Upwork service fee

michael_01

I have been freelancing using a freelance marketplace "Upwork". They take a 10% fee from my earnings. Can I claim this 10% as a business expense?

Its not clear to me, because although my hourly rate(which what my client is charged) amounts to X amount, the 10% is taken out before the money becomes available to me to withdraw. So I never actually get paid the full amount.

So let say for example 1000 hours billed at €55/hr, and disregarding any other expenses.

If I take my gross as what my clients are billed and calculate the tax based on that, claiming back the (using deloitte tax calcualtor)

€55,000 - €39,798 + $5500 => Net Tax 9702

If I take the total earnings as what I actually receive into my account from upwork it works out to:

€50000 - €37,223 => net tax 12777

SureYWouldntYa

You would be allowed claim it a tax deduction from your profit

The proper way to do would be to take the full sales before any deduction for commission as your income/sales, then deduct the 10% to arrive at your profit of x

This profit is what will then be charged to tax, what the tax charge will be depends on your own credits and cutoffs

Whether you deduct the expense from your gross sales, or just declare the sales post commission should make no difference on the tax calculations

michael_01

Thanks for your response. According to the calculation shown above though, it seems I pay considerably less tax if I take my gross and the amount my clients are billed, and then deduct the full a mount from my tax liability.

So I 'm glad to here that that would indeed be the proper way as you say.

SureYWouldntYa

You don't deduct it from your tax liability

It gets deducted from your profit for the year, your profit for the year is then what gets charged for tax

Whichever way you do it, it should make no difference on your tax liability