How does it work when earning in Dollars or Euro's

[Cius]

So for a while I have been considering working remotely for a company based in either the US or UK/EU. Turned down one job offer eventually and am talking to another company and in the meantime my wife has started an internship with a company based in the US paying her in USD. This has rapidly raised some major questions and I am hoping there are some people on the forum who know as they are already doing it.

How does tax work? From the reading I have done you only pay tax on one side if there is a tax treaty in place between the countries and it is based on where you live, not where the work gets done. So according to my reading of the US-RSA tax treaty my wife would become a provisional tax payer and pay tax in SA on her earnings. Is that correct? I also read a clause that indicated the tax treaty only covered earnings below 1.25M Rand. Does that mean for anything earned above that amount per annum one is double taxed?

Curious to know if people are in that position who does your taxes as obviously going with a tax person familiar with international cases would be ideal.

The second area of confusion is how does one get the money from the USA into a rand based bank account? My wife's work tried to pay her into a paypal account she opened but there have been issues and the money has not yet appeared for her first month. Curious to know how it works for others or which banking channels/products people are using and what the fees are like.

 

[Tomtomtom]

Correct. Tax for SA residents is on your worldwide income in ZAR terms at accrual*, and you'd be a provisional taxpayer automatically. You don't file anything in the US regardless of amount. (Well, normal human amounts.)

Simply convert the USD into ZAR (on paper, at the time of invoicing) and that's your income. SARS publishes exchange rates but you can use rates you find elsewhere if it's reasonable.

Highly recommend Wise for transfers. You get a USA bank account number that the sender deposits into. So very easy for them. Then Wise handles the conversion at very good rates, and sends to your ZAR account with no extra costs.

If you (have to) use PayPal, you can still hook Wise up to receive withdrawals from there. Otherwise you will pay FNB's ridiculous 3%+.

The other alternative is for the sender to use SWIFT to get it directly to your ZAR account. But that's possibly even more expensive.

There are two ways forex costs you: in the commission, which is the fee you get quoted, and also in the spread, which is often the bigger one. It's the difference in the rate you actually get vs. the rate you Googled (and estimated your income with). Both of these costs are tax-deductible at least.

*NB: accrual means it's taxable at time of invoicing - it's irrelevant how long it takes to become ZAR in SA. The exchange control regulations require that you convert within 30 days, but even if you don't, it's still taxable in ZAR.)

 

[airborne]

Correct. Tax for SA residents is on your worldwide income in ZAR terms at accrual, and you'd be a provisional taxpayer automatically. You don't file anything in the US regardless of amount.

Simply convert the USD into ZAR (on paper, at the time of invoicing) and that's your income. (NB: accrual means it's taxable at time of invoicing - it's irrelevant how long it takes to become ZAR in SA.) SARS publishes exchange rates but you can use rates you find elsewhere if it's reasonable.

Highly recommend Wise for transfers. You get a USA bank account number that the sender deposits into. So very easy for them. Then Wise handles the conversion at very good rates, and sends to your ZAR account with no extra costs.

If you (have to) use PayPal, you can still hook Wise up to receive withdrawals from there. Otherwise you will pay FNB's ridiculous 3%+.

The other alternative is for the sender to use SWIFT to get it directly to your ZAR account. But that's possibly even more expensive.

There are two ways forex costs you: in the commission, which is the fee you get quoted, and also in the spread, which is the difference in the rate you get vs. the rate you Googled (and estimated your income with). Both of these costs are tax-deductible but best to minimise regardless.

What is the total cost to use wise vs FNB’s 3%?

 

[Tomtomtom]

What is the total cost to use wise vs FNB’s 3%?

Always depends on volume but for say $2k it's below 1%.

 

[Corelli]

So for a while I have been considering working remotely for a company based in either the US or UK/EU. Turned down one job offer eventually and am talking to another company and in the meantime my wife has started an internship with a company based in the US paying her in USD. This has rapidly raised some major questions and I am hoping there are some people on the forum who know as they are already doing it.

How does tax work? From the reading I have done you only pay tax on one side if there is a tax treaty in place between the countries and it is based on where you live, not where the work gets done. So according to my reading of the US-RSA tax treaty my wife would become a provisional tax payer and pay tax in SA on her earnings. Is that correct? I also read a clause that indicated the tax treaty only covered earnings below 1.25M Rand. Does that mean for anything earned above that amount per annum one is double taxed?

Curious to know if people are in that position who does your taxes as obviously going with a tax person familiar with international cases would be ideal.

The second area of confusion is how does one get the money from the USA into a rand based bank account? My wife's work tried to pay her into a paypal account she opened but there have been issues and the money has not yet appeared for her first month. Curious to know how it works for others or which banking channels/products people are using and what the fees are like.

You will pay tax as a resident, not in which country you earn the money. So tax would need to be paid to SARS.

And yes any amount about 1.25m is double taxed. SA and US both have a double taxation system. I do use paypal and get paid that way but then you have to bring it in via FNB and its been misery ever since. So now Paypal and me got fed up with FNB and my Paypal account was switched to a US resident account and we simply just leave it there as savings.

However many banks have foreign accounts, Isle of Man, etc. Standard Bank, Nedbank both offers this, not sure about the others. They can do a swift transfer to your account from abroad, but it may cost a bit more. Best to chat to your bank. I found it much easier just opening up a foreign bank account. My friend works with Chevron and they pay into his Investec account. Best to chat to your bank.

 

[Spizz]

I’ve been earning Euros working for the same company for 10 years now. It was easy before the tax changes, do the efiling yourself and no tax. But since the change in laws I have a tax consultant who does my return for me just like anyone else. No tax liability in the country my head office is, only here where I am a provisional tax payer.

