Declaring taxes in Europe

[timomediagroup]

Hello everyone,

I was wondering about declaring taxes.
I’m from Europe and have to declare my incomes in euro’s. My Fiverr earnings are on PayPal, and mostly in dollars.
How do sellers from Europe declare their taxes when their earnings are still in dollars?
Do you declare the incomes the moment you withdraw them from PayPal to your bank account, or the moment you earned it on Fiverr?

Please share your experiences with declaring incomes in Europe!

Kind regards.

PS. If someone is willing to help me through PM, I’ll owe you a beer (or a glass of water if you don’t drink)!

[carineb]

You should ask this question to the tax services in your country.
Every country has different rules even if we have common rules.

In my country we declare the income when the money is on our account (not on Fiverr).

You should also ask if Paypal is considered as a personal account by your country.

[carineb]

The tax law in my country says that we must use the European Central Bank exchange rate to declare in euro (each time we receive a payment we should make the conversion!).

[cyaxrex]

Tax usually applies on income brought into the country. You, therefore, base calculations (depending on where you are) on income transferred to your domestic bank account or withdrawn from an ATM.

Depending on your circumstances, it can be a good idea to consider relocating/border hopping. Move between tax jurisdictions every 90-days and you don’t have to pay anything. For more a more stable life, Cyprus is tax-free providing you earn under $20K and Portugal can be tax-free for 10-years if you qualify for a special 10-year non-habitual residency tax status.

Best avoid Spain and Malta, though, as things can turn into a nightmare.

[miiila]

I don´t think it´s the same throughout Europe. For Germany, and if you don´t earn more than € X per month, the relevant date is when you get your earnings, which would be the moment you have it in your PayPal account (or even when it´s cleared by Fiverr or even the “billing date” may be relevant if you are over the limits in Germany).

The German Finanzministerium publishes a monthly conversion rate for all currencies (IIRC it´s based on the European Central Bank’s rate, so that might be similar in other European countries), which one can use for convenience, so you only need to do the maths once a month for the amount earned by month, but in theory, I could use the “official” conversion rates for all the dates I received money in my PayPal account.

I think it would be best to find someone who is a pro in tax things (and ask them if they have experience with “online freelancing”, earnings in foreign currencies) in your country and pay them at least once to answer all questions/tell you what you need to know, so you´re on the safe side and can do what you have to on your own from then on.

You may even have to let a pro do your yearly tax declaration at least once (even if it is super easy to do yourself) if your health insurance demands that for figuring out your dues.

[timomediagroup]

I don´t think it´s the same throughout Europe. For Germany, and if you don´t earn more than € X per month, the relevant date is when you get your earnings, which would be the moment you have it in your PayPal account (or even when it´s cleared by Fiverr or even the “billing date” may be relevant if you are over the limits in Germany).

The German Finanzministerium publishes a monthly conversion rate for all currencies (IIRC it´s based on the European Central Bank’s rate, so that might be similar in other European countries), which one can use for convenience, so you only need to do the maths once a month for the amount earned by month, but in theory, I could use the “official” conversion rates for all the dates I received money in my PayPal account.

I think it would be best to find someone who is a pro in tax things (and ask them if they have experience with “online freelancing”, earnings in foreign currencies) in your country and pay them at least once to answer all questions/tell you what you need to know, so you´re on the safe side and can do what you have to on your own from then on.

You may even have to let a pro do your yearly tax declaration at least once (even if it is super easy to do yourself) if your health insurance demands that for figuring out your dues.

Thank you for your reply!

As you said, there is a conversion rate that is given by the European Central Bank. But we all know that the conversion rate on PayPal are quite a bit higher. Do you subtract that in any way from your earnings?

Thanks!

[timomediagroup]

I’m just trying to gather as much information as possible, and will also contact a bookkeeper with experience in online freelancing!

[carineb]

Thank you for your reply!

As you said, there is a conversion rate that is given by the European Central Bank. But we all know that the conversion rate on PayPal are quite a bit higher. Do you subtract that in any way from your earnings?

Thanks!

Do you subtract that in any way from your earnings

I think that the answer will depend on the law in your country. In my country we shouldn’t substract paypal fees (I think that this point also depends on the type of the company you own. It’s so complicated…)

[miiila]

Thank you for your reply!

As you said, there is a conversion rate that is given by the European Central Bank. But we all know that the conversion rate on PayPal are quite a bit higher. Do you subtract that in any way from your earnings?

Thanks!

For that, either best ask a tax pro in your country, alternatively, look at the official forms you´ll have to fill out for your tax declaration to see what ‘topics’ for deductible expenses there are, probably you´ll have something where you can group “costs of monetary transactions” under.

But it´s really best to ask a pro, or perhaps see if you can find a relevant forum in your country (there may be some for the commonly used tax software where you might find answers to a lot of those questions) as things differ between countries.

