I am wondering about taxes regulations while doing job as freelancer and I would like to ask a few questions. I lead the company in Poland, pay income tax and VAT tax for any services around my country but I don't have a NI P number registered in European Union.
1. How should I settle any income profits when my client will be from United States for example? According to polish law I need to create an invoice and send it to my client after done service. If whole process is doing by upwork application as intermediary so who should be included in invoice, client or upwork? Please to clarify how it looks like.
2. I need to have a two invoices for income and cost to provide in tax office, will I have them both or just one from upwork and which? If client needs to be included in invoice then I create a document for service which value for example 1000$ then upwork will create a second invoice with cost 200$ for me as fee? Please to clarify the process of generate and exchange documents by upwork.
3. What with VAT tax? I found some information that I need to create an invoice with 0% VAT value for companies out of my country but I get an email with information about "You will be charged VAT if we are unable to valide your taxpayer information". I suppose that tax will be settle by upwork but what if I don't have a NI P number registered in European Union? Is it necessary to have it, why? I need this to making business with countries inside European Union not with countries outside.
4. What does it mean W-8BEN for client from United States? I never heard about it.
Thanks in advance for help.
Thank you for reaching gout to us. You can check these helpful articles for more information about reports that freelancers get on Upwork, payments and how to access invoices.
You will be able enter your company name in the legal name field on the Tax Info page if you'd like your company name to be displayed on your invoices. You will be able to access invoices in your Transaction History.
Upwork doesn't currently charge VAT on client payments to freelancers. VAT is applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. If you enter a VAT number, Upwork will not charge this tax but will print “VAT Reverse Charged” on the invoice you receive from Upwork and you may be required to self-assess VAT on your VAT return under the reverse-charge mechanism applicable to ESS. You can find more information here.
As for reporting your Upwork earnings to your local tax authorities, unfortunately, we won't be able to give legal and tax advise and recommend that you talk to a local tax adviser.