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hossein761
Member

How can I charge my client VAT?

Hi All,

I have recently started freelancing have a VAT number from the Netherlands. what I need to know is that how I can charge my client VAT?

Currently I am working with a client from within the EU, but I could not find anywhere mentioning about how to charge my client VAT? I hope I don't have to pay 21% of what I am earning to the tax ppl.

Can someone please help me?

Cheers

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Anonymous User
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@Hossein K wrote:

Hi All,

I have recently started freelancing have a VAT number from the Netherlands. what I need to know is that how I can charge my client VAT?

Currently I am working with a client from within the EU, but I could not find anywhere mentioning about how to charge my client VAT? I hope I don't have to pay 21% of what I am earning to the tax ppl.

Can someone please help me?

Cheers


Before you start a business you should clarify with a tax consultant what you have to do. As you have a VAT-ID it looks like you will have to charge VAT (or did you ask for a VAT-ID without any reason?) In case you are eligable to raise VAT you have to do it, alternatively you can apply reverse charge, provided your client is in an EU country and has a VAT-ID as well. Unfortunately, Upwork does not care about the VAT some of us have to apply to our invoices. Upwork's invoices to the client do not apply VAT. Moreover, Upwork does not provide a copy of the invoice to the freelancers. So, the only way for freelancers at the moment is to issue own invoices (less-than-ideal) and refer to the payment via Upwork. I really recommend you to get advice from a tax consultant, applying VAT between different countries is rather complicated. There is an ongoing discussion about VAT and invoices in the community. Please look for example here:

https://community.upwork.com/t5/forums/searchpage/tab/message?q=invoices+VAT

First thing when you start a business is to clarify if you have to raise VAT or not. That is a really essential difference.

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24 REPLIES 24
mrdanielprice
Member

Unless VAT works completely differently in your country than to mine (UK), the whole point of charging your clients VAT (here it's 20%) is to pay that percentage to your government.

Until Upwork implements a more traditional invoicing system, it looks like you're just going to have to increase your rate and inform your clients that a percentage of it is VAT.

Here in the UK it's not mandatory to charge VAT until you're earning something like ยฃ80K a year (which I imagine 99% of freelancers aren't lucky enough to, unless your clientele are celebrity, large businesses, etc.).
Anonymous User
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@Hossein K wrote:

Hi All,

I have recently started freelancing have a VAT number from the Netherlands. what I need to know is that how I can charge my client VAT?

Currently I am working with a client from within the EU, but I could not find anywhere mentioning about how to charge my client VAT? I hope I don't have to pay 21% of what I am earning to the tax ppl.

Can someone please help me?

Cheers


Before you start a business you should clarify with a tax consultant what you have to do. As you have a VAT-ID it looks like you will have to charge VAT (or did you ask for a VAT-ID without any reason?) In case you are eligable to raise VAT you have to do it, alternatively you can apply reverse charge, provided your client is in an EU country and has a VAT-ID as well. Unfortunately, Upwork does not care about the VAT some of us have to apply to our invoices. Upwork's invoices to the client do not apply VAT. Moreover, Upwork does not provide a copy of the invoice to the freelancers. So, the only way for freelancers at the moment is to issue own invoices (less-than-ideal) and refer to the payment via Upwork. I really recommend you to get advice from a tax consultant, applying VAT between different countries is rather complicated. There is an ongoing discussion about VAT and invoices in the community. Please look for example here:

https://community.upwork.com/t5/forums/searchpage/tab/message?q=invoices+VAT

First thing when you start a business is to clarify if you have to raise VAT or not. That is a really essential difference.

Thanks for the response.

In the Netherlands you need a VAT for any level of income.

The biggest problem with all this is that, I need to show the Tax people that I have recieved a certain amount from my client as VAT. But Upwork does not provide that! It seems that I need to create my own invoices and calculate the VAT there. As I understood invoices from Upwork are useless

 

Anonymous User
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@Hossein K wrote:

Thanks for the response.

In the Netherlands you need a VAT for any level of income.

The biggest problem with all this is that, I need to show the Tax people that I have recieved a certain amount from my client as VAT. But Upwork does not provide that! It seems that I need to create my own invoices and calculate the VAT there. As I understood invoices from Upwork are useless

 


Welcome in the club of those pitiable freelancers on Upwork who have to issue their own invoices... Woman Frustrated

Hi Hossein,

 

Thank you for reaching out. VAT will be applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. This tax will be collected by Upwork and remitted to the respective EU government, unless you provide a valid VAT number. Upwork does not charge and does not take responsibility for VAT that may or may not be due on charges by you as a Freelancer to your client. 