[timomediagroup]

Do you subtract that in any way from your earnings

I think that the answer will depend on the law in your country. In my country we shouldn’t substract paypal fees (I think that this point also depends on the type of the company you own. It’s so complicated…)

Thank you for your response.

I’m declaring it as ‘other’ personal income on my tax form, so I don’t have a company registered or anything.

[timomediagroup]

For that, either best ask a tax pro in your country, alternatively, look at the official forms you´ll have to fill out for your tax declaration to see what ‘topics’ for deductible expenses there are, probably you´ll have something where you can group “costs of monetary transactions” under.

But it´s really best to ask a pro, or perhaps see if you can find a relevant forum in your country (there may be some for the commonly used tax software where you might find answers to a lot of those questions) as things differ between countries.

Thank you.

I guess I’ll have to contact a pro then! I’m just afraid that if I start to do these calculations myself I declare it at the wrong moment and with the wrong rate etc. Very complicated!

[miiila]

Thank you.

I guess I’ll have to contact a pro then! I’m just afraid that if I start to do these calculations myself I declare it at the wrong moment and with the wrong rate etc. Very complicated!

Very complicated!

Just at first, once you know everything you need to know, it´s just rinse and repeat. 🙂

[carineb]

Thank you.

I guess I’ll have to contact a pro then! I’m just afraid that if I start to do these calculations myself I declare it at the wrong moment and with the wrong rate etc. Very complicated!

I guess I’ll have to contact a pro then! I’m just afraid that if I start to do these calculations myself I declare it at the wrong moment and with the wrong rate etc. Very complicated!

You should also contact the tax services and ask them a copy of the law. Then you’ll be sure of what you must declare and how.

[timomediagroup]

I don´t think it´s the same throughout Europe. For Germany, and if you don´t earn more than € X per month, the relevant date is when you get your earnings, which would be the moment you have it in your PayPal account (or even when it´s cleared by Fiverr or even the “billing date” may be relevant if you are over the limits in Germany).

The German Finanzministerium publishes a monthly conversion rate for all currencies (IIRC it´s based on the European Central Bank’s rate, so that might be similar in other European countries), which one can use for convenience, so you only need to do the maths once a month for the amount earned by month, but in theory, I could use the “official” conversion rates for all the dates I received money in my PayPal account.

I think it would be best to find someone who is a pro in tax things (and ask them if they have experience with “online freelancing”, earnings in foreign currencies) in your country and pay them at least once to answer all questions/tell you what you need to know, so you´re on the safe side and can do what you have to on your own from then on.

You may even have to let a pro do your yearly tax declaration at least once (even if it is super easy to do yourself) if your health insurance demands that for figuring out your dues.

btw, one last question about this matter. You say “if you don’t earn more than € X per month”, what happens below that limit?

[miiila]

btw, one last question about this matter. You say “if you don’t earn more than € X per month”, what happens below that limit?

There are some limits (revenue, earnings) that decide several things - whether you´ll have to take VAT from your customers and pass it on to the state or not, how often you need to do your VAT declarations, which kind of bookkeeping you are obliged to do, … I assume it´s similar in other countries, but not necessarily too similar.

You need to research those things for your country, perusing the internet or trying to get information from your finance authorities (who might tell you to get a tax consultant, though), or to find someone who is knowledgeable about all of that, best of all, again, a tax pro (because other people usually aren´t that passionate about taxes that they become pros themselves 😉 ).

[uk1000]

Surely Fiverr should have info on declaring taxes relevant to a seller’s country.
It could also make providing the info for the tax declarations easier, eg. showing & deducting business expenses (which could involve the purchase of other gigs or other purchases/costs).

[timomediagroup]

There are some limits (revenue, earnings) that decide several things - whether you´ll have to take VAT from your customers and pass it on to the state or not, how often you need to do your VAT declarations, which kind of bookkeeping you are obliged to do, … I assume it´s similar in other countries, but not necessarily too similar.

You need to research those things for your country, perusing the internet or trying to get information from your finance authorities (who might tell you to get a tax consultant, though), or to find someone who is knowledgeable about all of that, best of all, again, a tax pro (because other people usually aren´t that passionate about taxes that they become pros themselves 😉 ).

Ah now I remember! It’s the same here in Finland!

Thanks 🙂

[timomediagroup]

Surely Fiverr should have info on declaring taxes relevant to a seller’s country.

It could also make providing the info for the tax declarations easier, eg. showing & deducting business expenses (which could involve the purchase of other gigs or other purchases/costs).

That would be great. But you got to realize that those regulations change every year. So I bet that would be a lot of work for Fiverr to have all the right information.

[miiila]

They had a blog recently that deals with those things, but it´s US-centric, like the health insurance thing a while ago and other things too, for example, that you only can withdraw $ instead of your own currency, I guess it would be a bit much to cover all countries they have sellers/buyers in.

https://blog.fiverr.com/4-steps-to-simplify-tax-time/

[wp_kid]

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