Hello everyone! I'd like to open a web company in Estonia, and I have all the requirements to do it. My problem is that 50% of my future business will be with italian websites and freelancers, and this could be a problem. Sometimes I need to publish a banner, a guest post or other kind of advertisement in italian websites, and often I work with registered italian companies, with regular VAT, and I receive invoices from them. But sometimes (even if lately it happened more often), I work with individual webmasters who own a website or a blog without having a company, or any kind of individual VAT, so they can't make an invoice. I know that if an italian company decides to work occasionally with a freelancer, they can make a "special invoice", with the personal data of the freelancer, and pay taxes for him. For example, the company will pay the freelancer 100 euro, and at the same point it will pay to the state a tax of 20 euro for that service (20% of the net) at the end of the year. Considering my future company will be not in Italy, how can I deal with that? Of course I can't pay taxes in Italy, but at the same point I will need to record that payment of 100 euro. Moreover I use paypal to pay these freelancer, but I don't think it's a relevant information in this case. Hope to have some advices and thanks in advance!
From your post I see that you are making payment to a foreigner who is working as a freelancer , so you dont have to or liable to pay their country taxes. Rather you need to check with your home country tax authorities on how this transaction can be accounted for. I have been using Paypal for almost 7 - 8 years & use it as proof of transactions to submit by taxes , so if I'm correct your country should also be accepting Paypal transactions if you present them clearly with print-outs from Paypal site itself. Hope this helps
I am a Technology & IP Lawyer, I will put in two pointers- > Your expenses towards getting the work done will be a business expense, so it will be calculated under tax from your end while reporting. > The money you are paying to the Freelancers will be done via Paypal, it is now outside the purview of you and your company how they deal with the money and if they are paying taxes out of those incomes. And also you are not under any obligation to pay taxes for that country where the freelancer is residing. (The receiver of Income pays Taxes)