[EastSmith]

I am receiving SWIFT payments each months in EU as a commercial entity. I am invoicing in USD, providing a bank account number, where the money I receive are automatically converted to the local currency (not EUR).

Just checked the exchange rate on TransferWise and it seems it is way better than any bank exchange rate in my country (not EUR).

So, what I am concerned about right now is taxes. It seems I can create an USD bank account in US on the name of my company for free. Then I can invoice my customers in USD (as I currently do) and tell them to pay the invoice to the US bank account in TransferWise. Then I transfer the USD to my local bank account (in local currency, using TransferWise exchange rate). So far so good.

But what about my USD bank account in US - wouldn't I need to pay taxes for my USD income in a US bank account?

[charlesdm]

Depends on the tax and accounting laws of your country, but generally the taxable event happens when you invoice.

So I'm doing accounting in EUR and invoice 10,000 USD. For accounting purposes my 10,000 USD gets converted to EUR on the invoice date, at the ECB USDEUR exchange rate.

Then you hold that 10,000 USD for 2 months in your USD account, and the USDEUR exchange rate has dropped or increased 10% in that period. When you then exchange the USD into EUR, you'll generally pay tax on the exchange difference (= capital gain)

My Belgian bank accounts are all multi currency. I can hold, receive and send USD/EUR (and others if I wanted to).

[EastSmith]

Thanks, the exchange difference indeed looks like capital gain.

[jsty]

It may also be worth looking into whether you can open a Foreign Currency account with a bank where you're incorporated which is probably a lot simpler than opening one cross-border.

E.g. in the UK, Barclays offer these for a range of currencies:

https://www.barclays.co.uk/business-banking/business-abroad/...

[EastSmith]

Thanks, I can open an USD account, but then I need to pay fees for it and the currency exchange rate is not as good as TransferWise's rate.

[ska]

Retail exchange rates are never good but talk to your bank. If you have enough volume to do they may allow you access to their own trading desk for a much better rate.

[ska]

Can you open a USD bank account in with your own local bank? I know this works some places; it makes things much easier, and with sufficient funds your bank may let you trade directly on their desk which should get you within 0.5% or less of the spot rate. Wire fees shouldn't be much. SO this looks closest to what you do now but separates the sending money from the currency exchange parts.

However in the situation you describe if your economic activity isn't done in the US you probably won't owe tax on this but if your USD account bears interest, that would be considered US income. You may need to fill out US tax forms anyway, and it will depend on the tax treaties involved.

Currency fluctuation will results in capital gain/loss but you should talk to a knowledgeable accountant local to where you are filing taxes - in some cases this can be categorized equivalent to a bank fee (i.e. an expense), in some cases it has to be tracked as income.

[msadowski]

I don't think you are liable for any taxes just because you have a bank account in some place. If your company is registered outside of the US and you are not an US citizen then you shouldn't have to pay taxes there but as someone in tgis thread said - better ask an accountant.

[noelwelsh]

If you don't pay tax now it is my understanding you shouldn't pay tax after changing to Transferwise. The general rule is that tax is paid in the country where the work is carried out.

If you have doubts you should ask an accountant, rather than randoms on HN.

[pbhjpbhj]

I thought USA charged income taxes on dollar earnings paid in USA too.

That aside, suppose I work nomadically, ssh in to a computer in USA, perform actions there ... where is the work carried out? It's it necessarily the location of the employee? So USA based remote workers can geographically move to a low tax regime and save money? How about if I'm in USA working for an offshore company using a desktop and systems located in that companies premises but again I dial in to a USA based client; seems my work is offshore, at the companies premises?

[ska]

The answer to this is "it depends". This is really dependent on tax treaties and the nature of the work, it's as simple as where the computer is. The laws are basically set up to avoid setting up easy tax avoidance so it's not as simple as moving people around.