(French) freelancer - Paying taxes

[sarahglc]

Hi everyone,

I have a few questions about how to pay taxes as a (French) freelancer.

Since UpWork is not your client, when you're doing your tax declaration, should you declare the amount received plus UpWork fees and VAT? Or should just take into account the money that has actually landed on your account?

Sorry if my question has already been asked, I am a bit lost with the whole tax topic.

[versailles]

A lot depend on the legal status you're incorporated in. If you have incorporated as an "auto entrepreneur", you just claim your total income. Otherwise, you may want to check with your accountant who could definitely provide you with guidance.

[sarahglc]

Thanks for your reply Rene.

I did incorporate as an auto entrepreneur. Then, if I understand correctly, I'll have to declare what I'd earn if VAT and service fees were not deducted, and NOT the amount that will actually be transfered on my account, right?

[versailles]

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@sarah G wrote:

Thanks for your reply Rene.

I did incorporate as an auto entrepreneur. Then, if I understand correctly, I'll have to declare what I'd earn if VAT and service fees were not deducted, and NOT the amount that will actually be transfered on my account, right?

---

No, just forget the VAT, it doesn't matter at all in your case. You just claim the total amount of your earnings. By total amount I mean the amount in € that you received on your bank account. Every cent you earn on your bank account has to be reported and your taxes are calculated from this.

Your legal status implies that you don't charge the VAT but also that you don't deduct VAT from your tax claims. Pretty straightforward.

You may want to check this: La TVA sous le régime de l'auto-entreprise

[sarahglc]

Thanks for your quick reply Rene!

I was actually aware that as an autoentrepreneur I didn't charge the VAT. But I got pretty confused when I realized UpWork would charge me the VAT. I'm still not sure about this whole thing, but you answered my initial question.

[versailles]

Upwork will charge you with the VAT for all the services they provide to you. This is membership fees if you have a paid membership, and the fee they charge on every job.

At this point, this is not a problem. 

Now, some of your European clients may ask you for a VAT#. If you don't have one, you have to apply for one with your tax administration. It won't change anything for you but it is required when you work wit EU clients located outside of your state.

But in this case, since it is Upwork who makes and sends the invoices on your behalf to clients, the only way to have your VAT on the invoices is to add it to your profile on Upwork.

But then, Upwork stops charging you the VAT, which is OK for all legal forms but not for French "autoentrepreneurs", and for others in other states.

Then you're in trouble with the tax administration.

Good luck 🙂

[sarahglc]

Thanks a lot Rene!

But I still can't fathom this part:

"But in this case, since it is Upwork who makes and sends the invoices on your behalf to clients, the only way to have your VAT on the invoices is to add it to your profile on Upwork.

But then, Upwork stops charging you the VAT, which is OK for all legal forms but not for French "autoentrepreneurs", and for others in other states.

Then you're in trouble with the tax administration."

Since I have the autoentrepreneur status, I can't get a VAT number because I am not charging it nor claiming it. I have already double checked with my tax administration, I really can't get any kind of special VAT number. With direct clients, I would usually write "exemption from VAT registration art. 293 B, CGI" and this would do.

The only reason why UpWork charges me the VAT is because I don't have this number (that I can't obtain anyway)?

Why would I be in trouble if I UpWork stopped charging me the VAT?

[quinaz]

This is also what I've been told at URSSAF when I asked them (twice, in different years) at their offices in Paris: that I should only declare the amount that actually falls on my bank account. But I was never too reassured as they seemed to be answering it in a quick way (didn't seem like they knew what I was talking about) and actually just wanting me to leave as soon as possible so they could go to the next client.

However:

1. What happens to the commission that we pay for the transfer of funds (around 1€)? We don't get this 1€ on our bank account. Is this 1€ noone's responsibiity? No declaration of it's existence? Is it not important at all?

