Yes, Upwork charges Goods and Services Tax (GST) or similar indirect taxes (VAT, Sales Tax) on its service fees, such as marketplace fees, contract initiation fees, or subscription fees, depending on the user's location and local tax laws. For example, in Australia, a 10% GST applies to service fees, but providing a valid ABN can exempt you.
It's 18% of the cost of the service being taxed.
Like any other service provider, freelancers are also subject to provisions of GST. Usually, a GST of 18% applies to the services provided by freelancers. If you are a registered freelancer, collecting GST from the service recipients and depositing it with the government can cause cash flow issues.
In some locations in the U.S., sales tax also applies to digital services or purchases, such as fees you pay Upwork for services or Connects purchases. Collection of state and local sales tax varies depending on the state and local jurisdictions where you and your client are located.
Even if you make less than $30,000 in income in subsequent years after charging GST/HST, you must continue to charge GST/HST on your invoices to clients and remit payments to the CRA.
We understand that you may not be required to register for GST for the purposes of your freelance business. However, to comply with Australian laws, Upwork has to collect GST on the services we provide.
If your GST turnover is below the $75,000 threshold, you may choose to register. But if you do, regardless of your turnover, you must: include GST in the price of most goods and services you sell. claim GST credits for most business purchases you make.
Upwork is charging you up to 15% because they switched to a variable service fee for new contracts starting May 1, 2025, replacing the old 10% model, with the fee determined by factors like market demand, job complexity, and membership, aiming for a balanced marketplace but often resulting in higher fees for competitive niches like web development where supply is high. You see this fee on new offers and proposals, ensuring transparency before you accept, with the fee fixed once a contract starts.
Important to know:
You may be liable for taxes in your country even when we are not required to collect them on Upwork, so it's important that you stay informed about your local tax laws and requirements. Consult with your local tax authority or tax advisor about any questions you have.
If you earn 75,000 AUD or more in a 12-month period from your freelance work, you're required to register for GST. Once you're registered, you'll add 10% GST to your invoices, lodge business activity statements (BAS), and pass that collected GST to the ATO. You can also claim GST credits on eligible business purchases.
Go to the "Billing & Invoicing" section of your Upwork account. Click on the "Create Invoice" button. Select "Indian GST" as the invoice type. Enter the details of your GST registration, including your GSTIN (GST Identification Number) and PAN (Permanent Account Number).
But persons who are engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax or an agriculturist, to the extent of supply of produce out of cultivation of land are not liable to register under GST.
Under GST law, freelancers in India must register for GST if their turnover exceeds Rs. 20 lakh (Rs. 10 lakh for special category states). Freelancers offering services to overseas clients must also comply with GST on exporting services, even if they do not cross the turnover limit.
When you find a freelancer through Upwork, our Terms of Service require you to keep all work and payments on Upwork for the first two years. This helps protect both clients and freelancers and supports a trusted marketplace experience.
As a freelancer, you'll pay a variable freelancer service fee ranging from 0-15% on all earnings, including bonuses. This fee is charged on all your contracts with a client—whether hourly, fixed-price, or a Project Catalog project. (There are a few exceptions, see.
Use your business account for business purposes and your personal account to receive payments for personal transactions. Otherwise, personal payments will end up on your business's Form 1099-K, and you or your tax professional will then have to sort out personal and business payments when preparing your tax return.
The IRS does not actively monitor every Venmo account 1-(855)(518)(9622). However, Venmo may report certain transactions to the IRS if they meet federal reporting requirements 1-(855)(518)(9622). This typically applies to income-related payments, not casual personal transfers 1-(855)(518)(9622).
How do I avoid Upwork fees?
Upwork's advantage over Fiverr is its significantly lower commission rate, which is half the cost. Additionally, Upwork stands out with corporate clients and higher freelancing earning potential.
Cons of using Upwork
Small businesses in Australia who turn over less than $75,000 per year don't have to pay GST. If you're a registered not-for-profit, you also don't have to pay GST as long as your turnover is less than $150,000. If you run a taxi service or are an uber driver, for example, you must always pay GST, regardless of income.
You have to start charging GST/HST on the supply that made you exceed $30,000. You exceed the $30,000 threshold 1 over the previous four (or fewer) consecutive calendar quarters (but not in a single calendar quarter).
VAT is more commonly used in Europe and is typically collected at each step of the supply chain. GST is often applied in a single stage, usually the point of sale, and is common in countries like Australia, New Zealand, and Canada.