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.
- Calculating VAT
- Entering your VAT Number
- Changing VAT Number or Location
- Tracking your VAT
- VAT for Clients
VAT will be applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. This tax will be collected by Upwork and remitted to the respective EU government, unless you provide a valid VAT number. We remit the VAT payment we collect to your government through the Mini One Stop Shop (MOSS) mechanism instituted by the EU. The tax rate varies by country, which means your tax percentage will depend on your country's VAT rate. You can find the current VAT rate for your country here.
Upwork doesn't require anyone to have a VAT number. But we will charge VAT on the services above to freelancers and agencies within the EU unless they provide a valid VAT number. If you don't have a VAT number, here's an example of what this would look like:
(VAT rates vary by country. The example above assumes a 10% service fee and a 20% VAT rate)
We won't charge VAT if a freelancer or agency has a valid VAT number in the format shown here. Freelancers and agencies with VAT numbers can add them by going to Settings > Tax Information. If the tax ID that you submit isn't in the format provided by VIES, Upwork won't be able to validate it. You can check if your VAT number will be validated on the VIES website here. After you submit your VAT number to Upwork,Upwork will validate the number and email you to confirm whether it was validated or declined. We are currently experiencing longer processing times than expected but it typically takes up to 3 business days for Upwork to validate your VAT number.
After validation, we will print "VAT Reverse Charged" on your invoices. Please note you may be required to self-assess VAT on your VAT return under the reverse-charge mechanism applicable to ESS.
If your VAT number was declined, it was likely due to
- Country mismatch
- Name mismatch
- Expired VAT ID
- Invalid format (for information on formatting, click here and see Q11)
Note: Beginning soon (you'll be notified of the exact date) and until your VAT number is validated, Upwork will charge VAT. This means that a VAT charge will show up on any invoices occurring before and during the validation process. We can't refund you this amount. You may be able to claim credit for such amounts on your VAT return; please check with your tax advisor.
If you need to change your VAT number in the future, please contact Upwork Customer Support.
If you change the location listed in your account by going to Settings > Contact Info, we will automatically adjust your VAT to correspond with the rates in your new country of residence or stop collecting VAT if you have left the EU.
Your VAT is shown on your invoices, which can be found in your Reports > Transaction History.
Upwork doesn't currently charge VAT on client payments to freelancers or on payment processing fees.
Clients in the EU may enter a VAT number in the going to Settings > My Info so that invoices from the freelancer can be marked "VAT Reverse Charged" when appropriate. This will appear on all your invoices (regardless of freelancer/agency location).
Upwork is an online platform that brings freelancers and clients together. As our membership and activity have continued to grow in the EU, assessing VAT is an important element to continue providing services there. Based on Directive 2006/112/EC ("EU VAT Directive") Upwork's services qualify as electronically supplied services (ESS), which are subject to VAT at the place where the customer (i.e. the freelancer) is established or resides. Therefore, the services supplied by Upwork to freelancers who reside, have a permanent address, or are established in the European Union are subject to VAT there. Upwork is responsible for charging, collecting and remitting this VAT when providing these services to our EU customers.
Note: When freelancers have submitted a valid EU formatted VAT number to Upwork, Upwork won't be charging VAT. In these cases, the VAT may still be due but would be "reverse charged" to this VAT-registered freelancer. In other words, these customers of Upwork will have to report the VAT due on Upwork's service fee themselves.
Example: I am a declared auto-entrepreneur in France. I have a number, but I don't pay VAT.
No, Upwork won't charge VAT to anyone who has provided a validated VAT number. When Upwork is audited by your government, we are required to substantiate that we have charged VAT to all VAT non-taxable persons and that we have reverse-charged VAT to all taxable persons. The only way we can confirm and prove to your government that you are a taxable person is by collecting and validating your VAT number. Otherwise, your government will assume that Upwork is providing services to a non-taxable person and will require us to assess VAT, regardless of your personal status as an auto-entrepreneur.
Upwork is required to assess VAT on services provided by our company to anyone residing in the EU. This applies even if you are a digital nomad and only temporarily residing in an EU country. Every time you officially register in an EU country you should update your address information on Upwork. So, if you spend 6 months in South Africa, you are entirely subject to South African laws. If you then move to Germany, and you are officially registered there, you should update your Upwork address, and VAT will be assessed accordingly (or reverse-charged, if you provide a valid VAT number).