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Shawn P Adamo
Shawn P Adamo, Retired CPA
Category: Tax
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Experience:  Retired CPA
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I hope this e-mail finds you well. My name is XXXXX XXXXX I have

Resolved Question:

I hope this e-mail finds you well. My name is XXXXX XXXXX I have recently opened a single LLC yacht charter company in New York that is specilizing in booking yachts in Europe.

My problem is that we need to pay to the owner of the yacht in euros. I was very surprised to find out I can not open a euro account in the States. That is a big problem since I need to collect half of the money upfront and keep it for a while before I transfer it to the owner of the yacht. Due to currency fluctuation, that would cause many problems when charging a customer so I definitely need to charge a customer in euros. What would you advice me regarding this matter since I obviously can not open euro account in States?

In addition, there is alaways a question regarding charging a state sales tax on services. I called NY state to ask should I charge NY sales tax to my booking services, but I got very opposite answers ( first represenative said I am exempt because nothing is basically happening in NY state regarding these bookings and second one said yes, if I collect the money in NY state, which is where I currently have my business account. If that is correct, that would pretty much put me out of the business).

I am currently living in Europe and will file next years tax return from foreign address.

Thank you.
Mia
Submitted: 2 years ago.
Category: Tax
Expert:  ratioscripta replied 2 years ago.
Hello and thank you for the opportunity to assist you. Please remember that there might be a delay between your follow ups and my replies because I am typing out my answer, or taking a quick break.

I am sorry for your situation. What would you advice me regarding this matter since I obviously can not open euro account in States?

Have you thought of PayPal? PayPal allows someone to have an account in US, Euros, UK Pounds, etc - even if you are only a US Citizen or LPR. They basically function like a bank half the time anyhow.

As to answer your question re: taxes. If you have an LLC in NY registered, then you pay it, or if you are even stationed in NY, I am afraid.

Many caveats exist, however, so do not give up. If you will be working from abroad or from here, you may want to talk to an attorney tax specialist in depth to see how they can minimize your tax liability.

Note that if you are an LPR or US Citizen or LPR, you have to pay taxes even if living overseas on any personal income, although you get credit for any tax paid locally in your country:

http://www.irs.gov/businesses/small/international/index.html

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Customer: replied 2 years ago.
Relist: Other.
The answers are the gestimate and I eed a real info.
Expert:  ratioscripta replied 2 years ago.
Hello,

I am going to opt out and transfer your question to the Tax category. Perhaps a tax professional can help you track down the proper code. Good luck.
Customer: replied 2 years ago.
Thank you.
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Hi, I’m a moderator for this topic. Your Professional has opted out and I wonder whether you’re still waiting for an answer. If you are, please let me know and I will do my best to find another Professional to assist you right away. If not, feel free to let me know and I will cancel this question for you. Thank you!

Customer: replied 2 years ago.
Yes, I am still waiting for the answer.
Expert:  Rachel-Mod replied 2 years ago.

Sometimes, finding the right Professional can take a little longer than expected and we thank you greatly for your understanding. We’ll be in touch again shortly

Expert:  Shawn P Adamo replied 2 years ago.

Hello. My specialty is focusing on YOUR Financial needs. Financial Planner/Business Owner for 20 years. CPA,PFS,QFP,GMMA.

 

Open an account overseas (not in the US). You can keep the euro's there.

 

Buy the euro's and simply store them someplace safe.

 

Also consider a CC. they will tranlate to american dollars.

 

As to NY state, if the work is NT poerformed there then there is nothing due NY (from the business). of course YOU may have to pay state income tax as a resident.

 

 

Customer: replied 2 years ago.

Thank you Shawn:

 

I am looking to open the account overseas, but it is turning into nightmare. Almost every country I have contacted is asking for some residency connection to it to open such an account. For example, there is Citi Bank in UK, but when you call them, they say you have to be a resident of UK. The same for Austria etc. If you know of any Europian country I can open the account as a US citizen, please recomend it to me.

 

I am sorry I did not understand the suggestion about "CC".

You have said: "Also consider a CC. they will tranlate to american dollars"

What do you mean here?

 

As far as NY sales tax: Let's assume the account in euros is overseas. I need to issue the receipt to the customer. The receipt needs to be from my company registered in NY. On the receipt will be amount of approximately 30,000 euros ( 10% of that amount is my commission). How would you write that receipt? Would you just break it like 27,000 euros- cruise, 3000 euros -commission....and can the receipt be in euros? I am sorry but I am totaly confused about this part ...

 

Expert:  Shawn P Adamo replied 2 years ago.

a CC is a credit card.

 

You understand the part about the receipt perfectly. the receipt CAN be in Euros.

 

Have you thought about retaining a law firm or an accounting firm to open the account on your behalf?

Expert:  Shawn P Adamo replied 2 years ago.

If this does not answer your question please let me know. Also let me know if you have additional questions. This is my full time job and I only get paid if you accept my answer. We work on the trust system at JA. If you understand my answer and have no more questions, please ACCEPT and please leave positive feedback (if so inclined). Thank you.

Customer: replied 2 years ago.

CCs would not work since the owners of the yachts want only wire transfer (CCs have an option for disputes and refund which owners do not want to risk)

 

Now, I assume on the receipt would then be just amounts for services and then at the bottom I would add 10% VAT (which is European tax) ...correct?

