancing platform called Upwork," you'd be sent back to where you came from.

 


@Marcia M wrote:

Philippe CD said

 

You haven't understood the concept of being a digital nomad. We are constantly traveling, not staying put in any country for longer than 3-6 months. Hence there won't be a valid work visa. 

 

Philippe, I don't think you understand the concept of a work visa.  Without a work visa, for countries that require it, you cannot do any work in the country, online or offline, for three months or for three minutes.

 

If you entered the US or UK without a work visa, and told the immigration officer, "I'll be working on a freelancing platform called Upwork," you'd be sent back to where you came from.

 


Same here in Germany. If you work as an employee (not a freelancer) you can work without paying income tax here as far as you don't stay 6 months or longer.  This doesn't apply to VAT and it doesn't apply to freelancers. As Petra so nicely said, they simply ignore tax regulations. Their number is so small, that so far nobody cared.


@Valeria K wrote:

Hi Philipp,

 

Please make sure you have an appropriate visa type or permit to work in a country you are situated in and pay taxes accordingly. You may need to consult with a legal advisor about it.


Staying only 3-6 months in a country he probably pay taxes anywhere. 

If an individual freelancer such as myself cannot provide a VAT number, for perfectly good reasons - I might add - the questions is:-

 

1.  Can I continue to work with my long-term, repeat Elance clients through Upwork?  Yes or No?

 

2.  As I don't need to pay for Connects or Membership Fees,  and assuming that I can still use Upwork - without a VAT no.,:-

 

a)  How much extra cash would you ask me to pay to Upwork?

 

3.  Would I be better off making private arrangements with my repeat clients for whom I have done continuous, successful jobs?

 

I would really appreciate some definite and relevant answers to these important matters.  Do not tell me to ask my financial adviser or accountant or whatever, I do not employ such people.  I am an individual writer and have only ever worked through Elance, without feeling the need to register as a one-person business in any of the EU countries I work from.  I don't earn enough money to need to register and if I did register as a one-person business, the fees would cost more than the amount I earn each year!

 

This is why we need individual answers in re. Digital Nomads, please.

 

Thank you,

 

Lindy R.


@Lindy R wrote:

 

....Do not tell me to ask my financial adviser or accountant or whatever, I do not employ such people.  I am an individual writer and have only ever worked through Elance, without feeling the need to register as a one-person business in any of the EU countries I work from.  I don't earn enough money to need to register and if I did register as a one-person business, the fees would cost more than the amount I earn each year!

 

This is why we need individual answers in re. Digital Nomads, please.

 


Lindy,

 

OK, I won't tell you that. If you were a healthy individual with a health concern, I guess I couldn't refer your question to a doctor or some other professionally qualified person, either.

 

If getting a VAT number is prohibitively expensive, or in some other way inapplicable to your business, and you "reside" (as has been discussed in these fora) in the EU, then you will be subject to Upwork's collecting and paying VAT (or its equivalent) on work you do here. [Misstatement/error corrected below: thanks, Ela!]

 

While you may "need individual answers," you will not get them from Upwork. As has been noted, they will keep arm's length from any tax matters on which some government has not forced their hand. Since you have ruled out professional advice, I can only refer you to the public tax codes of wherever you happen to be nomadically resident, or of course to the good (and possibly bad) advice you can find online in discussions by your colleagues.

 

All the best,

Michael


@Douglas Michael M wrote:

@Lindy R wrote:

....Do not tell me to ask my financial adviser or accountant or whatever, I do not employ such people.  I am an individual writer and have only ever worked through Elance, without feeling the need to register as a one-person business in any of the EU countries I work from.  I don't earn enough money to need to register and if I did register as a one-person business, the fees would cost more than the amount I earn each year!

This is why we need individual answers in re. Digital Nomads, please.


Lindy,

 

OK, I won't tell you that. If you were a healthy individual with a health concern, I guess I couldn't refer your question to a doctor or some other professionally qualified person, either.

 

If getting a VAT number is prohibitively expensive, or in some other way inapplicable to your business, and you "reside" (as has been discussed in these fora) in the EU, then you will be subject to Upwork's collecting and paying VAT (or its equivalent) on work you do here.

