VAT number

[5an420]

Is it absolutely necessary to have a VAT number when making a withdrawal?
And, taking an example of earning $100 from a client, how much factually I will receive upon deduction of all the relevant fees (taxes, fees, etc.)? (consider that I am based in Italy)

[JoanneP]

Hi Sandro,

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. The tax rate varies by country, which means your tax percentage will depend on your country's VAT rate. Please check this help article for more information. Thank you!

[5an420]

Hi Joanne,

Thank you for your reply.

I have a cople of questions more:

first, the upwork commision fees are 10 or 20%?

(Because in the article sample it results 10 % but I remember from the registration it is 20%.)

Second, if I get you right, it is possible to work also without indicating the VAT number.
What will be the difference for me in the amounts received if I indicate it and if I don't?

Say, if I earn $100 from a client (not having a VAT number), my commissions to you will be:
10% + 20% of the 10%, that is, the net amount that I'll receive will be: $88.
Out of these $88, will I later have to pay 22% (the Italian tax)?

And on the contrary, having the VAT number right from the start, how will the deductions be calclulated: $100 - 10% (Your fee) - 22% (Italian tax) of what amount?

I hope I made myself clear.

Thank you in advance,

Sandro

[AveryO]

Hi Sandro, 

Please see the help article that Joanne linked on her post for more information on how your taxes are computed. It would also be best if you consult with a tax advisor for more information how your tax is computed. 

Please know that the Upwork freelancer service fees start off at 20%, for the first $500 you have earned with your client. The services fees slides to 10%, and finally to 5% as it meets a certain earning threshhold. You may read more about it here. 

[martina_plaschka]

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@Sandro P wrote:

Hi Joanne,

Thank you for your reply.

I have a cople of questions more:

first, the upwork commision fees are 10 or 20%?

(Because in the article sample it results 10 % but I remember from the registration it is 20%.)

Second, if I get you right, it is possible to work also without indicating the VAT number.
What will be the difference for me in the amounts received if I indicate it and if I don't?

Say, if I earn $100 from a client (not having a VAT number), my commissions to you will be:
10% + 20% of the 10%, that is, the net amount that I'll receive will be: $88.
Out of these $88, will I later have to pay 22% (the Italian tax)?

And on the contrary, having the VAT number right from the start, how will the deductions be calclulated: $100 - 10% (Your fee) - 22% (Italian tax) of what amount?

I hope I made myself clear.

Thank you in advance,

Sandro

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If you receive 100 USD from, e.g., a fixed price contract with one client, upwork will deduct a fee of 20% = 20 USD. You will pay your italian VAT of 22% on the fee amount of USD 20 = 4,4 USD, so you will receive 75,6 USD. 

(Don't forget to pay income tax on your total net income.)