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Tax and VAT

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Active Member
Coco S Member Since: May 20, 2017
1 of 8

Hello Community,

 

In the last 2 months I had about 18 jobs and the earned money was transferred to my bank account. Last week I sat down with my tax guy and he said I need the invoices WITH our clients VAT number which is not put on the downloadable invoices that are accessible.

 

So my question, how do you deal with this? Do you ask each client individually for their VAT number? That would be a lot of extra work/communication and I'm thinking not well received by the client?

 

Thank you for your advice!

 

All the best,

Coco

Active Member
Britt D Member Since: Mar 20, 2017
BEST ANSWER
2 of 8

To my knowledge, you only need to prove the income that Upwork gave you. So you will need to fill out a 1099-MISC form if you've made at least 600$. Then just report the income you've made from Upwork that way. 

Active Member
Coco S Member Since: May 20, 2017
3 of 8

Thank you for the answer. I'm taxed in Austria thou and we don't have this form...thats at least what the tax guy said and I have to admit freelancing is not his background..

Active Member
Julie H Member Since: May 11, 2015
4 of 8

Coco, for clients in EU countries other than your own who have VAT numbers, but not in my own, I generate my own invoice with all the info that the local government requires to be on it (because Upwork STILL doesn't give me one that the local gov't would accept..even thought I've asked them for it multiple times) - it needs both their VAT number and mine and last I checked the Upwork invoices still only have the client's VAT number and not my own. The receipt needs to say that VAT has been "reverse charged". 

I ask all my clients for VAT number, company name and address if I don't have that info through their website.

 

For clients in my own country, or clients in the EU without a VAT number, it's complicated because I MUST charge 19% VAT (there's no way to reverse charge in these cases) but Upwork doesn't give me a way to do that through their system. So as I see it, there are two options:

- Charge 19% more than usual rate, but issue the client an invoice that allows them to claim that 19% back from the tax office.

- Charge your regular rate and lose 19% of your income to the tax office (AFTER Upwork takes their 10% or 20%). 

Of course, it's more streamlined for the clients if you go with option number two, but you earn way less money. I think option one is viable, but I just wish Upwork would just make this happen through their own system, it's such a manual process right now. And clients don't get excited about being charged 19% more, even though they can get it back.

I have a great English-speaking accountant who can help you if needed. She's helped me.

 

If anyone has any better ideas, I'd love to hear them - this is a source of continual frustration and Upwork will cease to attract freelancers in Europe who want to do their taxes honestly, becuase it's so complicated.

Community Guru
Nichola L Member Since: Mar 13, 2015
5 of 8

Good question, and one that Upwork has been sliding around ever since this was introduced. It is particularly complicated for German freelancers working in Germany.

Active Member
Coco S Member Since: May 20, 2017
6 of 8

haha yes Nichola, I'm almost avoiding taking on Austrian clients because that makes everything extra hard. At least with foreign clients we really only need the VAT number so both parties avoid the "Mehrwertsteuer" Issue.

Active Member
Britt D Member Since: Mar 20, 2017
7 of 8

I'd be surprised if there isn't a form in your country that allows you to claim MISC income because what happens if someone wins the lottery? Or they get unexpected income from a wierd sorce? There is probably a document for it but since I am American I have no idea.

Community Guru
Nichola L Member Since: Mar 13, 2015
8 of 8

 


@Britt D wrote:

I'd be surprised if there isn't a form in your country that allows you to claim MISC income because what happens if someone wins the lottery? Or they get unexpected income from a wierd sorce? There is probably a document for it but since I am American I have no idea.



If you have no idea, then your input is not entirely helpful. Smiley Wink

 

I don't know about Germany or Austria, but I do know that in France (so far) that if you win the lottery however great the sum, it is entirely tax free, because it is a lottery. Obviously, if you were to invest an important sum of that win then you would pay tax on the interest.

 

By the same token, in the UK, there are bonds that "win" amounts on a sum paid in. These too, are legitimately, tax-free.

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