2. On Malt (a French freelance platform, much like Upwork) they say that we should declare the total amount that was billed to the client:

https://help.malt.com/l/fr/article/00utnwj2y7-je-suis-auto-entrepreneur-est-ce-que-je-peux-d-clarer-...

They say: "To declare your income, you must declare your gross income and not deduct the Malt commission.

The Malt commission is a non deductible charge when it comes to income taxation.

If you have an invoice of 1000€, but you have received 880€ (after Malt's commisison) you must declare 1000€, that's your 'chiffre d'affaire facturé' (billed gross income)"

They add:

" 'Micro-entrepreneur' freelancers must declare a 'chiffre d'affaires' (total income) that [...] does not take in consideration functioning and investment charges. User taxes and other comissions billed by the platform [Malt] to the independent worker are a functioning tax, that must not be deducted from the declared income.
Taking into consideration the above exemple, the user must indeed declare 1000€."

So my question is, why should declaring 'micro-entrepreneur' income through Upwork and Malt be any different???

--

What about my invoices? I've never issued any invoices of my own for work done on Upwork. Noone ever told me to do so, and I always thought that Upwork's invoices got me covered on that.
3. If so... how do I fix this mistake?? Can I issue a new invoice with today's date, specifying on its detail all of the projects developed and their date of paiement? Should I address it to Upwork? What's their billing address?

[quinaz]

Adding to my previous message:

I was checking the invoices generated by Upwork and they are pretty straight forward. They have both the name of the freelancer plus the one of the client, and the total amount payed in dollars by the client.

Then we have a second invoice, billed by Upwork to the freelancer, with the service (and VAT) that the freelancer payed to Upwork.

So TWO invoices for TWO purchases. All this makes sense.

I don't think it makes much sense though that we must do a second "French" invoice with a different amount (the one that lands on our bank account). This wouldn't match the original invoice issued by Upwork on our behalf, nor it would make sense to the client to have a new invoice disregarding some dollars from the amount they payed. (I mean, if I am a customer I'll want my invoice to present the full price I payed on a service. Especially if I'm asking for a reimboursement later on)

I doesn't make sense to issue an invoice to Upwork either because they didn't pay us anything and they could easily hold this against us.

The only logical way to me seems to be: issuing our own "French" invoice copying all data from the one issued by Upwork, and present the amount in both dollars and euros, as well as the exchange rate used (either from the date we got the funds on our Upwork profile, either from the date the invoice was issued, either from the date the transfer was done to our bank account. We can ask Upwork what was the exchange rate used, they've sent me this information before).

So, this amount in euros (converted from the total price in dollars without deductions) is our 'chiffre d'affaires' and the one we must declare.

What are your thoughts on this?

[quinaz]

For all those who are concerned and/or interested, here is how to correctly declare in France your income from Upwork freelance services, to both the "impôts" and URSSAF:

The client posts a job offer of 1000$. You apply. You get the job. You must declare 1000$. It’s as simple is that. 1000$ is your "chiffre d'affaire" (revenue/gross income).

The Upwork service fee+TVA, the purchase of connects and the bank transfer fee are not deductable from your income. These are at each freelancer’s own responsability and should not influence your 1000$ gross income.

If you’ve received a smaller amount on your bank account, OR EVEN if you’ve decided to spend all your dollars in connects and at the end reveived NO MONEY AT ALL on your bank account, you should still declare 1000$.

The conversion rate to euros to be used is the one used during the transfer of funds to your bank account. You can ask Upwork support team to give you the exact dollar-to-euro rate used. That’s what I’ve been doing and they’ve always sent me this information: precise rate and date.

You can print or download your invoice from your Upwork personal space and add a note to it with the amount in euros, as well as the exchange rate (and date) used for the conversion, as all invoices ("factures") must contain at least the amount in euros billed to the customer.

If you worked in January but you only received your money in March, you must use the exchange rate of March.

