Declaration of Paypal Account in France
Thursday 03 June 2021
Under particular conditions, residents of France who hold a Paypal account are required to declare it on their annual French tax return.
There are few households today who do not hold a PayPal account, an electronic payment service that enables money transfers for transactions between individuals, for payments on eBay or other online sales sites.
As PayPal Europe is a financial institution based in Luxembourg, a PayPal account is legally considered as an account opened abroad, which must, in principle, be declared to the French tax authorities.
If you fail to do so, you are potentially liable to a fine of €1,500, which applies for each year the account is held. So where the account has been held for 4 years, the total fine would be €6,000. Further fines apply if taxable income received on these accounts is not declared.
This arises under Article 1649 of the Code général des impôts, which states:
'Les personnes physiques […] domiciliées ou établies en France, sont tenues de déclarer, en même temps que leur déclaration de revenus ou de résultats, les références des comptes ouverts, détenus, utilisés ou clos à l’étranger », indique l’article 1649 A du CGI.'
By virtue of its status, Paypal Europe is required by law to notify the French tax authority if you hold an account with them, so even though you may not declare it the tax authority will probably know about it.
However, the tax authorities have provided for an exemption to this reporting obligation under certain conditions, applicable to most PayPal account holders residing in France.
According to the French administrative tax doctrine, the reporting requirement does not apply provided three conditions are respected:
- the account is used to make online purchases or sales related to the sale of goods;
- the account is backed by another account opened in France;
- the total amount of operations made by its holder does not exceed €10,000 per year.
Accordingly, business owners who makes sales over the internet and make receipts in a Paypal account are therefore required to report them when the amount of receipts exceeds €10,000.
However, if you do use the account for business purposes, then even though receipts may be under the €10,000 limit, you are required to declare these business earnings on your tax return.
They are also required to report them if the account is not backed by another bank account opened in France.
If you are required to declare the account you need to do so on Form 3961 (Déclaration par un résident d’un compte ouvert, détenu, utilisé ou clos à l’étranger), which is an annex to the main tax declaration form, when you will need to provide details of the holder of the account, date of opening (or closing) of the account and the account number. You do not need to provide details of the transactions or the amount in the account.
Other Online Bank Accounts
The general rule of the declaration of foreign bank accounts applies to any foreign on-line account you may hold, including Transferwise (now 'Wise'), N26, Revolut, and Monese.