Value Added Tax (VAT)

Value Added Tax, or VAT, is a consumption tax assessed on Upwork’s supply of digital services.

Upwork charges VAT to freelancers and agencies in certain countries unless specific exemption requirements are met. Upwork is required to collect this tax and pay it to the appropriate government agency.

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. VAT rates are calculated according to the local rate of the freelancer’s country of residence.

Please see country-specific tabs to further understand how VAT applies to you. We encourage you to consult your tax advisor with questions that relate to your specific situation.

 

Belarus (BY)

Starting on March 1, 2019 - VAT will be applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. The tax is collected by Upwork and remitted to the Belarusian government. The Ministry of Taxes and Duties of the Republic of Belarus keeps track of all companies that have registered to pay VAT. You can find Upwork Global Inc. on the list here, by selecting “List of Foreign Companies.”

VAT is shown on your invoices, which can be found under Reports > Transaction History.

Calculating VAT

If you are using Upwork as an individual entrepreneur and not for a legal entity, a 20% VAT will be applied to the following:

  • Freelancer service fees
  • Any Connects purchases
  • Any membership fees

You will not be charged VAT on any withdrawal fees you pay. Here’s an example:

vat-image.png
(The example above assumes a 10% service fee and a 20% VAT rate, but rates and fees may vary.)

Entering your Taxpayer Identification Number (TIN)

If you are using Upwork as a legal entity and your information is validated, Upwork is not required to collect VAT from you. We suggest consulting your tax advisor to understand your specific VAT responsibilities.

Freelancers and agencies working on Upwork as a legal entity can add their information and TIN by going to Settings > Tax Information. After you submit your TIN to Upwork, we will validate whether it's for a legal entity and email you to confirm whether it was validated or declined. It typically takes up to 3 business days for Upwork to validate your TIN.

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 e-services.

Note: Upwork will charge VAT on any invoices created 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.

Changing TIN or Location

If you need to update your TIN in the future, you can do so by going to Settings > Tax Information.

If you change locations and update this information in your account by visiting the Account Menu > Settings > My Info > Contact Info, we will automatically adjust your VAT to correspond with the rates in your new country of residence or stop collecting.

Frequently Asked Questions

Does Upwork charge VAT to clients?

Upwork doesn't currently charge VAT to clients.

Why is VAT being collected?

A law was passed in Belarus where VAT is now charged to Belarusians when they purchase electronic services from non-Belarusian businesses (like Upwork). To comply with this law, we need to collect VAT on the services we provide to freelancers and agencies and forward this tax to your tax authorities.

Upwork is an online platform that brings freelancers and clients together. Upwork's services qualify as electronic services, 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 Belarus are subject to VAT there. Upwork is responsible for charging, collecting and remitting this VAT when providing these services to our Belarusian customers.

Note: When a freelancer validates they are using Upwork as a separate legal entity, we don't charge VAT. In these cases, the VAT may still be due but would be "reverse charged" to the freelancer. In other words, these freelancers may have to personally report any VAT that is due for Upwork's services.

I'm exempt from paying VAT in Belarus. Are you still going to charge me?

If your legal entity information is validated, Upwork is not required to collect VAT from you. We suggest consulting your tax advisor to understand your specific VAT responsibilities.

What if I'm only residing in Belarus temporarily?

Upwork is required to assess VAT on services provided by our company to anyone residing in Belarus. This applies even if you are a digital nomad and only temporarily residing in Belarus.

Every time you officially register in a different country, you should update your address information on Upwork. For example, if you move to and spend 6 months in South Africa you may be entirely subject to South African laws. If you then move to Belarus, 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 TIN.

European Union (EU)

VAT is applied to the Upwork service fee, premium Upwork memberships, and purchases of Connects. The tax is collected by Upwork and remitted to the respective EU government. We remit the VAT payment we collect to your government through the Mini One Stop Shop (MOSS) mechanism instituted by the EU.

VAT is shown on your invoices, which can be found under Reports > Transaction History.

Calculating VAT

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-image-eu.png
(The example above assumes a 10% service fee and a 20% VAT rate, but VAT rates vary by country.)

Entering your VAT Number

We will not charge VAT if a freelancer or agency has a valid VAT number.

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, we will validate the number and email you to confirm whether it was validated or declined. 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 electronically supplied services (ESS).

If your VAT number was declined, it was likely because:

  • The country on VAT ID doesn’t match the country on your Upwork profile
  • The name on VAT ID doesn’t match the name on your Upwork profile
  • Your VAT ID is expired
  • Your VAT information was entered in an invalid format (check correct format for your country)

Note: Upwork will charge VAT on any invoices created 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.

Changing VAT Number or Location

If you need to change your VAT number in the future, please contact Upwork Support.

If you change the location listed in your account by visiting the Account Menu > Settings > My Info > 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.

Frequently Asked Questions

Does Upwork charge VAT to clients?

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 Account Menu > 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 or agency location.

Why is VAT being collected?

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 a freelancer submits a valid, EU formatted VAT number to Upwork we don't charge VAT. In these cases, the VAT may still be due but would be "reverse charged" to the freelancer. In other words, these freelancers will have to personally report any VAT that is due for Upwork's services.

I'm exempt from paying VAT in my country. Are you still going to charge me?

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 valid 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.

What if I'm only residing in the EU temporarily?

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. For example, if you move to and spend 6 months in South Africa you may be 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.

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