 

We suggest contacting your Tax local authorities for further assistance. Thank you.

 

For additional information and list of frequently asked questions regarding VAT, please visit our help page here.

- Aaron
Untitled

Dear Aaron,

Local tax authorities are very clear: we must provide an invoice with a valid VAT number from our client as well as a valid legal name and address for said client. There is no mystery nor big unknown here. Simple: can Upwork give us that information, so we can issue a valid legal invoice to our client? And can Upwork, when paying us for our work for said client, include in its payment notification the reference to said client, so our accounting matches all what it should?

Short of that, the entity that pays us and hots the work, is our client, the same way any contractor is responsible for its subcontractor. 

Which one is it?

Thanks.

 

Elsa,

 

Both freelancer and client addresses will appear on invoices that can be accessed in Transaction History if the client is located in a VAT country. Displaying an address is optional for non-VAT clients by marking a checkbox on the company contact information page.

 

Please, see this thread for more information.

~ Valeria
Upwork

Hello Valeria,


yes i know about the address, however in EU we need the client VAT number or whatever number they have that they are a "company", some kind of registration number that allow so for us to do not apply any VAT. Do you follow? Meanwhile currently UpWork do not care if the client has or not a VAT number which means that we get in trouble. Do you understand our point?

That's why we need to konw how to apply vat or if we should simply make our own invoice to UpWork as you have a clear VAT number.

 

Thanks

knuijver_sam
Member

It is best to reverse charge the VAT. In my understanding, this is simply put on the invoice Upwork sends to clients when they invoice your work. Upwork tries to only be a 'service provider', but they are keen to hold on to your money for a while.

If you enter your VAT number in Upwork and your client is outside the EU, the VAT will automatically be reverse charged.

 

You can ask clients for copies of the Upwork invoices. Then you may need to send your own corrected invoice (if you think the VAT is incorrect), where you correct for the (full) amount the client has paid via Upwork.

 

If your client is in the EU, or for some reason not receiving a reverse charging invoice from Upwork, or, the reverse charge doesn't seem to properly apply to your work (invoice), you can send your client an invoice appendix. In this you clarify the situation. It is possible to do this after the invoices were sent.

 

Only end consumers pay VAT ultimately, so your clients can redeem the VAT with the Dutch Tax Authority. It does constitute a bit of a hassle of course, but that comes with working internationally and with a reckless site such as Upwork.

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@Sam K wrote:

It is best to reverse charge the VAT. In my understanding, this is simply put on the invoice Upwork sends to clients when they invoice your work. Upwork tries to only be a 'service provider', but they are keen to hold on to your money for a while.

If you enter your VAT number in Upwork and your client is outside the EU, the VAT will automatically be reverse charged.

 

You can ask clients for copies of the Upwork invoices. Then you may need to send your own corrected invoice (if you think the VAT is incorrect), where you correct for the (full) amount the client has paid via Upwork.

 

If your client is in the EU, or for some reason not receiving a reverse charging invoice from Upwork, or, the reverse charge doesn't seem to properly apply to your work (invoice), you can send your client an invoice appendix. In this you clarify the situation. It is possible to do this after the invoices were sent.

 

Only end consumers pay VAT ultimately, so your clients can redeem the VAT with the Dutch Tax Authority. It does constitute a bit of a hassle of course, but that comes with working internationally and with a reckless site such as Upwork.


Wrong! Upwork does not care about the VAT freelancers have to charge to their clients (provided they have to). Their invoices sent to the clients in the freelancer's name does not apply VAT or reverse charge.

b22c6749
Member

Hello,

 

If you are a regular EU freelancer you should get VAT number of the client right? What if the client on UpWork doesn't have the VAT number in their profile? How should you proceed?

How can you apply VAT to the client ? Or should you simply ask him for the company number?

What if he doesn't have a company number?

blimunda
Member

Hi Hossain, I'm about to accept my first order on Upwork, and I am ZZP in The Netherlands as well.  I would like to know how you solved your invoicing problem, with VAT etc...  I must invoice with my VAT number on it as well as the VAT number (or equivalent) of the client. Thanks for your help.

Hi Lisa,

You client is Upwork cause you get the money from them and not the person/company for which you've done the assignment. The "invoice" that Upwork gives is completly useless. Here is what you should do (I did the same):

1- After your actual client accepts your assignment, Upwork will release the funds and assign them to you. in Dollars.

