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Reverse Charge VAT that shouldn't be reverse charged.

mihabarboric
Active Member
Miha B Member Since: Mar 3, 2021
1 of 7

Hi,

 

I've been running in circles with this for a while now.

 

I'm based in Slovenia (EU) and our tax authority demands that we should file a VAT report on any cross-border transactions within EU.

I've had regulard work with a client in Belgium, who is not registered for cross-border VAT transactions, i.e. his VAT number cannot be found in the VIES database.

However, Upwork's invoices for this Belgian client all feature reverse charge VAT, which I should report, even though in reality the invoices should not have been reverse charged at all.

Does anyone have an idea how to solve this?

 

Thanks,

 

Miha

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
2 of 7

Hi Miha,

 

Thanks for the message. I understand your situation and will ensure you receive an update directly from our dediacted team on the recent conversation you had with our Support agent.

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vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
3 of 7

Hi Miha,

 

I had a close look and while I won't be able to provide specific details regarding your client's account or their invoices, I can confirm the invoices are displaying correct information. Please ask your client to reach out to us directly if they'd like to receive a more detailed update and we'll be glad to guide them further. Feel free to follow up but do note that since we're discussing another user's account, we won't be able to provide more information.

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mihabarboric
Active Member
Miha B Member Since: Mar 3, 2021
4 of 7

Hi Vladimir,

 

Maybe I wasn't clear enough.

 

Client is happy with the situation as it is.

The problem is on my side, because Slovenian tax authority claims that this is an erroneous invoice, since Reverse Charge VAT only applies to businesses who are registered for cross-border VAT transactions and the client in question evidently isn't.

andregutierrez22
Moderator
Andrea G Moderator Member Since: Jul 7, 2020
5 of 7

Miha, we'd like to reiterate that it's working as designed and the invoices display correct details based on the information the client provided on their account. We won't be able to share further details about another user's account or provide tax advice and recommend that you discuss this directly with your client and tax adviser.

 

Thanks!

~Andrea
Upwork
8e4bb28b
Active Member
Gasper M Member Since: Mar 28, 2021
6 of 7

Hi everybody, I am advising Miha on this tax issue. I must point out that the conclusion by Andrea is not right as the invoice is not correct and Miha is the one who will bear the risks of this and/or will need to pay VAT which by systematic mistake was not put on the invoice and was therefore not paid by the customer (but will be claimed by tax authorities from Miha).
The problem as I see it is that client's VAT ID number seems not to be validated according to EU VAT rules (in the VIES system) at the creation of the invoice or earlier. The Upwork's invoicing system seems to enable the customer in question to enter some false number as VAT ID.

The consequence is that the invoice issued and paid by the client was missing VAT which is wrong as the client without a valid VAT ID is not a part of a EU VAT system and so the VAT will need to be covered by Miha (out of invoiced amount) or he at least will bear the legal risks of this.

If the client's VAT ID was valid, the issued invoice would have been OK.

Please do not hesitate to contact me in case that additional explanation is required.

Kind regards,
Gasper **Edited for Community Guidelines**

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
7 of 7

Hi Gasper and Miha,

 

We've escalated your requests to our executive escalations team and our team member has already reached out to Miha directly with an update. Miha, you can access your support ticket here.

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