Categories: Taxation

Taxes 2016 and PayPal account: taxation, declaration, obligations

PayPal and the French tax authorities&comma; how it works &quest;&NewLine;PayPal is an electronic payment service that enables you to transfer money &by&sending&comma; receiving&rpar; for transactions with individuals&comma; for payments to merchants on eBay or other online sales sites&period;&NewLine;As PayPal Europe is a Luxembourg-based financial institution&comma; a PayPal account is legally considered as an account opened abroad&period; In principle&comma; any account held abroad must be declared to the French tax authorities&comma; on pain of penalties &lpar;amende&comma; pénalités&rpar;&period; But the&rsquo&semi;administration fiscale has provided for an exemption to this obligation under certain conditions&comma; applicable to most PayPal account holders residing in France&period;&NewLine;Foreign accounts &colon; mandatory declaration&NewLine;What the law provides for&NewLine;Pursuant to article 1649 A of the CGI &lpar;Code général des impôts&rpar;&comma; the holder in 2016 of&rsquo&semi;an account opened abroad is required to declare it to the French tax authorities at the same time as their tax return&comma; in April-May 2017&period; This principle applies irrespective of the use made of the account &lpar;on a personal or professional basis&rpar;&period;&NewLine;For each account, the taxpayer domiciled in France must provide details of all the following references &colon;&NewLine;&&num;8211&semi; name and address of the establishment where the account is held&NewLine;&&num;8211&semi; account designation &colon; number&comma; nature &comma; use and type of account &lpar;electronic money account&comma; bank account&comma; savings account&comma; term account&&num;8230&semi;&rpar;&NewLine;&&num;8211&semi; date the account was opened or closed during the past year&NewLine;&&num;8211&semi; surname&comma; first name&comma; date and place of birth&comma; address of account holder or representative&NewLine;Declaration with or without Cerfa 11916 form&NewLine;These items can be declared either on plain paper or using the n°3916 declaration form &lpar;Cerfa 11916&rpar;&period; These details must be repeated each year when the annual tax return is drawn up&period; In addition&comma; box 8UU dedicated to "Accounts opened&comma; used or closed abroad"&period must be ticked;&NewLine;Please note that these procedures apply to all members of the tax household, as well as to people who are attached to the household, such as children of full age who are studying&period; Similarly, all taxpayers are affected, whether or not they are taxable&period;&NewLine;Penalties for failure to declare&NewLine;In the event of non-declaration&comma; a fine of 1&period;500 euros is payable per non-declared account&period; Above&rsquo&semi;a total amount of 50&period;000 euros of &lpar;assets on one or more&rpar;&comma; accounts; the&rsquo&semi;fine per non-declared account is equal to 5&percnt; of the credit balance&comma; with a minimum of 1&period;500 euros&period; To these fines may be added penalties &colon; taxation of undeclared assets&comma; together with&rsquo&semi;a surcharge of 40&percnt; applied in the event of&rsquo&semi;omission&period;&NewLine;PayPal account &colon; no&rsquo&semi;reporting obligation&comma; subject to conditions&NewLine;In the majority of cases&comma; the holding of a PayPal account is not subject to the declaration obligation laid down by law&period; C&rsquo&semi;est la conséquence de l&rsquo&semi;opinion given on November 12, 2013 by the Direction générale des finances publiques &lpar;DGFiP&rpar; on the issue&comma; shortly after a decision by the administrative court of Pau which had condemned an antique dealer for failure to declare his PayPal account&period;&NewLine;Thus&comma; according to a note published in the BOFiP-Impôts &lpar;le bulletin officiel des impôts&rpar;&comma; the&rsquo&semi;obligation to declare an account held abroad does not&rsquo&semi;apply provided the following three cumulative conditions are met &colon;&NewLine;&&num;8211&semi; the account is used to make online payments for purchases or collections in connection with the sale of goods.&NewLine;&&num;8211&semi; this payment services account assumes the holding of another account opened in France&comma; to which it is linked&NewLine;&&num;8211&semi; the total sums credited to this account resulting from sales made by its holder are less than or equal to 10&period;000 euros per year&period;&NewLine;If these three criteria are not met, the exemption from obligation does not apply. In this case, the holder must comply with the reporting formalities required by law;&NewLine;Is the money in a PayPal account taxable?&NewLine;PayPal Europe is not responsible for any applicable taxes&period; In its terms of use&comma; the company specifies that&rsquo&semi;it is "in no way responsible for determining the taxes applicable" to transactions carried out by an account holder&comma; "nor for collecting&comma; declaring or remitting the taxes associated with a transaction"&period;&NewLine;In fact, the taxable event is not linked to money transfers or to the balance held on a PayPal&period account; it arises from the activity that generates the financial flows passing through the&period account;&NewLine;Several situations can then arise&colon;&NewLine;&&num;8211&semi; Non-taxation &colon; use of the PayPal account for personal or family purposes, e.g. to sell second-hand goods such as a bed, knick-knacks, toys, etc&period;&rpar; from time to time on Le Bon Coin for example&period; In this case&comma; it is not&rsquo&semi;a paid extra-professional activity&period;&NewLine;&&num;8211&semi; Imposition &colon; use of the PayPal account as part of a remunerated activity &lpar;example &colon; sale of&rsquo&semi;self-made items&rpar;&period; In this case&comma; income is to be declared as non-commercial profits &lpar;BNC&rpar; for an occasional activity, or as industrial and commercial profits &lpar;Bic&rpar; if&rsquo&semi;it&rsquo&semi;is a regular activity&period; In this case, there are different declaration procedures&comma; depending on the nature of the&rsquo&semi;activity and the amount of sales generated&period;&NewLine;<a href="https&colon;//www&period;toutsurmesfinances&period;com/impots/impots-et-compte-paypal-fiscalite-declaration-obligations&period;html" target="&lowbar;blank">Source</a>&NewLine;

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