 

[...]

 

All the best,

Michael


 

No, that is not what Upwork will be doing - they are only going to collect the VAT on the 10% Upwork fee (for a service they are rendering to its customers = us) if and when a freelancer does not provide a VAT number. Once you provide the number, Upwork will print "reverse charge' on its invoice to us and we, as freelancers, are under the obligation to report and pay said VAT to our tax authorities ourselves. Because we are the ultimate consumer of said service. And an end consumer is ALWAYS responsible for dealing with VAT charges.

 

Upwork will not and cannot collect any taxes for services a freelancer provides to her/his clients. They don't care whether or not a European freelancer charges VAT. They don't care about the VAT clients have to pay. But the new EU regulations force them to care about the VAT they need to charge us and that EU governments want to collect from us as end consumers. So, be upset about greedy EU states, not Upwork. 

 

As for setting up a business and all the horrid costs that apparently entails: at the moment I operate as a German "Kleinunternehmer", which is pretty much the equivalent to the French auto-entrepreneur scheme. As such, I am exempt from paying VAT for the revenue I generate via the services I render, hence, I don't charge it to my clients. VAT has to do with revenue, and there is input and output VAT. I am not exempt from paying VAT for services I consume. That will qualify be as a business cost I can deduct from the income tax I owe.

  

I have a VAT number and I provide it to my EU customers. It didn't cost me anything to acquire one and I didn't have to register a trade or a company etc. as I am a member of a so-called liberal profession. I am rather sure every tax authority will happily dole out tax numbers (for free) as that means they know you are making money and might owe them a percentage of your revenue. It's not in their interest to give you a hard time getting a VAT number.

 

As the terms (German) KleinUNTERNEHMER and (French) auto ENTREPRENEUR clearly state, as soon as you generate revenue with what you do, you are considered an entrepreneur = business. In Germany, you don't have to be an entity to qualify as a business, natural persons can be entrepreneurs, too. Tax law is complicated - so if you don't know what applies to you, you will have to ask somebody who does. 

 

Ela

 

 

Edited to rectify spelling mistakes...

I sent an email query to Elance and received an intelligent and direct answer tailored to my circumstances - complete with a short example for clarity.  I don't need a VAT no. 

I don't have a work permit and don't need one for the bit of extra cash I earn as a freelance writer.  If I approached the officials with this matter, they would think I was mad bothering them with such a petty matter, that has no effect whatsoever on the tax revenues of the country.

 

Lindy

julia_lee
Active Member

As someone who is a digital nomad myself, I would really appreciate some help as well. 

 

First of all, Upwork is focusing on DMs as one of their main target groups: https://www.upwork.com/blog/2014/09/work-travel-beginners-guide-digital-nomads/

 

More than that, Upwork has actually endorsed the following book: http://try.odesk.com/digitalnomadplaybook/

 

That's how they convinced me to continue when Elance changed to Upwork.

 

I understand that there will always be countries where laws are clearly against someone doing any work, even if it's working for 2 hours on his/her laptop while visiting New York.

 

The reality, however, is that thousands of freelancers here lead digital nomad lifestyles while they work constantly travelling from country to country. I, for instance, can and am officially working in 4 countries, out of which 2 are non-EU. 

 

Which brings up the following points:

 

 - Switching my location every 2-4 weeks honestly looks very strange on my profile. And should I verify my location with a new ID/visa copy every time I commute to a new place? The whole verification process is not that easy, it involves an online interview with an Upwork team member and takes at least 1-2 days each time as far as I remember.

 

 - Philipp has a good point about VAT: why should anyone pay it all the time if he/she spends at least half of his/her life not in EU? 

 

I'd be very grateful if someone could treat this issue seriously. I personally know many travel journalists, bloggers, videographers and programmers who would join Upwork as soon as there will be more working solutions for DMs here. 

Totally agree with Julia here. There are heaps of people facing the same challenge that Upwork has created. I really, really hope that they will address this issue in a timely and professional manor. 

 

This affects more people than you might imagine and it will have major implications on wether or not freelancers will stay with Upwork or find other, more accomodating ways of generating income.


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