Fiverr Forum

Fiverr Needs To Help Us On Tax/VAT

Hi, so when you export your sales as a csv file you simply don’t get the info you need when selling services across the world. My partner handles my tax and our company’s VAT and she has to delve into each and every order in order to find out the country of origin of each order in order to identify the necessary tax rules for selling to that country. In addition she cannot access addresses or any relevant VAT EU numbers etc.

As it stands, when someone reviews your gig you get a really nice little flag related to the nationality of the reviewer, but when you export the sales info, and when you really need it, you get no such info… Please help us Fiverr… our other option is to lump all gigs together and refer to you as the client for tax purposes. If we are to treat you as an agent we need more information and you to break down each and every sale with the necessary info…

Thanks for listening… rant/request over :slight_smile:

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Taxes

  • Buyers may be charged with indirect taxes (such as Sales Tax, VAT or GST) depending on their residency, location and any applicable law, in addition to the Gig price shown on the Gig page.
  • Buyers agree that they are responsible to comply with all tax requirements applicable to them, including but not limited to any obligation to deduct or withhold taxes. It is hereby clarified that all prices and fees that appear on the Site are the net amounts that will be paid following any direct or indirect taxes, levy, withholding tax and/or deductions.

The above is from the Terms of Service at the bottom of the Fiverr main page.

This may be helpful to you: https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#digital-portal

The platform operator is supplying the consumer if the platform operator identified you as the seller but, sets the general terms and conditions, authorises payment or handles delivery or download of the digital service. Then the platform operator would be responsible for accounting for the VAT payment that’s charged to the consumer.

The above is from the link I have given you.

Suggest you refer these documents to your accountant who will be able to advise you accordingly.

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Your customer is Fiverr. You only need one VAT code.

Are you VAT registered?

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Your Fiverr buyers aren’t your customers. You are a subcontractor of Fiverr and Fiverr is your client.

It’s like if you sub-contract for an agency. You don’t pay tax based on your client’s clients. The company you are subcontracting for does that because they are their clients, not yours. You’re just paying tax on your income, not on a per-product or per client’s client.

Also, Fiverr gigs are services, not products, because you are personally fulfilling them with your time and labour snd skill. The VAT rules you are thinking of apply to products, not services.

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Correct answer! We work for fiverr, we aren’t freelancers or have clients. Simply report your income on your personal income tax form.

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Along with Fiverr being your customer, the income is Out of Scope when it comes to VAT as Fiverr are registered in Tel Aviv.

Hi there @cubittaudio

Are you selling from the UK?

It’s become apparent my past 12 months earnings through Fiverr are over the £85k VAT threshold. Working through an online marketplace seems to be confusing a lot of accountants. Do you have any source to prove this income is “Out of scope”? Do you have a UK accountant that understands this that you could refer me too?

Thanks in advance!

Tom

I’m not sure why it confuses accountants because it’s basic sub-contractor work. Fiverr is our client. Do they not have other clients who sub-contract? It’s just weird to me that so many don’t seem to get it.

I know VAT is confusing and complicated, but it seems accountants make it more so by not understanding how and why it is a sub-contract. Or maybe their freelancer clients aren’t describing it that way.

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From my experience, no tax consultant or accountant can understand freelancing. To me, this undermines credibility in their entire profession. Every single tax consultant assumes that freelancers are working with local businesses directly. The fact that they never commit to understanding what you do makes them not worth paying to work with in the first place.

Hi Tom,

I use Crunch accountants, and it was whomever I spoke with there (it’s a team of people so I couldn’t give you a name) who confirmed this work was out of scope. I believe this is because of the geographical location of Fiverr, but also because of the portal method of operating, explained in the link below.

Unfortunately, the whole ‘portal’ way of working is still quite new to some accountants, especially the more old-school. Crunch are good as they’re much more up to date with how the world works now, but they’re not the cheapest. Could be worth having a chat with them though.

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My accountant understands freelancers, and there are even accountants who specialize in freelancers. Money is money, it doesn’t matter if it comes from selling at a farmer’s market or selling online. My country doesn’t have a VAT, however, it is the buyers who pay the VAT, not the sellers. Sellers pay ordinary taxes depending on how much money they’re making. In America, if you make less than $800 a year, you don’t have to pay taxes. More than $800? Then you have to declare the income, and a good accountant can find you tax deductions.

These are potential deductions for freelancers on Fiverr, based on my experiences. I am not a tax professional nor does the following constitute financial advice.

-Internet
-Phone bill
-Rent/Mortgage
-Gasoline (the tax authorities don’t know if you’re meeting your clients offline)
-Lunches/Dinners
-Any software you buy to make your gigs better
-Any educational training you undergo. Paid for a LEARN by Fiverr course? That’s probably tax deductible.

If your gig involves driving (rideshare), you can either deduct by mile or you can deduct gasoline, repairs, oil changes, etc. A good accountant should do the math and tell you which one is better. All I’m saying is there are drivers making $100,000 a year that are not paying a huge amount in taxes.

Whatever you do, work with a professional, not TurboTax.

Not necessarily. The tax credits alone make it worth it, but I see what you’re saying.

Fantastic! Thanks for this, i’ll check them out.

Tom

LISTEN Everyone. I am Associate Certified Chartered Accountant from UK. i have passed two papers about Taxation(UK). my reply is just to clear your concept about VAT Tax on freelancing income.

freelancing income is transfer into your bank account at the end. either you earn from fiverr or at any other website. if your transfer income is more than 85000 Pound. then you must have to pay VAT. the thing is separate which rate is chargeable on your earning.

FOLLOWING steps will be taken your personal Accountant on behalf of you if you are not very much familiar about accounting and Taxation.

1)- The procedure to register for VAT in HMRC. HMRC is regulatory Tax Authority in UK.
2)- Monthly income transaction bookkeeping. this is now a day mostly in Quickbooks and XERO Accounting software. the benefit of this software is it can connected to your bank account which is helpful to record and maintain your bookkeeping and HMRC is recommend Quickbooks and XERO. because both can connected your VAT Account and we can submit VAT return easily.

you can ask any other question. :slight_smile:

Hi @waqarakram007

I’m not offering advice here but from what i’ve read, Fiverr income is classed as “Out of scope” because Fiverr is a business customer outside of the EU.

The current compulsory VAT registration threshold figure is sales in excess of £85000 in any twelve month period.

You disregard sales that are “Out of scope”, therefore Fiverrs “Out of scope” income will not itself trigger compulsory VAT registration.

@waqarakram007 as a Chartered accountant could you explain why this is incorrect? Thanks for any help you can provide.

Sources (another chartered accountant): https://www.vgwoodhouse.co.uk/bookkeeping-and-vat-topics/services-outside-scope-vat.htm
https://www.vgwoodhouse.co.uk/bookkeeping-and-vat-topics/vat-registration.htm