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Invoice If You Work With Fiverr From Spain

EntrepreneurLaw and Tax Changes

invoice Fiverr

We already discussed how Fiverr could help your business in a previous article. This article will explain how you should issue your invoices if you are a freelancer who uses Fiverr to get projects and clients.

Fiverr was founded by Micha Kaufman and Shai Wininger and launched in February 2010. The founders came up with the concept of a marketplace that provides a two-sided platform for people to buy and sell a variety of digital services typically offered by independent contractors. 

Fiverr services start at US $ 5, and do you know the reason for the company’s name? You guessed it FIVE DOLLAR → FIVERR

Fiverr as an excellent strategy

Fiverr is an excellent strategy for Spanish freelancers to reach clients worldwide by earning money online with specific projects. And how has Fiverr managed, in less than 10 years, to be listed on the New York Stock Exchange and to generate income of 107 million dollars in 2019:

1. For the ease of use of the platform

2. The number of services and products that can be contracted and offered.

3. The large number of active users who hire freelance services.

4. The possibility of growing as a professional on the platform, as it has a scoring system that generates a good reputation.

Suppose you are interested in knowing how Fiverr works, creating your profile, creating a gig (presentation of your professional services), and practical advice on how to work with the platform. In that case, you can find much information on the internet (one of the posts about Fiverr that I liked the most in my inquiries has been this one written on this page).

How does Fiverr work?

The platform is organized with two user profiles in mind: buyers (service seekers) and sellers (freelancers who provide services).

As a freelancer, the seller must create a seller profile and create the service you sell on Fiverr. On this Fiverr page, you will find videos and tutorials that guide you to perform each step in this process — even a free course on how to become a successful salesperson.

On the other hand, buyers, companies, and professionals seeking to outsource specific jobs or processes within their companies. In 4 steps, you can find a professional to solve your need:

1. Consult the freelance professional’s work samples.

2. Check the comments of other buyers like you.

3. Choose the service package that best suits your needs.

4. Contact the professional if you have any questions to ensure they align with your expectations.

Once we know the 2 parties involved in providing the service (buyer and seller), Fiverr processes the order in the following way:

1. Once the buyer has found the professional and the service they want to hire, they order it.

2. That will take you to a confirmation and payment page. Once Fiverr charges the service, the platform creates the order and sends it to the seller.

3. Fiverr performs its function of the depositary of the amount of the contracted service. When the buyer receives the service and gives his ok, Fiverr releases the money and delivers 80% to the seller.

Whom should you bill?

After much research on the Fiverr page to find a clear answer to this question, with some legal and tax consistency, we came across this text:

Fiverr does not issue invoices for sellers and sellers also do not have buyer billing information to issue invoices for purchases made from your service. However, you, as a Fiverr seller, can issue invoices to Fiverr to report the earned income to the tax authorities.

Invoices can be prepared using the information below and can be sent to our Support Team or can be mailed to the physical address listed below:

Fiverr International Ltd

8 Eliezer Kaplan St.

TelAviv, Israel 6473409

VAT number: 558327284

From the tax point of view, we consider that the correct way to act with this type of intermediation platforms should be the one that we explain when we talk about Upwork. That is, the seller must invoice the buyer and include the commission from Fiverr as an expense of their activity. Although it seems that Fiverr has tried to simplify the process, issuing an invoice to the buyer in the name of Fiverr (as if they were the ones who performed the service), and paying the order to the seller (as if they were the ones who contracted the service).

Following the indications of the platform itself, the self-employed person must issue an invoice to Fiverr Internacional Ltd, which, being domiciled in Israel, provides a service to a client from a third country. For this reason, the invoice will go without Spanish VAT and without withholding.

We recommend that, even though Fiverr provides you with this information about your billing, you issue your bills with your billing system, following the chronological and correlative order as established by Spanish regulations.

Invoice Fiverr

What is the earnings statement on Fiverr?

As is clear from the information provided by Fiverr, sellers (self-employed) are responsible for managing their local taxes (personal income tax and VAT).

But it is possible that if you manage many projects and clients on Fiverr, the amounts you must invoice may get out of control. 

To avoid the mismatch between what you are collecting from Fiverr and what you have billed in your income book Fiverr offers you the possibility of requesting an annual income statement. You will see a list of all the amounts collected in a specific year in this statement.

What would be the amount that you should include in your invoice?

Perhaps the question should be: what amount do I include in my invoices so that, in case of verification, the Tax Agency will be very clear about where this income comes from? And the best way is to match the amounts you transfer to your bank account with the amounts of the invoices

That is, if in a month you have done 3 projects that are in your Fiverr account but you have not withdrawn the money yet, we advise you to make a withdrawal for the amount of the 3 projects and issue an invoice to Fiverr for the amount received.

We do not recommend making invoices for periods exceeding a month and at most within the same quarter in which you completed the project.

What date do I put on the invoice?

Continuing with the previous example, the invoice date must coincide with the withdrawal date of the money.

As I have told you during the article on the Fiverr page, you have a lot of information about these and other aspects related to the platform and its operation. With all this information and the billing advice I have given you, I hope your relationship with Fiverr will be very profitable and long-lasting.

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