PayPal is one of the most well-known links between buyer and seller in e-commerce and web shops, which has further gained trust and general approval among the public in the last year. The services it offers are diverse and, above all, they provide the user with a great deal of security on the Internet. How can you use your PayPal account for business? When do you have to register it with the tax office?
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PayPal account and the tax obligations in Slovenia
Individuals, who use a PayPal account, often ask if they need to report this account to the tax office. They also ask about the taxation of funds they receive in their PayPal account.
According to the Act on Mandatory Registration of Bank Accounts Abroad, you must report payment accounts from abroad to the Financial Administration of the Republic of Slovenia (FURS). However, according to FURS, the PayPal online service do not fall under the term for bank account. Here, the payments that go through it are non-cash payments.
As long as you do not activate the Paypal account in a way to provide payment services with it, you do not need to register it. But if you upgrade your account by adding e.g. the IBAN number, to which you can receive receipts, must be registered within 8 days. The same goes of all foreign bank accounts.
Taxation of the inflows to the PayPal account
Do you receive the inflows to your PayPal account and are an individual without a registration to perform activities? Do you only occasionally perform a service online? Then your earnings are subject to the taxation under the Personal Income Tax Act. They have the same taxation as the income from another contractual relationship.
If a natural person carries out an online activity continuously and independently, he must carry it out as a sole trader. In the event that the sole trader (s.p.) determines its tax base by taking into account the normalized expenses, receipts via PayPal are considered income and are taxed with income tax from activities under the Personal Income Tax Act. But if you determine the s.p. tax base by taking into account the actual income and expenses, the receipts through PayPal do not affect the revenues. The revenues are part of the tax return and have taxation along with the income tax from activities.
But if the PayPal account is used by a company (LTD) that receives the payments for certain services there, it has to start paying the corporate income tax. In determining its tax base in the annual tax return, you use the revenues and the expenses in the income statement.
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Do you have additional questions about using your PayPal account for your business? Do you plan to start a business in Slovenia? If you also need more details on business in Slovenia, send us an email to data@data.si. You can also call us on +386 1 6006 270/+386 1 6006 274 (our landline). You can also use our Viber/Whatsapp +386 40 530 718/+386 64 173 023. We are also available on skype data.business7.
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