Paypal account and Tax questions

[jumcc87]

Hello everyone

I'm trying to do some research to find out about how taxes work with online business and paypal accounts.

My situation is - I live in New Zealand but want to open a UK paypal account. I have a UK company and bank account (sitting dormant right now).

The reason I want to do this is because Paypal UK has so many more features over Paypal NZ.

Now my question is:

If I live in New Zealand, but process all of my payments through UK paypal, and deposit funds into a UK bank account (personal account), do I pay taxes in New Zealand on my worldwide income or will I get stung for taxes in the UK too?

I can't figure out how this would work.

If anyone has any advice that would b great.

Thanks

[Bromley86]

No specific advice, but I'd suggest that you'd want to look at double tax treaties. So this might be useful, as might earlier threads here and here.

Short answer appears to be declare all worldwide income in NZ but claim reduction in the NZ tax bill for any tax paid in the UK. Unless you're still within the 1st 4 years of residency in NZ, in which case you don't appear to have to declare the UK income. Or something like that (IANAtax advisor etc.).

[Sun777]

Now my question is:

If I live in New Zealand, but process all of my payments through UK paypal, and deposit funds into a UK bank account (personal account), do I pay taxes in New Zealand on my worldwide income or will I get stung for taxes in the UK too?

Taking a guess here from experience and borrowed knowledge, as long as your UK income stays in UK you probably wont have to pay tax here in NZ however you will need to pay tax in UK (after a certain threshold i..e around 6K pounds). As I said, its just my guess.

If you transfer the amount to NZ bank account, then its seen as overseas income (and consider what's posted above i.e. little reduction as its already taxed in UK).

If you are in doubt, its best to check with an accountant.

[Super_BQ]

Taking a guess here from experience and borrowed knowledge, as long as your UK income stays in UK you probably wont have to pay tax here in NZ however you will need to pay tax in UK (after a certain threshold i..e around 6K pounds). As I said, its just my guess.

One of the main goals for countries having tax treaties with each other is to avoid double taxation. Regardless, $ earned in the UK (hence Paypal UK / deposit UK bank account etc) is taxed there. That income must be declared by the tax resident in NZ. This is not an issue of "probably" What ever tax paid in the UK is claimed back on the NZ tax returned under Foreign Tax Credit section.

Even UK's personal exemption applies, the income earned there does not escape the tax on the NZ end. NZ has not personal income tax threshold exemption.

[Sun777]

Thanks for that Super_BQ