Are Paypal and similar online banks activities subject to taxes in Germany?
Thread poster: shosho11

shosho11
Iraq
Aug 4, 2017

So to shorten my story, Paypal does not support my area, so I use my cousin's (German citizen) PayPal account to buy stuff from eBay, I fund that PayPal account by his account in another online bank which provides personal IBAN, which in turn is funded by wire transfer from myself. Both of these accounts are his accounts but he doesn't use them and he gave me a permission to use them. My question is, Am I doing any harm to him regarding increasing his taxes? or these online accounts do not count when calculating taxes?

Regards


 

Sheila Wilson  Identity Verified
Spain
Local time: 20:50
Member (2007)
English
+ ...
Normally, that would be the case Aug 7, 2017

I know absolutely zero about taxation in Germany, but I do know a little about taxation in three other EU member states, and they all tax your worldwide income, wherever it's sourced and however you receive it, UNLESS you've paid tax on it to another country AND there's a double taxation agreement in place between the two countries AND the tax due in the home country would normally be equal to or less than that already paid.

If you're only using your cousin's PayPal account to buy things, and he's feeding that PayPal account from his own bank account, I don't believe that in itself presents any taxation problem. The only problem I can see is if you have any disputes with a merchant or with PayPal. But that's your problem.

However, that money arriving from your bank account could well be causing bells to ring and investigations to start. Not just because your cousin should be paying tax on that income, but because it could be linked with money laundering and/or terrorism. Here in Spain, I commonly get asked to prove where international funds come from and to give justification for them. In my case, the invoices from my freelance business serve to quieten their fears about the more-or-less regular sums arriving. When I transferred a large sum from my own bank account in the UK - same account name etc - to buy a house here, the Spanish lawyer had to certify that it was indeed being used for that purpose, and I presume the UK bank also had to confirm that it was money that they'd held for some time in a savings account.

If you're receiving payment for work through that PayPal account, then you could be storing up big trouble for your cousin due to unpaid tax, undeclared earnings, etc., and for yourself for much the same reasons.

But I'm far from a tax expert, so do get advice from someone who is.


 

Kay-Viktor Stegemann
Germany
Local time: 21:50
Member (2016)
English to German
Income? Aug 7, 2017

shosho, you are only talking about spending money via Paypal. Why should that be tax relevant? Of yourse, if you receive income via Paypal, the story is different. You should never use an account that belongs to someone else for receiving income, since this might indeed complicate tax affairs for both of you.

 

Mirko Mainardi  Identity Verified
Italy
Local time: 21:50
Member
English to Italian
Complicating things Aug 7, 2017

Kay-Viktor Stegemann wrote:

shosho, you are only talking about spending money via Paypal. Why should that be tax relevant? Of yourse, if you receive income via Paypal, the story is different. You should never use an account that belongs to someone else for receiving income, since this might indeed complicate tax affairs for both of you.


I believe the OP's fears are summarized by what Sheila wrote here: "However, that money arriving from your bank account could well be causing bells to ring and investigations to start".

If they're periodically transferring funds from their own account (and from Iraq no less...) to their cousin's account in Germany, then authorities might very well find it suspicious and look into it, and not just for tax purposes.


 

Kay-Viktor Stegemann
Germany
Local time: 21:50
Member (2016)
English to German
Depend on the sums Aug 7, 2017

Mirko Mainardi wrote:

If they're periodically transferring funds from their own account (and from Iraq no less...) to their cousin's account in Germany, then authorities might very well find it suspicious and look into it, and not just for tax purposes.


That depends on the sums, I think. As far as I know, there are probably some triggers in place - banks will report certain activities to authorities when certain sums are exceeded. But when this is just about buying everyday articles on ebay, the sums should be modest enough not to draw attention. Of course, if the activities can be considered businesslike, tax authorities will be interested.


 


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