Are Upwork fees tax deductible

VAT on income from the freelancer platform 'Upwork'

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This answer is dated 08/30/2016 and may be out of date. Ask your current question now and get a legally binding answer from a lawyer.

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Dear questioner,

I would like to give you a binding answer to your request based on the information provided as follows:

For the taxation, the place of the recipient of the service & lpar; not the intermediary & rpar; must be taken into account. In this respect, the recipient of the respective service & lpar; Tontechnik & rpar; the respective customer. The decisive factor here is Section 3 a Paragraph 1 No. 3 a UStG. The service is taxable where it was provided.

As a sound engineer, you are likely to fall under this standard because you offer entertainment related services.

For you this means first of all that UPWORK is not the recipient of the invoice, but every single customer from whom you accept a sound engineer order.

The tax regulations then apply depending on the domicile of the customer and whether this is a private person or a company. To expand this further, I need more information here. Roughly it can be said that normal "German" tax law will of course be applied when executing in Germany. In the EU area, a distinction must then be made between private individuals and companies as service recipients, because this depends on who has to pay the taxes.

So again, you have to prepare a customer invoice for each order & lpar; not Upwork, but the actual recipient of the service & rpar; because the tax liability is based on this. Basically I would attach the rough table from Upwork as a printout to the invoices. The obligation to provide evidence should then be met.

You can deduct the Upwork invoices as expenses, but an input tax deduction & lpar; German sales tax against American sales tax & rpar; not possible in advance.

I hope that I have answered your question in an understandable way and thank you for the trust you have placed in us. If you have any questions, you can use the free inquiry function.

With best regards


Attorney Doreen Prochnow

Inquiry from the questioner30.08.2016 | 15:51

Thank you for your answer in advance.

Unfortunately, there is one problem with it. As already described above, I have no access to the data of the actual beneficiary. I only see a nickname freely chosen by the customer and the country that he specified when registering.

Even when asked by Upwork, one is not ready, unable to use & lpar; or whatever & rpar; to provide me with this data.

As a result, I have no way of sending a correct invoice to the actual recipient of the service & lpar; since I don't even really know him & rpar ;.

I read online that if the end user is not known, the sales tax can be transferred to the operator platform & lpar; which is why I considered the workaround outlined in the original question & rpar ;. Is this right? If so, the tax liability would have to be transferred to the operator platform & lpar; Upwork & rpar; because the end user is unknown from my point of view.

Is an account statement that lists the payment received, together with a screenshot of the income table on Upwork, sufficient as evidence for the tax office, or does an invoice necessarily have to be present?

With best regards

Answer to the question from the lawyer30.08.2016 | 18:10

Dear questioner,

what is sufficient for the tax office is * unfortunately * also a question of taste of the respective tax office.

In general, there is an obligation to prove the sales, there is no obligation to do this via invoices, so the tables and their account statements should suffice. When the tax office accepts a verifiability & lpar; or. satisfied is & rpar ;, is quite different. So I advise you to contact the local tax office directly and ask for information about regional handling.

In addition, I actually see that the account statements together with the Upwork list should be sufficient as proof of income, if otherwise only insufficient data & lpar; e.g. Nicknames & rpar; be available. I also consider this to be more secure receipts than the invoices to Upwork, since the VAT can vary from customer to customer, which is falsified in the case of invoices to Upwork, which is definitely not the recipient of the service.

With best regards

Doreen Prochnow