 

What if, for example, the american customer wants to pay me in dollars and wants me to arrange wire transfer in euros for him/her. Let's assume I issue to the customer a receipt in US dollars and I receive the money from the customer to my US bank. The money then goes out from my US dollar business account in NY to the owner of the yacht in Europe. Would then the receipt be subject to NY sales tax of 8.875%?

 

If the answer to that is yes, then would the whole amount be subject to sales tax or just my commission? I understand that on my commission I will pay income tax wherever I have the account in the world, so that is clear to me. However, I really do not understand this whole situation with NY sales tax, and if it is applicable, then on which part of the receipt it would apply (since I would retain only my commission, not the whole amount on the receipt)?

 

I am looking for the other firms to open the account for me. Right now the only option that might be availble is to open the escrow account somewhere in Europe. The problem I am trying to figure out right now is that I want to be in control of that account since that is the only way I can really protect my customers (common thing in the industry is to collect half of the money upfront, then just before the charter to collect the second half, and when customers arrive to the yacht to release the money.

I am the only one that should control that situation and escrow account...hmm....I still do not know the answer to that issue)

Expert:  Shawn P Adamo replied 2 years ago.

Yes you can simply add VAT.

 

Not since the work waqs done outside NY. The only NY work you did was billing.

 

Again working through an attorney (there will be a cost) who is ethically and legally obligated to follow your instructions or risk "disbarrment" should work just fine.

 

 

If this does not answer your question please let me know. Also let me know if you have additional questions.

This is my full time job and I only get paid if you accept my answer. We work on the trust system at JA.

If you understand my answer and have no more questions, please accept and please eave positive feedback (if so inclined). Thank you.

Customer: replied 2 years ago.

Ok, I understand now the VAT and law firm. Thank you for that information.

 

I still have the issue with following:

" Not since the work waqs done outside NY. The only NY work you did was billing."

 

When I called the NYState to ask this question, the one representative said to me:

 

" Regardless that the work was done outside of NY, you are collecting the money in NY and therefore you should be adding NY sales tax to your receipt." Then she added: " In addition, if any of the item on the receipt is state taxable, the whole amount on the receipt becomes state taxable"

 

The second NY State representative I spoke to said he thinks I am exempt in this case. Completely opposite answers....

 

Now, about the income tax.... If I make the money in euros, how is that taxed on my yearly income tax. I mean, there are currency fluctuations. How does that work? Is it going by figuring out the bracket I fall under and the numbers are converted on the date I file tax return or...?

 

Expert:  Shawn P Adamo replied 2 years ago.
LOL. Ahhhh NYS. You will use the exchange rate from euros to us. It's as simple ad that. You will use the yearly average exchange rate
Customer: replied 2 years ago.

Ok Shawn, thank you :)

 

Just before I click on Accept Answer and give you a very positive feedback, please just once again ( to heal my insecurity) confirm to me that even I actually have registered company in NY State and have the US address there and am collecting the money in NY and keeping my commission there, there is nothing on that receipt that I should apply NY State tax on since the yachts are in Europe and I am currently living outside of US so bookings are also happening outside of NY.

 

 

 

 

Expert:  Shawn P Adamo replied 2 years ago.
Your understanding is correct (as 1 of the 2 NY state employees that answered you). Shaw isn't it that an employee of NYS who you call for an answer gets it wrong?
Expert:  Shawn P Adamo replied 2 years ago.
Shame.... sorry for typo
Customer: replied 2 years ago.

I do not know if she got it wrong, but I was keep explaining it to her and she was just repeating the same answer on everything I would say. However, she definitely made me nervous in regards XXXXX XXXXX matter :)

 

Thank you Shawn for being so patient with me. I am relieved now. I would definitely give you excellent feedback and if I ever need help in future, I would be really happy to work with you again.

 

Best Regards!

 

Mia

Expert:  Shawn P Adamo replied 2 years ago.
I'm just glad I was able to help resolve your issue and put your mind at ease.
Shawn P Adamo, Retired CPA
Category: Tax
Satisfied Customers: 1279
Experience: Retired CPA
Shawn P Adamo and 12 other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Shawn..I am back to you again..:) I am calling all these banks these days and researching my options, but I do have a question for you in a meantime.

 

If I collect for example 20 000 euros on my euro account in Europe and I keep for example 3000 as my commission and I forward the rest of 17 000 to the owner of the yacht..Isn't it that if I open the account in London, UK could see that 20 000 euros as something I should owe taxes on even I am not the resident there and I do not have the company there, but just bank account with a balance? Do you know which country in Europe would be the country where that money could be collected and forwarded with some minimal taxes?

Expert:  Shawn P Adamo replied 2 years ago.

there should be no taxation as you are simply BANKING there.

 

Customer: replied 2 years ago.

Great...I did not know that "banking only" is excluded from taxation. Is it then that if you are the resident, then taxation would apply?

Expert:  Shawn P Adamo replied 2 years ago.

No. The fact that you bank has nothing to do with taxation.

For example if your dad died and you received 1,000,000 from life insurance that money is tax free. depositing it means nothing.

 

 

If I gave you 100 for your birthday or Christmas as a gift and you deposit my check would you expect to pay tax on that?

 

I hope i explained it a bit better so you understand.

Customer: replied 2 years ago.

Yes. The first comparison...brrr....do not want to think about that.

 

The second one, I would not mind receiving that gift at all :)

 

Little joke, but I do understand what you mean.

 

Thank you again.

Expert:  Shawn P Adamo replied 2 years ago.
NP. That's why I am here.

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