Paypal and taxes in the EU?
Thread poster: Alain Alameddine

Alain Alameddine  Identity Verified
Lebanon
Local time: 21:06
Member (2009)
English to French
+ ...
Dec 19, 2011

Hello all,

I have a question in mind. Suppose a resident of the UE receives and sends payments via Paypal, and so withdraws only part of the amount he's received to his bank account. Will his government know what he received via Paypal and tax him for it, or will it just know about the money he actually withdrew to his bank account and tax him for it?

Thank you very much for your answers!

Alain Alameddine
Master's in Entrepreneurship and New Technologies, EnglishFrench EN15038-certified translator


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Sheila Wilson  Identity Verified
Spain
Local time: 19:06
Member (2007)
English
+ ...
Revenue received Dec 19, 2011

Hello Alain,

I'm far from being a tax expert, but I believe that the government is interested in everything you receive from your clients. What you do with it after that is your own business, except that if it earns interest then you will need to declare that separately somewhere.

PayPal's commission is deducted after the client pays you, so you should declare the entire amount as income. As far as I know, in France at least, the tax authorities don't know for sure what you've received from where - but if they audit you then they'll check every account and every item in those accounts, so it's best to be honest.

HTH

Sheila


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Decipherit  Identity Verified
United Kingdom
Local time: 19:06
Portuguese to English
+ ...
Second that Dec 19, 2011

At least in France or in the UK, the government won't 'know' what you received unless they choose to inspect you and when they do, they're thorough. Transfers to your bank account from a Paypal a/c would show up on your bank statement and I suspect they would go through the entire history on that account to ensure it is in order.

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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 20:06
Member (2005)
English to Spanish
+ ...
Paypal is registered in Europe Dec 19, 2011

I think (don't take my word for it, though) that Paypal in Europe is registered as a French company. As such, they have to report your money movements if the authorities decide to investigate.

What you are asking us is whether you can practice tax evasion within the EU, and I think that you should not even entertain the idea. If your local tax authorities decide to have a look at your bank accounts, they will be very thorough and will therefore ask Paypal about your money movements with them. Paypal will have to inform them about everything.

In that case, if you cannot justify that the money you have in Paypal was obtained legally, with an invoice you can show to them etc., then you are in deep trouble.


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dkfmmuc  Identity Verified
Local time: 20:06
Member (2009)
German to English
+ ...
The date of receipt of the payment is decisive Dec 19, 2011

Dear Alain Alameddine,

in Germany and most other countries the date of receipt of the payment is decisive for the year in which it should be viewed as being your income.

So if your question is directed to a legal shift of income to the next tax year the best way is to ask a tax advisor. Let us assume you are only some Euros before a threshold which would impose a h igher tax burden on you or higher tax rates. Then the LEGAL way IS NOT to "forget" what you receive by PAYPAL, the legal way is just stopping to issue invoices this month or ASK your CLIENTS to PAY in January.

Then the income is subject to the taxation of the "new" tax year. Every attempt to "forget" income harms you and the translation colleagues in that way that suspicion of the society and the tax authorities will increase besides the question of moral behaviour.

So just a thumb down for everyone trying this.

Instead of doing so just ask your clients to pay in January if you need to shift income.

For tax purposes (e. g. in Germany) the "Zuflussprinzip" is valid that means at that date the payment is received (on any type of account - regardless the country) it is subject to taxation.

Hope this helps.

Best regards

dkfmmuc


[Edited at 2011-12-19 09:33 GMT]


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Alain Alameddine  Identity Verified
Lebanon
Local time: 21:06
Member (2009)
English to French
+ ...
TOPIC STARTER
Clarification Dec 19, 2011

A clarification for all: I am not trying to evade taxes! I am not European, I am not an EU resident, and I do not have an EU bank account. I am looking to use a colleague's Paypal account to receive/send payments, and I am asking to see if that would put him into trouble.

And by the way, thank you very much for all your replies!


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 20:06
Member (2005)
English to Spanish
+ ...
Yes... Dec 19, 2011

Alain Alameddine wrote:
A clarification for all: I am not trying to evade taxes! I am not European, I am not an EU resident, and I do not have an EU bank account. I am looking to use a colleague's Paypal account to receive/send payments, and I am asking to see if that would put him into trouble.

Very honestly, I think you could put this person in trouble, since he/she risks being fined for not declaring Paypal movements and the fact that she cannot explain where the money comes from. If a fine happens, I am quite sure you will lose a friend even if you foot the bill for the fine. :-/

Good luck!


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Decipherit  Identity Verified
United Kingdom
Local time: 19:06
Portuguese to English
+ ...
Plus... Dec 19, 2011

Might someone classify this as money laundering?

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Natalie  Identity Verified
Poland
Local time: 20:06
Member (2002)
English to Russian
+ ...

MODERATOR
Hi Alain Dec 19, 2011

In this case your friend should pay taxes for your money coming to his account as for his own income, you just need to pay him some amounts for covering these expenses, you should agree this with him.

Also, may I suggest you to remove your email address from your start posting: publishing your email and thus making it an easy catch for all kinds of spammers, scammers, bots etc. is really not a good idea.

Natalia


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Williamson  Identity Verified
United Kingdom
Local time: 19:06
Flemish to English
+ ...
Paypal=hefty fees Dec 19, 2011

In Europe, PayPal is registered as a bank in Luxembourg under the legal name PayPal (Europe) Sàrl et Cie SCA, a company regulated centrally by the Luxembourg bank authority.
Anyway, only use Paypal is it is absolutely necessary. They sometimes force their "personal" accounts into "business" and charge hefty fees.


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