Hello everyone, Over the past month, we have been using Upwork to earn some revenue. I would love to understand how that is taxed. Let's take an imaginary example (amounts inUSD): Monthly expense salary -$7.000,00 How much we are paying ourselves from the company Monthly expenses other -$1.000,00 Other stuff we have to pay from the company (accountant, lawyer, bank, equipment, insurance, etc.) Month on Upwork (Income) $10.000,00 Our revenue in a month from Upwork Upwork fee -$1.000,00 Upwork has a fee (we put that as an expense) Total month expenses -$9.000,00 This includes: salaries, other expenses, upwork fee Net Income $9.000,00 This is Upwork revenue - Upwork fee VAT $2.250,00 This is 25% of Net Revenue Total offsetable fees $2.250,00 These are the VAT fees we have to pay (usually this is charged to the clients as an extra on the invoice - we are NOT doing that) How much VAT we need to pay -$6.750,00 This is Total offsetable fees - Total Month expenses (if it is negative we don't have to pay anything)
Are the above calculations correct? Regarding Corporate Tax (22%) is it applied at the end of the year, if there is any profit, on that profit?
The first part is relatively easy to understand - net income 10.000 however - and expences 9.000 = profit to 22% tax 1.000 usd
The VAT is not to understand -
Who is your client - upwork or the end clients?
If you invoice upwork (outside EU as I remember) then there is no VAT for you involved - but sales are reported in group C- then Upwork must charge their clients and care for VAT
If you invoice the end client and that is outside EU - then there i no VAT involved for you - sales i vat group C - If the end client is in EU and you invoice the end client - then there is VAT involved and same if in Denmark
It is possible, that it is simply so, that Upwork charge you - as an expence for VAT so your sale is seen as 10.000 usd but as 7.500 ex vat - just - in which case that is your turnover and VAT has not to do with VAT for you, but is an expence charged - minus the 1000 fee on top, so you have 6.500 as result of you sales and then minus your salary, and other expenses
Corpoate tax is payable during the year - but finally calculated at year end - but then you are charge nondeductable interest for paying late - you shall calculate and pay "aconto" skat i u to 3 rates
I would check with an auditor for the VAT question which sounds difficult to understand
br John Hannover
6 stærke Ivæksætterbøger - e-bøger/paperbacks - letlæste I LINK HER Intro til regnskab - og Fradrag - e-bøger letlæste I LINK HER
On Upwork we conduct work on an hourly basis or fixed cost basis. Upwork generates invoices on our behalf and charges our clients. It works as an escrow service. Please note that the client’s details might not be fully available to us here. At the bottom of these invoices there are Upwork’s details with the title 'Remit To'. The funds we have earned are currently with Upwork. That means that we will receive them from a bank account associated with them. The funds will be received all together (they won’t be split in separate transactions based on each work). To receive these funds we understand we will have to issue an invoice:
Should that invoice be directed towards each client or should we generate invoices towards Upwork (the latter seems much easier)?
If it is towards each client: - How do we deal with the fact we might not have all information of our client? - These clients can be from across the world (EU, US, Canada etc.). Are there changes on how to make the invoice? - Is there a specific way we should send it, or would a normal email/ chat message suffice? Do we need to send it to them?
If it is towards Upwork: - Is it an invoice or a credit note?
Since Upwork is charging in USD what should be the currency of our invoices?
Upwork generates invoices on our behalf and charges our clients.
Do they invoice the custumor on YOUR CVR and VAT no? If not - they cannot charge danish VAT on your behalf. If they do - then next question is why, as you would not include dansk VAT to customers outside EU but only state the turnover as outside EU together as C VAT
If they do it on your VAT number and CVR, then they are right in including VAT to EU and Danish custumers if it is privat persons, If it is vat registerede companies in EU they should not add danish VAT but sell as reverse charge (again only if they invoice on your CVR and VAT number) - whereas dansk VAT reg companies should be charged VAT
panosf:
- How do we deal with the fact we might not have all information of our client?
you cannot charge the client VAT without having full info, and I am pretty sure upwork is not an escrow and the invoice to the clients are made in their own CVR and VAT no
panosf:
- These clients can be from across the world (EU, US, Canada etc.). Are there changes on how to make the invoice?
yes VAT is totally depending on outside or inside EU , and inside EU on whether the client invoiced has a VAT registration in the EU country (no vat but reverse charge) - or Danish, always VAT on the invoice.
You can never have 25% VAT on invoices to clients outside EU anyway - And if the invoice is 10.000 dkk then VAT is 20% down = 2.000 of that (8000 + 25% = 10.000)
I cannot help more, it seems very wrong if upwork charges you VAT on all sales - and for you it is just an expence - nothing to do with VAT as I understand the procedure.
br John Hannover
6 stærke Ivæksætterbøger - e-bøger/paperbacks - letlæste I LINK HER Intro til regnskab - og Fradrag - e-bøger letlæste I LINK HER
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