03.03.2023 - ICT, Startups

Abillio is going international

Last year, Abillio, a business-as-a-service startup, already had 2,350 users, but this year’s goals are much higher: by the end of the year, it plans to expand to 10,000 users. To achieve this, the platform is going international, allowing freelancers from any country to invoice a client abroad, as long as the payment is in euros.

Initially, the founders of the startup intended to expand by customising the platform for each country. Instead, they decided to offer it to everyone at once: the platform is available in most countries and the limitation is the euro currency. Other currencies will be offered soon.

“This is our first international version: we’re making it possible for anyone to invoice customers abroad. We want to reduce the administrative burden for independent professionals and freelancers so that when they start their solo business, they solve cross-border invoicing,” says Abillio co-founder Mārtiņš Viļums.

Most invoices on Abillio are issued by video production and film professionals. This is followed by information technology professionals, photographers, graphic designers, event organisers, stylists, and private tutors. 70% of Abillio members invoice alongside their main job, while 25% of platform users invoice clients abroad.

Abillio has been offering the service to others since April 2021. Since then, the platform has more than 2,500 registered users. Some use it once a month, others as often as five times. The startup’s 2022 turnover exceeded three million euros.

Reduces administrative burden

Cross-border invoicing is a problem for many freelancers because you have to be VAT-registered to invoice a client abroad. In some countries it is relatively easy for a self-employed person to register for value added tax, but in others it is more complicated and can take up to two months. “On top of that, you have to report monthly or quarterly, which usually means hiring an accountant,” says Mārtiņš.

For international clients, personal tax payments are not automatic, as they are for Abillio clients in Latvia, because tax laws differ from country to country. However, Mārtiņš promises that the company will advise its members on how to pay all their taxes correctly. It is also hoped that in time Abillio will be able to pay freelancers’ taxes for them in other countries, just as it does in Latvia.

Another reason why Abllio offers the possibility to register on the platform from any country is the chance to work with large companies. They can deal with 150 photographers across Europe, each with a lot of administrative work: contracts, invoicing, and payment. The idea is that the company will be able to issue one invoice to Abillio, which in turn will settle accounts with all the freelancers. “This will make things much easier for large companies and help us grow our customer base. Large companies are not interested in freelancers from Latvia only, so we needed an international version,” says Mārtiņš.

Fivefold growth planned this year

In 2021, Abillio graduated from the Mastercard Lighthouse programme and last year from the Startup Wise Guys fintech startup accelerator programme, where it received a 100,000-euro investment. “The programme helped us to understand our goals more clearly, to organise our internal processes and to better understand the investment world,” says Mārtiņš.

In their conversations with potential investors, they have found that they appreciate the fact that the team has reached the first few thousand users on its own and that the ownership structure is not complex and fragmented. The team is now considering raising 300,000 euros in pre-seed funding.

“With this capital, we plan to offer our full tax administration service in all EU countries and reach 10,000 users by the end of the year. That would be five times more than today: an ambitious but achievable goal,” says Mārtiņš.

Platform users must report income

As of January this year, the European Union’s DAC7 Directive is in force. It requires all digital labour platforms such as Etsy, Toptal, Fiverr, Upwork to report the earnings of freelancers to each country’s tax authorities.

“All freelancers who receive money from the platforms will have to report their income. In the past, many received money in a Revolut account, for example, and optimistically hoped that Fiverr or another platform had paid their taxes for them. But they don’t. Our goal is to help the employees of these platforms to manage their taxes. This directive could play a big role in our growth,” says Mārtiņš.

Abillio also wants to set up a freelancers’ association to talk to the Ministry of Economy and other partners about allowing digital labour platforms to pay taxes instead of freelancers. “Social contributions are an important part of a healthy society. Platforms should therefore be able to pay taxes for their freelancers. In many countries, there are now disputes about whether an Uber driver can get sick pay. Apparently not, but on the other hand, why shouldn’t he? Laws and regulations are simply not keeping pace with the rapid changes in the way jobs and services are performed around the world. We would also like to see voluntary social contributions. It’s supposedly there now, but it doesn’t really work, the process is very complicated,” says Mārtiņš.

Business as a service

The digital platform Abillio offers so-called business as a service, wrote Labs of Latvia. This model allows freelancers who are Latvian tax residents to become members of a cooperative and send VAT invoices to customers in Latvia and abroad. A similar model is used for tax residents in other countries.

How does the Abillio platform work? A person registers, pays a membership fee, and uses the platform to invoice recipients: legal entities. Abillio pays corporate income tax and VAT to the Treasury. The commission for using the platform is 5% after tax. In other words, an Abillio member receives 76 euros from an invoice of 100 euros issued to a customer.

“The money paid by Abillio to the members of the cooperative is a dividend, which is exempt from personal income tax and therefore from national social security contributions. Nevertheless, Abillio invites its members to make social contributions voluntarily and offers them the possibility to take care of themselves in the future by offering health insurance and the possibility to make pension savings with Indexo,” adds Matīss Kodoliņš, co-founder of Abillio.

Mārtiņš stresses that the platform cannot be used to pay disguised remuneration for salaried employment, and Abillio monitors that this does not happen. If the cooperative suspects that someone is using the platform to pay wage labour, it requests an explanation. If the suspicion is confirmed, such invoices are cancelled, and the member is expelled from the cooperative.

Inspired by own experience

The idea of a business as a service was born out of experience. Alongside his main job, Mārtiņš occasionally takes on various side-projects: mentoring, design services, etc. It has always been difficult to get paid for these, as each time you have to sign a royalty agreement, which you will soon no longer be able to use without registering as self-employed, or think about setting up your own business.

Once Mārtiņš asked his friend Matīss Kodoliņš, a tax consultant, if there was a simpler way to deal with these things. He had noticed that there was a solution in Estonia called Xolo, which allows you to invoice as a company without having your own business. But there was one downside: you yourself  had to find out what taxes you had to pay and how much. As he continued to think about this topic, Matīss recalled a form of business such as a cooperative. “He had the idea that a similar solution could be offered through a cooperative, and then we brought in a third friend who became a co-founder: Artūrs Cirsis. He helped design and write the code for the digital platform,” says Mārtiņš.

Author: Anda Asere (labsoflatvia.com).
Publicity photo: Abillio founders: Mārtiņš Viļums, Artūrs Cirsis un Matīss Kodoliņš

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