Direct contract and taxes

[noemisz]

Dear Community! 

I would like to ask a question about direct contracts. How is the VAT handheld in the case of a direct contract?

Thank you very much!

Noemi Szentesi

[AndreaG]

Hi Noemi,

VAT is assessed on digital services provided by Upwork (i.e. service fees, membership fees, and connect purchases), not on services freelancers and agencies provide their clients. To learn more about VAT, check out this help article.

Thanks!

[ordpatty]

Hi Andrea,

I have sort of the same question but different

I work from Argentina so I don´t have a VAT and I understand in this case Upwork takes 20% for taxes, but in direct contracts, do they also take that 20% of taxes?

If not, do clients receive the respective invoice o do i need to generate it myself and figure out how to pay for taxes independently from Upwork?

I have a prospective client who wants to have the proper receipt and such, invoice, but I don´t know if I should add the 20% of taxes additionally to the fixed price or is it included? Or how to handle that.

Thank you in advance

[AndreaG]

Hi Patricia,

When using Direct Contracts you are charged a 3.4% payment processing fee. For example, if your earnings are $100 you’ll be charged a payment processing fee of $3.40 USD. You are not charged a freelancer service fee, only the 3.4%. Clients also are not charged any fees. 

Regarding taxes, you are responsible for complying with the rules and regulations in your own jurisdiction. You may wish to consult with a trusted tax expert or advisor, as Upwork cannot provide tax advice.

Thanks!

[e54e8d4e]

Hi,

It's still not clear for me.

So if I have a direct contract of $1000 a month.

and 3.4% of it is $34 processing fees charged by upwork.

Will there be a 20% VAT on the processing fees ? 20% of $34 ?

Kindly clarify.

Regards

Ashutosh Naik. 

[petra_r]

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Ashutosh N wrote:

It's still not clear for me.

Will there be a 20% VAT on the processing fees ? 20% of $34 ?

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Do you even pay VAT on Upwork in your country? And is the rate 20%?

You've earned well in excess of $200k on Upwork. Are you paying VAT on those earnings?

[e54e8d4e]

That doesnt answer the question at all. I am planning to move to a country that has 20% VAT, hence my specific question above.