One of our favorite topics that we work on every day for our clients is registering companies abroad, opening accounts for them in banks and payment systems, as well as registering a business accounts with PayPal to receive payments from foreign clients from all over the world.
The problem is that abroad everyone uses the PayPal system, in particular, for settlements on such marketplaces as Amazon, Ebay, Etsy. Any e-commerce project, made for an American / European client, simply loses a big amount of money if it does not accept payment via PayPal.
In this article, we will share with you the most valuable experience that we have collected for many years, helping our clients receive money to their PayPal account and withdraw them in a completely legal way and without any intermediary structures.
PayPal and Ukraine in 2020
Probably one of the most interesting topics for discussion: when will PayPal appear in Ukraine?
As a reminder, PayPal does not allow customers from Ukraine to accept payments or withdraw them from the system to a bank account or card. The only functionality available to Ukrainians is sending payments. That is, you can just link your bank card, from which funds will be debited, if you want to buy something interesting on Amazon.
In the spring of 2020, there were rumors that the Ministry of Digital Transformation of Ukraine was negotiating with PayPal in order to fully enter the payment giant into the Ukrainian market. The negotiations, in fact, ended in nothing for the reason that Ukraine is not particularly interesting for PayPal as a market. And the National Bank of Ukraine with its, frankly, ridiculous and archaic regulation of financial services, does not in any way contribute to PayPal.
PayPal works almost all over the world. In this regard, Ukraine was frankly unlucky to be in the same camp together with countries such as Turkmenistan and some other countries of Central Asia.
There is no transparent and understandable regulation from the National Bank - there is no full-fledged PayPal functionality. It's simple.
PayPal and Estonia with e-residency program
It would seem, what does Estonia have to do with its e-residency program to the answer to the question: "How to open a PayPal account in Ukraine"? The most direct. Here, in place of Estonia, there could be any other jurisdiction in which the PayPal functionality has no restrictions. However, historically, Estonia has won universal recognition for the simplicity and transparency of business administration, an understandable tax system and the relatively cheap registration and maintenance of a company.
Read our author's article "5 reasons why registering a company in Estonia is a good idea."
If the citizens of Ukraine, that is, individuals, as well as companies registered in Ukraine, cannot have a full-fledged PayPal account to receive payments and withdraw funds from PayPal, then the solution will be:
- opening a bank account abroad for an individual (Poland is especially popular in this regard);
- registration of a company abroad and opening an account for such a company abroad (a very vivid example of such a decision is Estonia).
By the way, here we described in detail what e-residency is and how to work with it. It is often confused with tax residency, or it is believed that e-resident card opens all doors to Estonian banks. In fact, everything is far from so rosy, and the E-residency card is more of a convenient electronic digital signature, but not panacea that cures all the "diseases" associated with the Estonian banking system.
By the way, Estonian banks stopped serving non-residents normally (by non-residents we also mean Estonian companies established by non-residents of Estonia) from 2016 after a series of scandals related to money laundering through the Estonian banking system. Without a carefully thought-out and implemented substation in Estonia, there is even no point in trying to knock on Estonian banks, since companies will refuse to open an account without explaining the reasons, although the reasons are as clear as day for those who work with banks and compliance every day (here we immodestly hint that the company Taxters is a proffecional one ?).
So, having obtained Estonian e-resident card, you can start registering a company. While it usually takes 1 month to get a card, the registration process takes only a few days.
After registering a company, you need to open an account with a classic bank or payment system.
Communicating with the PayPal support service, we often received conflicting information, they say, to work with PayPal, an Estonian company must open an account in the country of registration, that is, in Estonia. In practice, the situation is different for companies registered in Europe. You can register a company in the same Estonia, but open an account for it in a financial institution of another country that is part of the European Economic Area (English - EEA).
In other words, an Estonian company doesn't have to open an account with an Estonian bank to work with PayPal. It will be enough to open a corporate account in the Lithuanian payment system Paysera.
How to register a business account in PayPal
After registering a company and opening an account for it with a European financial institution, the first step is to issue a corporate plastic card that can be linked to a PayPal business account.
In some countries, PayPal allows you to link only bank cards to withdraw funds from the system, in others - bank accounts. In Europe, as a rule, it is allowed to link plastic cards.
By the way, European banks / payment systems, as a rule, never send cards outside the EU. You can get out of the situation if, for example, you specify the legal address of the company as the address for the delivery of the card. Well, from the legal address of the company, the card can be sent without any problems to Ukraineor Kazakhstan.
After the corporate card is in your hands, you can safely start registering a PayPal business account.
A very important nuance that not everyone knows аbout: a PayPal account must be registered on the PayPal web page of the country where your company is registered. At the same time, a mandatory attribute will be the use of a VPN service at the time of registration. Otherwise, you risk getting problems with PayPal account verification.
Business account registration in PayPal is also good because you don't need to forge any personal documents confirming that you live in some other country. The director and shareholder of a foreign company (let it be Estonia or Poland) can also be a resident of Ukraine. PayPal does not prohibit this in any case if you have a business account for a company in the country where the full functionality of PayPal is available.
PayPal money withdrawal
If you are the happy owner of a PayPal business account, then there will be no problems with withdrawing money.
Simply withdraw funds to your corporate card, which is linked to your PayPal account.
Personal PayPal account vs business account
If you use PayPal for regular freelancing, then PayPal's personal account may well meet your needs. In this case, it will be enough to visit Poland, open a personal account in a local bank and link a card from a personal account to PayPal.
Cons of a personal PayPal account:
- In some cases, it is necessary to deceive the system and literally "draw" an address confirmation if PayPal asks you for a utility bill;
- You need to clearly understand that a personal account is not suitable for conducting active commercial activities. If the turnovers on the account exceed the limits, the system will block transactions and offer you to switch to a business account.
If you aim to develop an online store, for example, you definitely need a business account. In this case, after passing an additional check, PayPal removes the limits from your account, and you can safely work.
Why do you need Taxters for opening a PayPal account
Did you heard the phrase from youtube bloggers: "I know how to open an account / company abroad for PayPal, but I am not responsible for the consequences, since I am not a lawyer"? We are just going from the opposite. Before doing anything, we advise on all the nuances related to taxes, company administration, automatic exchange of information, and so on.
We have helped numbers of clients successfully implement their business projects related in one way or another to accepting payments through PayPal.
If you are tired of paying sky-high commissions to intermediaries for withdrawing money from PayPal, you are welcome to contact us for a consultation.
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