I got this information from my accountant, which was confirmed by a second accountant from Maison des Artistes, also confirmed by a «conseiller» at URSSAF Paris Nord 19e (I booked an appointment with them, so it was "sur place"), and also confirmed by the "service des impôts du 19e". All appointments and exchange of information took place this month (July 2020).

Be careful, sometimes people in administration and offices might not know right away the correct way to declare income, so if you do the research on your own, like I did, do insist on the importance of having the correct information and ask them if they are sure and if they’ve conducted a thorough research on the issue. Do this with time and never accept an  answer if they are rushed and strugling with time or seem to not be too sure about what you're asking.

So there you go.

I don’t understand why this information is not easier to find online. And Upwork could have done the effort to contact the experts in France and give out the correct information, the same way they do at Malt.

😉

[alecsastewart]

Hi Goncalo,

Thank you for the confirmation you've just added on here. I've been having the same dilemma regarding French declaration and invoicing... and I had considered the way Malt suggested to declare the income as "chiffre d'affaires" and I have been doing just that.

However, I have a question regarding what you say about issuing "French" invoices. I find it a bit strange for customers to be sent invoices twice, I don't think it would be a great experience for them. So I tried one option:

Option 1 - Send one invoice per month for total services that month

So say I have done 3 projects for $100 each for the customer i.e. 85€ each. I would then send them one "catch-up" French invoice at the end of the month showing the total of $300 / 255 € and tell them this is for information only - nothing to pay. This is what I've been doing so far.

I feel, however, that the correct option is to match every Upwork invoice, i.e. Option 2:

Option 2 - Match every Upwork invoice

In the above scenario, send one invoice for $100 / €85 every time one is generated by Upwork and the client pays.

This means the client will be getting lots of invoices, some from me through messages as "for info only" and some from Upwork.

What are your thoughts on this?

Also, there is Option 3: Generate invoices, don't send to client as they'll have one from Upwork anyway. I'm not sure what the legal status is about that - do we have to prove we've sent these "French invoices" or not?

Thanks for your help!

[quinaz]

Hi Alecsa,

I don’t know if legaly the client needs to receive a second invoice, but I’ve never been asked by a client to send them another invoice with the amount in euros and I’ve never been adviced to do so. And so I’ve never done that and I don’t intend to do it.

But this is something that we can ask Upwork support and/or an accountant and/or the tax office.

I think that the only thing that is indeed required is that you note on Upwork’s invoice itself the respective amount in euros. If you’re not doing this at least be sure to have this information on your records because the tax officers will probably want to know this if they ever want to conduct a verification of your business (a “contrôle”, in French).

If you choose to issue another invoice where you group several pays, be mindful of the exchange rate used for each pay. If there are different exchange rates used maybe it’s best to break it down to sub-payments on that same invoice description and refer the exchange rate (and date) used for each one of them.

I hope this helps. But I’m not an accountant 😛

[alecsastewart]

Bonjour,

I think that's a very good point about grouping invoices... it's because I have too many per client per month (e.g. writing several blog articles as milestones) so thought it would be easier. At the same time, I keep a log of exchange rates when they pay so I guess that would suffice. It's not that straightforward is it 🙂

Thanks for your input!

Alecsa

[sarah_thiery]

Goncalo Q

That's so helpful thank you.

I'm usually very resourcful and good with the maths but I was loosing hope to declare the little I've earned so far which is not much with double VAT from upwork then Urssaf... + 20% upwork fee...

So thank you I'm very grateful you take the time to write it.

[madronsilvia]

Hi,

I am new to Upwork and have been reading your replies because I am also concerned about how to declare what I earn on upwork.

I am "autoentrepreneur" in France. I just saw the invoice issued by Upwork and it doesn't indicate the client's intracommunity VAT number, which is needed when we work for a client outside France.

Should I ask for it to the client and modify the invoice myself?

Thank you!