So definitely get a tax consultant as they know the ins and outs and know how to deduct your phone bill or a new monitor or whatever. But be wary of claiming your home is your office and claiming for repair and enhancements, that has long term implications when selling it for example.

One thing to watch for. I also use Wise, but if you have a bond you might have to wangle it a bit with your provider as they want your salary coming from your employer directly. With Wise being a middle man and the employer paying into that, it’s then up to you to do the transfer to Rand and banks don’t like that.

 

[Corelli]

Correct. Tax for SA residents is on your worldwide income in ZAR terms at accrual*, and you'd be a provisional taxpayer automatically. You don't file anything in the US regardless of amount.

Simply convert the USD into ZAR (on paper, at the time of invoicing) and that's your income. SARS publishes exchange rates but you can use rates you find elsewhere if it's reasonable.

Highly recommend Wise for transfers. You get a USA bank account number that the sender deposits into. So very easy for them. Then Wise handles the conversion at very good rates, and sends to your ZAR account with no extra costs.

If you (have to) use PayPal, you can still hook Wise up to receive withdrawals from there. Otherwise you will pay FNB's ridiculous 3%+.

The other alternative is for the sender to use SWIFT to get it directly to your ZAR account. But that's possibly even more expensive.

There are two ways forex costs you: in the commission, which is the fee you get quoted, and also in the spread, which is the difference in the rate you get vs. the rate you Googled (and estimated your income with). Both of these costs are tax-deductible but best to minimise regardless.

*NB: accrual means it's taxable at time of invoicing - it's irrelevant how long it takes to become ZAR in SA. The exchange control regulations require that you convert all USD to ZAR within 30 days, but even if you don't, it's still taxable in ZAR.)

You can only open a US account normally if you have a social security account. Non residents wont have that.

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[Tomtomtom]

So now Paypal and me got fed up with FNB and my Paypal account was switched to a US resident account and we simply just leave it there as savings.

Believe it or not this is illegal. We have capital controls still on the books from the Bad Old Days and although they don't seem to get enforced on normal people much these days (or presidents, apparently?) you may want to be aware of them.

 

[Corelli]

Believe it or not this is illegal. We have capital controls still on the books from the Bad Old Days and although they don't seem to get enforced on normal people much these days (or presidents, apparently?) you may want to be aware of them.

We already had the fight with SARS legally. Eventually they conceded I only need to bring in the money when someone other than FNB is involved. Currently no other banks support this. They also got fed up with FNB

 

[theratman]

The other alternative is for the sender to use SWIFT to get it directly to your ZAR account. But that's possibly even more expensive.

Swift is the way to go, and not expensive. I pay less than 1k in fees on a 1 Mil when receiving.

 

[Tomtomtom]

You can only open a US account normally if you have a social security account. Non residents wont have that.

International payments

Want to send or receive funds overseas? Our seamless international payment solutions can be done anywhere, anytime.

www.standardbank.co.za

International Banking: Platinum Optimum Account

Get exclusive benefits to enhance your international banking experience. Look no further than Standard Bank International for your offshore banking needs.

international.standardbank.com

Well Wise neatly gets around this, somehow - and it's a key part of their product. They open the account themselves. You don't fill in any US bank forms. But you get a US-domiciled USD-denominated account number with your name on it.

 

[Tomtomtom]

We already had the fight with SARS legally. Eventually they conceded I only need to bring in the money when someone other than FNB is involved. Currently no other banks support this. They also got fed up with FNB

Capital controls are separate. They're in the purview of the SARB, not SARS.

 

[Tomtomtom]

Swift is the way to go, and not expensive. I pay less than 1k in fees on a 1 Mil when receiving.

And what's the forex spread?

If you're getting less than about 2% all in even at that volume then you don't have a normal consumer arrangement with the bank.

Besides it's not just the cost. SWIFT is a hassle for senders, and it's a mess when it goes wrong.

 

[Corelli]

Try Citibank however in the US. Look at the below. HSBC also has a presence in South Africa somewhat.

Capital controls are separate. They're in the purview of the SARB, not SARS.

SARS has been going after Paypal accounts, so I got threat from SARS, not SARB.

 

[theratman]

And what's the forex spread?

If you're getting less than about 2% all in even at that volume then you don't have a normal consumer arrangement with the bank.

Besides it's not just the cost. SWIFT is a hassle for senders, and it's a mess when it goes wrong.

No special arrangement with Standard Bank, and it's the same for individual / company when receiving money in my experience. I receive 3 payments monthly, all various amounts.

When the amounts are smaller then you do notice the fees but I found it to be better than the alternatives. Only hassle is the form the recipient must complete which takes me less than a minute. Tick 3 boxes and enter a BOP code.

Swift can be a hassle for senders, but it's fairly easy for them to setup regular payments. Once off is a hassle for sure.

 

[Tomtomtom]

SARS has been going after Paypal accounts, so I got threat from SARS, not SARB.

Okay well that's interesting to know, but it's separate from the question of whether you're allowed to leave USD in a PayPal account as "savings".

Even if the SARB were cool with that, I'm not sure it'd be wise. PayPal is not a real bank, it doesn't pay interest, and you have very little recourse if something goes wrong. Be careful.

 

[Tomtomtom]

When the amounts are smaller then you do notice the fees but I found it to be better than the alternatives.

Again I suggest you look at the rates you're getting quoted and you might find that's where most of the cost is hidden.

 

[Corelli]

Compare exchange rates and money transfer providers to send money | RemitFinder

www.remitfinder.com

 

[PowerFactor]

I want to say use Shyft but it seems like with Wise you don't need SWIFT payments.

 

[theratman]

Again I suggest you look at the rates you're getting quoted and you might find that's where most of the cost is hidden.

Yes that certainly could be the case, I've received 2 this morning so I'll check to see how much the rate differs once it's processed.