I am not an accountant. This is not tax advice. However, I do international consulting and have to deal with this kind of stuff all the time. Basically, for him, he needs an invoice. It should describe what he's getting and how much it costs. Then it's up to him to convince his company to pay the invoice. Whether or not they can claim it is an expense is probably important to the company, so something like a support contract is much more useful than a sticker (I really, can't imagine how to declare a sticker from a non-partner as an expense...)

From your point of view, you have sent and invoice and received funds. You need to pay taxes on those funds. How you do that depends a lot on your tax laws. Where I am (Japan), you can be self employed, in which case it is treated just like extra income (Japan doesn't have multiple categories of income, which is super awesome for getting rid of tax evasion). You can also set up various kinds of companies. These companies can shield you from certain kinds of taxes, but accounting becomes much more difficult. Usually it does not pay to set up a company in order to receive $500.

Depending on where you live, you might also be liable for VAT (or the equivalent). Exported goods are usually exempt, but exported services often aren't! Be careful! The reason for this is that value added taxes are usually only taxed once. So if you have a physical good that you are exporting, you have already paid the VAT on the things that made that physical good. Since a service is not made up of physical things, then you are liable for tax on the whole thing.

As is relevant to the original article, where you pay the tax is dependent upon where the company is base, or where the work is done. It gets really complicated from there, but basically if you are providing a service remotely (and not needing a work visa to provide the service), then you are performing the work in your country (even if you are working over the internet) -- or at least that's what my accountant has decided.

TL;DR: giving him an invoice (especially for a service) will make it easy for him to pay you, but will make things complicated for your taxes. It only makes sense if you think you will make a lot of money.

> Whether or not they can claim it is an expense is probably important to the company, so something like a support contract is much more useful than a sticker (I really, can't imagine how to declare a sticker from a non-partner as an expense...)

+100 - absolutely bang on target.

> TL;DR: giving him an invoice (especially for a service) will make it easy for him to pay you, but will make things complicated for your taxes. It only makes sense if you think you will make a lot of money.

Question - is it easier to take and account for donations ? that's what I dont understand. In India, donations are taxable as income - in fact they are a bigger pain to account for (gift tax) than normal business income. So the question is not "nothing vs invoice" - it is "donation vs invoice"

The whole point of this thread from Krita was that they thought they were exempt ...but got screwed badly because they ran afoul of tax laws. Is this not a case of better safe than sorry : Dont take any money ... or do it the right way ?

Well... There were complications. This service is not subject to VAT in Russia. There was no service delivered to the Foundation: the Foundation didn't get anything in return for Dmitry's work.

Oh, and in the Netherlands, donations received do not count as income. Stuff just got too complicated for an outfit as small as ours.

I think some form of gift is excluded from tax in india, atleast thats what my accountant told me sometimes back

I submit the invoice you give me to my tax authority. Depending on where in the world you are, governments do check this stuff (and share it between themselves ).

I would urge you NOT to do this. Setting an invoicable entity shouldn't be hard - I'm in India and it's not hard here, and we are fairly at the bottom of the Ease of Doing Business listings .

Sidekiq Pro uses Plasso - I'm sure there are tons of alternatives where I don't have to email you for an invoice

IANAL, but as was said elsewhere, please don't do that carelessly. It really depends on your local law, but don't go around making fake invoices if you don't have a legal structure. Depending on where you are it would be more or less easy, but don't go exposing yourself. In most countries, those on the receiving end of a (fake) invoice have much less risk than those emitting them.

It's actually the jist of this blog post. They thought they were square, but tax authorities don't understand how open source non profits work, and they made mistake in the structure. So depending on where you are you have to make sure you stay within the law.

"It's actually the jist of this blog post. They thought they were square, but tax authorities don't understand how open source non profits work, and they made mistake in the structure. So depending on where you are you have to make sure you stay within the law."

Amen. I spent hours telling the inspector what it was we were doing, and why. And in the end, she still asked what our future profits were likely to be. It just didn't register...