Fiverr invoices and Polish tax law

Fiverr is a global platform for freelancers that connects professionals with clients looking for a variety of digital services. Through Fiverr, those with skills in areas such as graphic design, programming, writing or music can offer their services to an international market. However, working through such platforms involves accounting for taxes. In this article, we will discuss how Polish freelancers can account for their earnings with Fiverr, both in terms of VAT and annual PIT return.

How does Fiverr work?

Fiverr is a platform that has revolutionized the way freelancers around the world offer their services. Imagine you are an artist, graphic designer, programmer, copywriter or musician looking to work remotely on a global scale. Fiverr is a place that connects such professionals with clients from all corners of the world, offering a rich array of services in one convenient location.

Founded in Israel, Fiverr is an online space that allows freelancers to sell their skills in a wide variety of fields. If you’re a graphic designer, you can offer your services in logo design, illustration creation or print preparation. If your passion is digital marketing, Fiverr allows you to offer services related to SEO optimization or the creation and management of advertising campaigns.

But that’s not all. Fiverr is also a treasure trove of content creation talent. You can find copywriters ready to write articles, translation specialists and experts in creating advertising content. If your needs include programming and technology, Fiverr has you covered for app development or web development. And if you are interested in the world of video and animation, you can commission video editing, clip creation or animation.
Let’s not forget about music and audio — Fiverr is full of talented people that can help you record sounds, produce music or create audio effects.

To make project management easier, Fiverr offers a tool called Fiverr Workspace. This all-in-one solution helps freelancers organize their work, invoice, and track income and expenses. With Fiverr Workspace, freelancers can focus on what they do best — creating exceptional projects — while the platform takes care of organizational and administrative issues.

How to account for earnings from Fiverr?

EU VAT registration

For Polish freelancers who provide services to clients from other EU countries, registration as an EU VAT taxpayer is essential. This requirement applies when annual business revenues exceed PLN 50,000. The registration process begins with the submission of a VAT-R form to the tax office. Once the registration is approved, the taxpayer receives confirmation in the form of a VAT-5UE form, which serves as proof of his status as an EU VAT taxpayer.

EU VAT registration is important because it allows the legal provision of services within the European Union and enables the use of the reverse-charge mechanism for business-to-business transactions. Without this formal step, freelancers may face difficulties in accounting for VAT and difficulties in dealing with foreign clients.

Invoices and VAT

Despite being a popular platform for providing services, Fiverr does not allow you to invoice your services directly. For Polish freelancers, this means that they have to invoice themselves for services rendered. On these invoices, freelancers should include VAT in accordance with current legislation.

The process of calculating and documenting VAT can be a bit complicated, especially when Fiverr does not provide detailed information on tax settlements. In such cases, it is advisable to consult a tax advisor or accountant to assist with the proper accounting for VAT. This specialist can provide guidance on the correct tax calculation, as well as help with the required forms and tax returns.

With the support of an expert, freelancers can avoid potential errors and problems related to tax returns. Professional advice ensures that all tax obligations are carried out in accordance with current legislation, which is key to maintaining legal compliance and proper financial management.

Income tax (PIT)

For freelancers without a business activity

For freelancers who do not have a business activity, income settlement is based on a contract of mandate or contract for work. In this case, a PIT-37 form is used for income tax settlement. Principals are required to issue a PIT-11 form, which documents the amount of income earned and advance payments made for income tax.

However, when freelancers perform services for foreign clients, such as those using the Fiverr platform, the tax situation can become more complicated. With such transactions, income may be treated as income from other sources. As a result, it may be necessary to report this income yourself in your annual tax return, usually in the PIT-36 form, if it is not covered by a contract of mandate or contract for work.

In such cases, it is advisable to enlist the help of an accounting firm or tax consultant. A specialist will help you report your income correctly, ensuring that all tax obligations are fulfilled in accordance with the regulations. This will help you avoid possible problems with the tax authorities and ensure that your accounts are correct.

For self-employed freelancers

Self-employed freelancers have slightly different tax obligations. In this case, income from Fiverr is treated as business income and is accounted for using the PIT-36 form. These freelancers are required to calculate their income and income tax on their own.

When running a business, entrepreneurs can take advantage of various allowances and deductions provided for entrepreneurs, which can affect the final amount of income tax. For example, business-related expenses, such as fees for services offered by Fiverr, can be included in deductible expenses, which can lower the tax base.

