My Tax status: While putting in my W-8BEN tax information it says I cannot work for US projects. Is that the right assumption ? Below are the points it asks me to certify:
4. the services performed under this Upwork account will not be performed in the U.S. and
5. the income related to this Upwork account will not be effectively connected with the conduct of a U.S. trade or business.
Non-US freelancers can submit proposals to any jobs except to US-only jobs here on Upwork. The Form W-8BEN is a form used to confirm that you’re not a U.S. taxpayer and that Upwork is not required to withhold taxes from your earnings. You may click here to learn more about Form W-8BEN. Thank you.
My previous answer was a bit confusing, I apologize. In the tax section we just wants to make sure that you are not working from inside the U.S nor that the income you earn will be associated with a U.S based trade or business because that would require a different type of tax form.
With regard to working U.S jobs, you are able to work jobs posted by U.S companies. However sometimes clients prefer to hire freelancers specifically from the U.S for certain jobs, and those jobs are termed as U.S-Only jobs, which you would not be able to apply to. I hope that clears things up!
Thanks Nina. Yes it does.
One more question if you know the answer. It seems Upwork will deduct VAT unless I have the VAT registration and to have VAT registration I think I need to work as a company and not an individual freelancer...!! Is that correct ?
Upwork charges the country-specific Value Added Tax (VAT) to freelancers and agencies in the European Union (EU), unless you provide a valid VAT number. VAT will be assessed on services provided by us, not on services you provide your clients. You can check this help article for more information. Thanks!
You said, if I'm NOT a U.S. person, after acceping the statement "the income ... will not be effectively connected with the conduct of a U.S. trade or business", then I'm still allowed to works jobs posted by U.S. companies.
This is slightly confusing to me, it seems like a contradiction.
If I work a job for an U.S. company from outside the U.S., why isn't that a U.S. trade or business?
Thanks in advance
If the intention of the statement
"5. the income related to this Upwork account will not be effectively connected with the conduct of a U.S. trade or business."
is to clarify that it's about trades or business that happens completely inside the territory of the U.S., could it make sense to word the statement more clearly? For example:
"5. the income related to this Upwork account will not be effectively connected with the conduct of a trade or business where all involved parties are inside the U.S..
The form Nina was referring to is form W-8BEN that is used to confirm that a freelancer isn't a U.S. taxpayer. Either form W-8BEN or W-9 has to be completed by the freelancer before they are able to withdraw their earnings from Upwork. It's irrelevant if the freelancer works with clients located in the U.S. or in other countries in this case.
Please, check this help article for more information.