PayPal vs. foreign bank account (USA residents)
Thread poster: Susan Welsh

Susan Welsh  Identity Verified
United States
Local time: 06:16
Member (2008)
Russian to English
+ ...
Jul 17, 2009

By the time PayPal and the tax man take their percentages from what I earn, there's not much left. I understand that some translators who live in the U.S. maintain a bank account, say, in Germany, into which their European customers can deposit euros. Does this save money on transfer fees? If so, would you mind telling me how it works? How do you set up the account, and how do you get your money transferred to your U.S. bank (in dollars)?

Thanks,
Susan


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Tomasz Poplawski  Identity Verified
Local time: 05:16
English to Polish
+ ...
Foreign bank account Jul 17, 2009

I think it is absolutely necessary, unless your client is willing to pay fees on both ends of the money transfer, which rarely happens.

I can tell you that we are charged zero for incoming transfers within EU to our bank account in Poland (and I believe this is typical).
You can do a lot of things with the account over the Internet - but in order to open it, we had to be there physically. I can imagine a family member can do it for you but most likely even making you an authorized user requires showing your face in the branch.
We do not transfer money from the Polish account to the US (think how nice it is to have euros when you go there, and about advantages of currency hedging in general), but if you have to, I would recommend waiting until a decent amount accumulates because as you know, the bank fees are flat, and not based on the amount.

However, if you have a basic Paypal account, and the client transfers money from their bank account (as oppose to credit, or debit card), the transfer does not cost you a penny. I had several back and forth about it with several European clients, and some of them were able to do that, and some were not, for no apparent reason.


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LEXpert  Identity Verified
United States
Local time: 05:16
Member (2008)
Croatian to English
+ ...
Many considerations Jul 17, 2009

Susan -
Intra-EU transfers (on IBAN/SWIFT) are generally faster than cheaper (and less mysterious to agencies) than transfers from outside the US into US bank accounts (which are not on IBAN/SWIFT and must be referenced by ABA routing # and Acct. #.

In theory, receiving a number of smaller transfers to an EU account and then doing a larger transfer to the US could save money on transfer charges. However, while no-fee accounts here are the norm with reasonable min. balances, elsewhere such free accounts tend to be rare, and you may need to pay maintenance charges, internet banking charges, etc. You may also need a separate account for each currency you want to hold or accept (EUR, USD, etc.) These adders may well negate the savings on transfer charges. You could also look for ways to spend directly from the foreign account (by credit or debit card, or PayPal), rather than transferring it back.

In the end, you might be better off looking for a US bank with reasonable incoming transfer fees. I think I saw Citibank advertising accounts with $10 incoming wire transfers recently. My bank theoretically has no incoming wire fees, but somehow $25 or so seems to have regularly disappeared from incoming wires, I suspect this is due to the conversion charges and charges of correspondent banks that must be used in order for the wire to cross from IBAN/SWIFT to the US system.

Other considerations - does the location where you want to open an account allow non-resident accounts? Would a regular inflow of cash from business attract the unwanted attention of tax authorities in that country, if you do not have a work permit or registered business there?

I just accept wire fees as a cost of doing business on larger jobs, and for smaller jobs PayPal fees are bearable (if frustrating nonetheless). The problem arises with smaller or medium jobs where PayPal is not an option.


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Tomasz Poplawski  Identity Verified
Local time: 05:16
English to Polish
+ ...
No tax haven Jul 17, 2009

After reading the Rudolf's post, I'd like to add that I do not use the account to hide my income from US authorities, and certainly would not suggest doing that -- so if tax authority in Poland get interested, I can prove I pay taxes on it, and there are conventions against double taxation between US and most countries where you want to have your account.

But to feed the fat cats in the banking industry, and go with their outrageous fees as cost of doing business - no, I don't think so.
I think within 1 year you would save enough money to buy a plane ticket to Europe

[Edited at 2009-07-17 20:27 GMT]


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Daina Jauntirans  Identity Verified
Local time: 05:16
German to English
+ ...
Citibank Jul 18, 2009

I use Citibank, and they charge $10 for an incoming wire and $40 for an outgoing one (not a concern, unless you're outsourcing).

Some customers deduct their wire fees from my invoiced amount (plus I pay mine), while others pay their own wire fee and mine as well. It really depends. This is not a black-and-white situation as was stated above. What I do to help out regular customers is save up invoices from smaller jobs until a larger amount (say €500) has accumulated. That way they don't have to transfer money to me as often.

If any of your customers have offices in the US, they may also be able to cut you a (US) check from that office. That's another scenario that I have experienced. Avoid European checks like the plague. I got one once, but was able to return it to the customer and have the money transferred when I found out that there would be a hefty fee and long waiting period (6-8 wks. I think it was?) to cash it here in the US.

Anyway, people have posted here before about successfully opening bank accounts in Germany, but I do believe they did it in person. It's a lot more difficult if you don't travel to Europe regularly and don't have an address there.

HTH!


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Susan Welsh  Identity Verified
United States
Local time: 06:16
Member (2008)
Russian to English
+ ...
TOPIC STARTER
Тhanks for the help Jul 20, 2009

It doesn't look very promising, but I will pursue the leads you've given me.

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