It is important for freelancers running a business to carefully keep records of all business-related income and expenses. Regularly updating financial records and enlisting the help of a professional accountant can help optimize the tax burden and avoid billing errors. Working with an accounting firm ensures that all aspects of your PIT return are handled in accordance with applicable laws.

Practical tips

Payment and commission

Fiverr, as an intermediary platform for selling services, charges a commission of 20% on each transaction. This means that freelancers need to be aware that 20% of their earnings are retained by the platform. For example, when a client pays $100 for a service performed, the freelancer will only receive $80 in his account. This commission charge is standard on Fiverr, and you need to take it into account when calculating your income.

Once the client accepts the project, the money is transferred to the Fiverr account. However, the funds can only be paid out after two weeks. This is the time that Fiverr sets aside to settle any disputes or refunds, in order to safeguard both sides of the transaction.

As for the withdrawal itself, Fiverr offers several options. Transferring to a bank or PayPal account incurs additional costs: the standard transfer fee is $3. In addition, if the withdrawal requires currency conversion, there may be additional fees of 2% of the transaction value associated with currency conversion. These costs should be taken into account when planning your finances so that you know exactly the real income from the platform.

Documentation

Proper accounting of revenue from Fiverr requires careful collection of financial records. Every freelancer should systematically archive all evidence of revenue and commissions collected by the platform. Regularly sending statements of completed assignments to the accounting department is key to keeping records in order and facilitates the subsequent preparation of tax returns.

Fiverr provides annual reconciliation, which can be a valuable source of information when preparing annual tax returns. These documents include a summary of all transactions and commissions collected, making it easier to control earnings and calculate taxes due. Nonetheless, it is always a good idea to check that the accounts comply with local tax laws and administrative requirements.

Enlisting the help of a professional accountant or tax advisor can prove invaluable, especially if Fiverr settlements are part of a more complicated financial structure. These experts can help properly account for income, commissions and any currency conversion costs, ensuring tax compliance and minimizing the risk of billing errors.

How to be successful on Fiverr?

Optimize your profile and offers

In order to be found on Fiverr and succeed, it is crucial to create a professional and attractive profile and offers. Start by carefully crafting your profile — this is the first step that will allow potential customers to get to know your skills and experience. Add a high-quality profile photo that reflects professionalism and inspires confidence. Your profile description should be clear, compelling and detailed, showcasing your skills, experience and unique strengths.

The offers you make on the platform are also an important element. Each offer should be accurately described and include all relevant details about the service you are offering. Use attractive photos or graphics that visually represent the end result of your work. The description should be clear and precise, including information about what exactly the customer will receive as part of the service. It’s also a good idea to add keywords that will help your listings rank better in Fiverr search results.

Updating your listings regularly is equally important. Monitor the statistics of your listings, such as the number of impressions, clicks and conversions, and adjust content and pricing based on this data. Analyse market trends and customer needs so you can adjust your services to meet changing requirements. Only then will you be able to stay competitive and successfully attract new customers.

Building a reputation

Reputation on Fiverr is one of the most important elements for a freelancer’s success. Positive reviews and recommendations from satisfied clients can significantly increase your credibility and attract new clients. Treat each assignment as an opportunity to demonstrate your skills and professionalism. Work to ensure that each completed task is carried out with the utmost care, according to the client’s expectations and in accordance with the agreed deadlines.

Striving for positive reviews requires proactive communication with customers. Respond to messages promptly and professionally, and be flexible about any corrections or adjustments. Think about how you can exceed customer expectations – perhaps offering additional added value or expressly completing a task in an emergency situation will be something that will be appreciated and reflected in a positive review.

Building a positive reputation on Fiverr is an ongoing process. Each review is a step towards strengthening your position on the platform. As you gain more experience and positive reviews, your listings will become more visible, and you will gain more trust from customers. Remember that reputation is not only about the number of positive reviews, but also about the quality of the work you do and your professionalism in every customer interaction.

Earnings from Fiverr can be effectively accounted for by complying with applicable tax laws and using the tools available. Understanding VAT and PIT rules and working closely with a tax advisor or accountant is key. It will also be helpful to regularly monitor the statistics of your listings and ensure the quality of your services, which will contribute to your success on the platform.
Working on Fiverr offers many income opportunities, but it also requires attention to formal tax issues. With proper management and strict compliance, freelancers can enjoy the benefits of working on this global platform.