Annett Hieber Germany Local time: 22:02 Member (2008) English to German
Jan 11
I am posting this question, because I have been asked to accept US dollar as
payment. So far, I always have been paid in euro, even from countries such as
the US and GB.
Can anyone tell me, if this is feasible without substancial bank fees or other
problems? How do you list such amounts for your tax declaration?
Any experiences?
Thanks for sharing.
Annett
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Jose Ruivo Portugal Local time: 21:02 Member (2007) English to Portuguese + ...
Probably yes
Jan 11
Annett Hieber wrote:
Can anyone tell me, if this is feasible without substancial bank fees or other
problems?
Depends on payment methods. PayPal will charge you a percentage of the paid ammount - around 3%. Your client may deduct around 40 USD for a bank transfer to your account. Your bank will probably charge you something for accepting a cheque in USD - you'll have to inquire with your bank.
For smallish amounts may not be worth it. For regular work, yes, it is!
Annett Hieber wrote:
How do you list such amounts for your tax declaration?
Use the amount in Euros credited in your account. Keep either your bank statements or a copy of PayPal process.
Good luck,
José Ruivo
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Tomás Cano Binder, CT Spain Local time: 22:02 Member (2005) English to Spanish + ...
More bank fees
Jan 11
You definitely want to ask your bank about the rate they will charge for exchange fees as you receive US Dollars in your account in Euros. When they receive money in US Dollars, they exchange it to Euros, credit that to your account, and charge you the currency exchange fee on the spot.
Another option for you is to benefit from the situation by opening a bank account in US Dollars with your usual bank and be paid in that account. This way you can receive and keep the amount in US Dollars and only use the money when you need it, exchanging the money when the exchange rate is more favourable. This way you can better compensate for part of your bank's currency exchange fees, or can even have a credit card on the account in US Dollars and pay in Euros locally from your US Dollar balance (although I do not know whether this is more favourable to you in terms of exchange rate applied).
With an account in US Dollars, you can even play the tycoon and move money from one currency to the other based on how the exchange rates behave, and even make money for that extra bottle of reasonably agreeable wine on your Christmas Eve dinner table!
Of course, opening a second bank account means more paper and an additional account maintenance fee, so you really have to choose:
- Simplicity (keeping one account and paying the currency exchange fee immediately), or
- Freedom (managing your two accounts as you please, but with more account maintenance fees and more papers to handle).
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Annett Hieber Germany Local time: 22:02 Member (2008) English to German
TOPIC STARTER
Wow!
Jan 12
Thank you both for the profound information and advice. I will check this issue with my bank and consider the pros and cons.
Annett
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Sheila Wilson Spain Local time: 21:02 Member (2007) English + ...
My two cents' worth
Jan 12
Hello Annett,
This is all I can add:
- Your own comment about checking with your bank is the only really good advice - they all differ, even within one country.
- I advise you to stipulate on the quote and/or invoice that they pay their own fees and you accept to pay yours (but NOT theirs).
- Make it clear that you live in the Euro zone and the value of the Euro is what you use to establish every job quote. That means your Dollar rate per word can and will vary (it could go down, of course). On the other hand, if it changes between quoting and being paid, then you will just have to accept any shortfall - that's one of the risks we take in this worldwide business of ours.
- Opening a USD bank account for a first client seems a bit of a "sledgehammer to crack a nut" solution, particularly if there are charges for operating the account.
- You should find out from your tax office what to do about declaring the sums. Rules vary a little regarding the date to use (invoice date, payment date, end of tax period...) and the rate (which must normally be from one particular source rather than the one your own bank charges).
- Think about setting up a PayPal account. You would set up your account in EUR, then you can set up a second balance in USD within that account. This would mean that you could receive the USD amount into your PayPal account and leave it in USD until you decide what you want to do with it. All you would pay on receipt would be their normal commission, and you can build that into your quote. This is what I do: I have my account in EUR, with three different balances (EUR; GBP; USD). I prefer bank transfers from my Euro-zone clients, but I do find it useful for personal receipts and payments. For clients in GBP and USD areas, I leave the money in the original currency until one of three things happens: 1) I want to buy something in that currency - paying by PayPal is very convenient and absolutely free; 2) the exchange rate becomes very favourable so I transfer the balance into EUR; 3) I need cash, so I just turn it into spendable Euros at whatever the going rate is - the last resort.
Hope that helps.
Sheila
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Jose Ruivo wrote:
Depends on payment methods. PayPal will charge you a percentage of the paid ammount - around 3%.
This may be in Portugal. In Brazil PayPal has been deducting 7.5% from what I receive through them, plus they admittedly (as per their help screens) adopt an exchange rate 1% lower than the market.
To add insult to injury, or the other way around, since PayPal set up their operations in Brazil, they've discontinued the possibility of using http://www.xoom.com to transfer funds from an account there (PayPal) to a bank account in Brazil. Xoom transfers funds from a bank account or credit card in the USA to a bank account in any of some 30 countries - Germany included - between 1 and 24 hours on banking days. Now PayPal Brazil delays that payment by 3-5 banking days (possibly making a side profit on our high interest rates).
So I have been giving my timely-paying clients in the USA a 7.5% discount when they use Xoom instead of PayPal. It costs them USD 5 per transaction, and nothing to me. I prefer to give those 7.5% to my esteemed clients - since I wouldn't get them anyway - than to PayPal, whose single contribution now lies in delaying my payment.
So check how much PayPal would be deducting as fees in Germany,and don't forget to add the 1% in lower exchange rates.
[Edited at 2012-01-13 10:42 GMT]
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). On the other hand, if it changes between quoting and being paid, then you will just have to accept any shortfall - that's one of the risks we take in this worldwide business of ours.
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