Is money in an escrow account taxable
Thread poster: Roy Williams

Roy Williams  Identity Verified
Austria
Local time: 21:51
Member (2011)
German to English
Apr 15, 2008

Hi. I haven't started freelancing yet but plan to eventually. While gathering information, a question popped into my head: is money held in an escrow account (i.e. paypal, moneybookers, etc.) taxable? Is it possible that it is not taxable income until you transfer it to a personal account?

 

Andrew Levine  Identity Verified
United States
Local time: 15:51
Member (2007)
French to English
+ ...
I am not a tax accountant, but... Apr 15, 2008

In the USA at least, money held in a PayPal account is not considered to be "in escrow" at all (I would imagine the same goes for moneybookers); it is simply another account in your name, and the money I am paid via PayPal is indeed taxable.

I don't know about Europe, but I would be very surprised if you could avoid all income taxes there by receiving all your payments by PayPal! That doesn't sound right.

[Edited at 2008-04-15 14:46]


 

Henry Hinds  Identity Verified
United States
Local time: 13:51
English to Spanish
+ ...
Tax authorities Apr 15, 2008

Check with the authorities that tax you, they are the only ones who can give you a valid answer.

 

Charlie Bavington (X)  Identity Verified
Local time: 20:51
French to English
When you count the money as income Apr 15, 2008

WilRoy wrote:

Is it possible that it is not taxable income until you transfer it to a personal account?


I'm far from being an expert on Austrian tax, but I would be surprised if this were the case. Assuming that the set up there is similar to self-employment here, i.e. the business and the person are one and the same, business income is yours.

Of course, you could set up a separate entity (i.e a company), but then you are just changing the question to "does it count as business revenue"? Which would probably be taxable under a corporation tax, and then when your company pays you, you are liable for personal income tax.

Anyhow, what I was actually going to say was that the question may be irrelevant. Some countries insist on, and some give you option to, counting money as income as soon as you have invoiced for it. Not received it. Just sent the invoice. If this is the case for Austria, the question may be irrelevant.


 


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Is money in an escrow account taxable

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