Comment by j1elo | Hacker News Reader

Comment by j1elo | Hacker News Reader

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Patio11 was ultimately asking for the owner of the free software project to emit an invoice, which has its own financial bureaucratic burden in which the owner most probably won't want to enter. Ie. it won't work because the typical free software developer doesn't want to incur into the taxes that this could imply.

For example, in Spain you aren't allowed to extend invoices if you aren't first registered as an autonomous worker (freelancer), which most people aren't because they already work for some company. But even if you did, then you'd have to pay for the obligatory social security for freelancers, which is around 260 Euro per month (so staying registered indefinitely as freelancer is not financially sensible, if you are not really doing actual contract jobs).

I would think this is similar in most other European countries, which in other words means that for the most common of the FOSS developers, writing a legally valid invoice is a no-no.

Of course the matter changes if the company doing the donations doesn't really care about the invoice being legally correct inside the country of the developer. But I wouldn't advise the developer to do things like that... (s)he would be risking a fine.

In Canada, if you're receiving donations as a result of work you're doing, you count as self-employed and that income is taxable -- there doesn't need to be an invoice or even an explicit quid pro quo in order for income taxes to apply.

(Fortunately the paperwork is very minimal: Basically, you add an extra one page form to your annual income tax return.)

In the UK, I'd be taxed on it, and sorting that out properly would mean having to go through self-assessment. But that's not actually hard, and while I've not needed to fill in that particular bit, the extra effort it would require doesn't appear to be particularly onerous.

I suspect that if you started getting any reasonable quantity of donations that would also pique the taxman's interest.

The company needs the invoice to make a payment. They typically don't care about the legal correctness. Particularly if the developer is in another country. Making the invoice look legal/official is more important than anything else.

That's what I meant in my last paragraph. There is some risk for the developer: if they are in the same country than the company, when the company declares the expenses the government can get to know that the developer is having 'customers'.

Of course we could say that "this will never actually happen", but if the company had to pass a tax inspection, they would have to prove all their expenses by showing the corresponding invoices. And this would show that the developer has been generating irregular invoices.

I don't know for bigger companies, but as a (proper) autonomous worker in Spain, I had worked for just 1.5 years and already was asked once to prove some expenses with the corresponding invoices.

A company can't pay an invoice that has formal flaws (missing tax id; missing date; missing a running serial number) without risking serious book keeping problems and not being able to get reimbursed for VAT paid.

Not a single company could pay such an invoice.

(Germany, but pretty sure this applies in most of Europe)

are you sure it's 260 Euro per month for social security in addition to what the freelancers salaried company is paying?

There are some schemes which allow to save money if it's the very first time that you register as such. But they are only a short- to mid-term solution (covering typically the first year), but in the long term (starting from the 12th to 18th month) you'll end up paying the full quota.

If you can read spanish, articles such as this one explain the options: http://gestron.es/ventajas-ser-autonomo-trabajar-cuenta-ajen...

A regressive tax like this must disincentivize freelancing and thus prevent a lot of economic activity. What are the benefits?

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