2- Then you need to send that money to your account. When you do that, Upwork will tell you what would be the equivalent in Euro and will be transferred to your bank account. 

3- On the SAME DAY (the date of your invoice should be before when you get the money in your account) that you ask for the transfer of fund to your bank account,  issue an invoice to Upwork (for your own administration). They have a VAT number: I use Moneybird by the way:Screen Shot 2017-12-10 at 20.53.12.png

 

You need to do something called reversed VAT, but I used my accountant to do it for me.

Hope it helps.

Cheers

Hello Hossein K,

I am also based in Amsterdam but i did not get your point. UpWork do not make an invoice when he transfers the amount from dollars to your bank, or does it? Where did you get that invoice?

 

Ps. also because what you are doing i am not sure is correct, because for example if 5 clients pay me through Paypal and then I transfer the money from PayPal to my bank account. I do not make 1 invoice to Paypal, I mean the client is not PayPal.


Thanks

The invoice from upwork is not really and invoice. It lacks a lot of info on it (BTW, address, etc).

The method i used was suggested by my accountant. You client is Upwork and not Paypal. So you need to issue the invoice to Upwork. The money comes in Euro through Paypal.

Hello Hossein,


thanks for the feedback, however i still find it strange. 

Mine was an example, like if you have a client outside UpWork who pay you on your paypal account. Then you transfer your money from Paypal to your Bank account. 
You should make an invoice for your client and not for Paypal. 

So this is the same concept for UpWork, upwork is not your client he is just like Paypal or stripe it only collect the money.

Am I wrong? Any @upwork who can say something, please?


Thanks

Niccolo, you're not wrong. The invoice should be on the client's name, not Upwork's. It's the client who hired you and paid you for your services, Upwork makes it clear in their TOS.

 

Unfortunately not many accountants will look into this issue deep enough to see what's going on, especially in the Netherlands, because of the way freelancing agencies work here in NL. Upwork is not like those freelancing agencies, it doesn't "subcontract" you to the clients.

 

The way I've been doing it so far:

  1. If a client is in EU and has a VAT number, I make an invoice with their name and VAT. On the invoice, I make a note that VAT is reverse charged to the client. Then I file this quarterly under "intra-communitary export"
  2. If a client is in EU and doesn't have a VAT number (they're an individual), I make an invoice with their name, apply their country's VAT rate, and file this via MOSS. I pay the VAT to Belastingdienst.
  3. If a client is not in the EU, I still make an invoice on their name just with no VAT applied.

In all 3 cases, I usually have to hunt for the address and/or VAT details myself because Upwork is useless and plans on staying useless.

 

Note regarding point no. 2: I might be wrong to apply the client's VAT rate instead of my own (21%), but when I try to file it via MOSS, I have to pick the client's country and that country's VAT rate. So it didn't make sense to me to make an invoice with 21% VAT and then file (e.g.) 23% via MOSS. ๐Ÿ˜•

 

In any case, you can't make an invoice on Upwork's name (since they're not your client) and you can't use their VAT number for reverse charge because it's not a valid VAT number (it's not VIES-verified). If that's how it would work, then the client would not be able to claim VAT back.

There is my answer then. Thank you, you made it clear for me how to proceed.

@Ines

 

Regarding your point 3 in case you do not apply the VAT to the client as he is outside EU is that correct right? Even if he doesn't have a VAT number (as the VAT number are only EU numbers)?

 

Thanks

Yeah if they're outside EU, they don't have a VAT number, so you don't apply VAT.

Hi all,

 

I am confused by this. From my accountant's point of view, all my clients must pay the Spanish VAT as the work has been provided in Spain. I mean if I go to the USA to work for a client it wouldn't apply but if I do whatever for them in my office in Spain I'll have to include Spanish VAT.  Our freelance system is pretty unflexible so I do not know if this apply to every country.

Hello,

I am based in the Netherlands, and what we have here is "reverse charge
vat". Basically, you do not have to pay VAT for clients who are outside the
EU. As the VAT is something specific for EU.
>From what I understood so far, simply do not apply any VAT to clients
outside EU, and write "reverse charged" on your invoice. Meanwhile client
in EU should have the VAT number usually.

I understood that, but as I said, my accountant insists that the job is
being performed here in Spain, even if the client is based abroad. I have
to really get to the tax authorities again and ask about it.

Thank you,  this is precisely what I needed to know .

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