Gig Economy

Ensure the ecosystem of gig workers runs tax compliantly

Fonoa helps freelance marketplaces manage freelancers from a tax perspective, making sure they are charging appropriate taxes when required, issuing compliant invoices globally, and reporting transactions in real-time across the world.

Most gig economy participants are unclear on their tax obligations, resulting in problems down the road for them and the platforms that facilitate the activities.

OBLIGATIONS

Making ride-sharing 100% tax-compliant

Verify the tax status of your drivers

It is important to validate your drivers’ Tax IDs when you invoice on their behalf, as you need to know whether these invoices should include tax or not. Moreover, in cross-border transactions (ie. when charging your global driver population from a central legal entity), it's often a requirement to check their tax status in case you’re not charging tax.

Calculate and apply correct indirect tax rates globally

Once you know the tax status of your drivers and customers, you need to determine the taxability and correct tax rate per country, for every transaction. This is hard if not impossible to do manually in any large volume business.

Issue invoices compliant with local tax juridstictions

Customers around the world will expect locally compliant invoices for your services. Not issuing invoices that comply with local regulations or customer expectations can increase customer support costs and manual work. B2B customers may not even consider using your platform if they don't receive tax compliant invoices.

Ensure transactions are reported to tax authorities

It’s good for ridesharing operators to be aware of the growing amount of rules and regulations throughout the world that prescribe real-time transaction reporting to tax authorities. In many countries, you are now required to report your sales transactions to the tax authorities (e.g. Brazil, Taiwan, Portugal) electronically and in real-time through specific reporting protocols established for this.

OBLIGATIONS

Making food delivery marketplaces 100% tax-compliant

Verify the tax status of your platform participants

It is important to validate your couriers’ Tax IDs when you invoice on their behalf, as you need to know whether these invoices should include tax or not. Moreover, in cross-border transactions, it is often a requirement to validate your customers' tax status before you decide not to charge tax to your business customers.

Calculate and apply correct indirect tax rates globally

Once you know the tax status of your couriers and customers, you need to determine the taxability and correct tax rate per country, for every transaction. This is hard if not impossible to do manually in any large volume business.

Manage complex invoicing flows across your food delivery platform participants

As a food delivery platform you may need to issue locally compliant invoices to couriers and end-consumers on your platform (both B2B and B2C), as well as on behalf of the couriers and restaurants / shops / merchants doing business through your platform.

Ensure transactions are reported to tax authorities

It’s good for food delivery operators to be aware of the growing amount of rules and regulations throughout the world that prescribe real-time transaction reporting to tax authorities. In many countries, you are now required to report your sales transactions to the tax authorities (eg. Brazil, Italy, Taiwan) electronically and in real-time through specific reporting portals established for this.

OBLIGATIONS

Making freelance marketplaces 100% tax-compliant

Understanding when you need to collect tax

Freelancers on your platform could transact with consumers in different countries globally. In order to understand if and what taxes they need to charge and remit in each country, you will need to understand their customers’ taxable status (B2B or B2C). If you invoice or collect funds on their behalf, this is even more important.

Make sure freelancers are charging indirect taxes when they need to

Once you know who is taxable, freelancers also need to know when they need to charge indirect taxes and at which rate, based on the rules of the country of their customer. Typically, this will depend on the nature of their services and the amount of sales they’ve generated to each country, which could make them pass relevant VAT thresholds.

Issue compliant invoices across all tax jurisdictions

As a marketplace, your global customer population will often demand a compliant invoice, especially your business customers. They need this for accounting and tax compliance purposes. Not meeting their demands means increased customer support costs, manual work, and churn.

Ensure transactions are reported to tax authorities

As a marketplace, transactions on your platform can occur anywhere in the world. And the sellers on your platform are likely to have local real-time tax reporting obligations with regards to their transactions on your platform. But many gig / freelance workers are not aware of their obligations or find it hard to solve these compliance requirements. This can be both a barrier for sellers to use your platform and risk for non-compliance that can harm both your and their business.

See Fonoa in action

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