[c8925967]

Would you know whether we should declare our spendings if we have a client account on upwork? for example i have the autoentrepreneur status and want to hire staff to help me through upwork

[quinaz]

Hello Rawan A,

I can't really help you, I've never used Upwork as a client nor have I ever hired staff to help me, so I never needed to look this up. My advise would be to reach out to an accountant and/or URSSAF, etc.
All the best.

[versailles]

You are entitled to a VAT# if you request one. Your local SIE (service d'information aux entreprises) should advise you. There is a form to fill and to mail them.

If you have troubles to get it, ask me in PM I'll see if I can find a copy. This is only if a client ask you though since it is not compulsory.

As for being in trouble if U stops charging you the VAT, this is purely hypothetical, I think they'll go after U if ever they find out.

[colettelewis]

"As for being in trouble if U stops charging you the VAT, this is purely hypothetical, I think they'll go after U if ever they find out. "

+ 10 René 🙂

[sarahglc]

Alright, thank you for your patience.

I'm trying to get everything clean before I start my first project 🙂

I send you a pm for the form.

[a_soulami]

Hello,
I have the same problem, I entrepreneur I have no VAT number !!

Sarah : peux-tu me dire si tu as trouvé la solution ? 

Merci

[versailles]

It has to be sought from your local SIE (service des impôts des entreprises)

For more info, click here.

[leticia64]

Hi René, 

I am french auto-entrepreneur and got a firts project on upwork.

I asked for a VAT number to my SIE as adviced even thought I'm not entitled to charge VAT.

I gave me a number with the format FRxxXXXXXXXXX

FR and 11 digits. Upwork doesn't recognise this format... Have you got any idea of what went wrong?

Many Thanks 

[a_soulami]

Hello Laeticia;
I had the same concern in the beginning, and no administration has even asked me!
I was stuck for a long time bou!
Finally I went to the tax who contacted me intracomunotaire a VAT number.
And it goes

[colettelewis]

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@Abdelkamel S wrote:

**Edited for Community Guidelines**

---

Hi Abdelkamel,

That's a good answer, but it is against the forum rules to write in any language other than English, which is Upwork's lingua franca.

[a_soulami]

I'm sorry I did not know

[vladag]

Hi Abdelkamel,

I'm sorry about editing your comment. I see Nichola already explained our ToS, so please feel free to repost your comment in English.

[versailles]

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@Laeticia B wrote:

Hi René, 

I am french auto-entrepreneur and got a firts project on upwork.

I asked for a VAT number to my SIE as adviced even thought I'm not entitled to charge VAT.

I gave me a number with the format FRxxXXXXXXXXX

FR and 11 digits. Upwork doesn't recognise this format... Have you got any idea of what went wrong?

Many Thanks 

---

This is the right format for the VAT number. Try to speak with the CS. 

[leticia64]

thank you. My VAT number has been approved on the Upwork platform.

[vladag]

Hi Laeticia,

Please make sure that you submit a number that can be verified by the VIES database, and try adding it again after confirming. Let us know if it verifies there but not on Upwork.

[adamcontu]

Hi Sarah, 

I have exactly the same question... how to declare his upwork income with the french service tax ??? Did you find the solution?

Thank you,

Adam

[evakaternberg]

Hi, 

I have nearly the same question but for the upwork fees. Do they count into my income or do I deduct them and declare only the received money on my bankaccount?

Also do you emit invoices for upwork or for the specific client?

Thanks a lot in advance!

[olganigay]

Hello Eva,

I'm trying to find an answer for the same question, could you find a solution for it?

Thank you!

[evakaternberg]

Not yet, sorry... but I wrote a mail to Urssaf and wait for their response.

[adamcontu]

Hi there,

Since 2016, I've found my answer. So, you juste have to declare the money you received on your bank account from upwork. Actually, you do the same as usual when you declare your bills to Urssaf every month or quarters, you declare the "net" you received from your client.

See you !

Adam