How to receive PayPal payments in Romania

In the current globalized environment, online payments are a requisite for many professionals and businesses. This is not a problem anymore with PayPal, the famous payment service. It is important, however, for the residents of Romania to learn how to make the most effective use of PayPal. This article covers the steps needed to receive payments through PayPal in Romania.

Understanding PayPal’s Availability in Romania

Romania is one of the countries that PayPal functionality, meaning people are able to use it to send and receive payments via PayPal. Romanian citizens can use Paypal together with their local Visa and Master Card debit and credit cards. Nevertheless, it is important to understand that some merchants do not allow payments via PayPal from Romanian accounts.

Setting Up Your PayPal Account in Romania

For a Romanian working online, be it a freelancer or an artist or even someone running a small online shop, starting with PayPal may look like any other sign up procedure but trust me it is not. The steps you take at the beginning will define how smooth the experience will be later on.

Imagine this: you’ve just acquired your first international client either through a freelance website or a direct recommendation. Their preferred payment method is PayPal. You agree, but in your head, you remember that your account isn’t set up yet. That is precisely where this section becomes useful.

Visit to PayPal’s site: signing up with them tasks is they verify your identity, so pay attention to this section as I detail it out-they do not mean to mislead you.

You will be asked to select either a Personal or a Business account. If you only get paid for services rendered infrequently, or for non-work related transactions, Personal is fine. However, if you intend to be invoicing regularly, selling digital or tangible products, or executing anything that seems like a professional activity, the Business account is the best choice. It comes with additional features such as invoicing with branding, comprehensive reporting, and multi-user roles.

Once you select an appropriate account, PayPal will prompt you to enter your personal information which includes your full name, email address, phone number, and password. Choose an email address that is secure, but one that you check regularly, since this is the email address that clients will send payments to. After this, you will receive a text message notification as well as an email confirming your identity which we call two step verification. Make sure that both forms of contact are working and easy to access.

And now, the linking of a payment method comes next. In Romania this usually implies attaching either a Visa or MasterCard debit or credit card. Bank accounts are not mandatory for linking at this stage, but cards are mandatory for identity verification. PayPal will charge your card an insignificant amount, usually €1 or less, and after a short reclaim process once you disclose the verification code shown in your bank statement the funds will be returned. This minor transaction is what allows you to claim the status of besofor verified PayPal user.

However, this isn’t the last step. PayPal may at times require the clients to provide identification such as a national ID card or passport. This is one component of their “Know Your Customer” policy aimed at preventing corruption and fraudulent activities like money laundering. This procedure is safe and is often resolved in a couple of days.

Once everything has been finalized, everything is good to go with your account, although you won’t be truly active until the payments start rolling in.

Receiving Payments in Your PayPal Account

Now that your account is active, verified, and all the necessary payment methods are in place, the next step is figuring out how to actually receive the funds, as everything is now set up on your end. The next step is figuring out how to collect money via PayPal.

Arguably the most convenient way is giving your buyers the email address linked to your PayPal account. The next step in this process will be straightforward, as you will simply tell your clients to use the email you registered with as a PayPal account to send funds. The clients have everything they require to pay without any hassle.

Especially if you are looking for something more formal, for goods and services, PayPal allows you to build invoices which gives you the ability to issue professional requests detailing service you provided. This feature allows for itemized payment requests that capture the figure, description of the service performed, name of your business, and applicable taxes. More so, it’s useful if you deal with clients who would prefer formal requests as opposed to casual emails.

You can also enable a PayPal.Me link. This is a personalized payment link (such as paypal.me/YourName) that can be sent via chat, email, or added to a person’s website. Then, the client simply clicks on a link, enters the amount, and completes payment in just a few steps. It adds a modern, personalized touch to payment collection. It is especially useful for freelancers or content creators who receive tips or donations, wherein modern payment methods are incorporated.

Whenever a certain payment is made, recipients get instant email notifications. The amount is available PayPal balance, providing users with the option to retain it in their account, for purposes of online shopping, or transfer the amount to the bank account.

Withdrawing Funds to Your Romanian Bank Account

While payment to the PayPal account needs to be set up, most users prefer transferring their funds onto an actual bank account that is ready for use or saving. PayPal supports the bank withdrawal service, specifically for Romanian users. Once the account is set up, the process becomes substantially easier and even seamless.

Then, navigate to the wallet region on your PayPal dashboard. You can link your Romanian bank account or card here. Most users opt to link their card because it enables faster withdrawals, particularly a Visa debit card. You will need your IBAN number along with the bank’s information, so pull out your banking app or card statement to link them.

You can transfer the balance from your PayPal account to your bank anytime after linking the bank or card. All you need to do is select the Transfer Funds option, choose the respective bank or card, and indicate the amount. PayPal will validate the transaction and provide an estimated timeframe which is typically between 1 to 3 business days. However, some users report receiving faster transfers depending on their bank.

A helpful tip: ensure the currency of your PayPal account is set to the same currency as the account you’re withdrawing into. For instance, if your Romanian bank account exclusively accepts RON (Romanian Leu), and your PayPal balance is in EUR or USD, PayPal will convert these funds automatically. As explained earlier, this conversion incurs a fee, which as pointed out earlier, affects your withdrawal strategy.

A few freelancers prefer opening a multi-currency account with Wise or Revolut. These services tend to have better rates, and when used with PayPal, they provide an effective way of managing earnings in foreign currencies while minimizing losses due to fees.

Understanding PayPal Fees

Fees that spring up without notice can be a hassle. As someone who lives in Romania and intends to use Paypal as a payment platform, you need to know which fees you will face because they can be quite hefty. At first glance, these fees may appear negligible, however, if you’re receiving multiple payments per month, they certainly add up.

Consider the example of a graphic designer from Cluj-Napoca. One of their clients from Germany pays them €200 through Paypal. The expectation is the amount sent is the amount received but that is not the case with Paypal. Its customary charge for receiving payments for services rendered is 2.9% of the whole amount plus a currency-specific fixed cost. Therefore in reality, you will receive less than 200, likely around €193.

This does not close the case.

Assume now that you would like to change euros into Romanian lei (RON) and withdraw them to your local bank account. Assuming there is no minimum withdrawal limit which constitutes a supplemental fee, withdrawing funds from paypal comes with a monetary charge. Paypal tends to have a very high currency conversion fee which is usually more than what banks or services like Wise or Revolut charge.

In Romania, withdrawing funds Paypal to a linked bank account has a relatively low cost for personal accounts. However, business accounts as well as foreign currency accounts incur a small fee and in some instances may include a flat fee. The speed of these account transfers is also a bit suspect where it can take anywhere from 1 to 5 business days depending on the bank used.

Tax Considerations for Freelancers in Romania

Taxes is not a topic that most freelancers enjoy discussing, but it is certainly one that you cannot afford to ignore. If your clients pay you through PayPal and your income is being deposited into a Romanian bank account, that sum is subject to taxation in Romania.

Such is not the case in many countries but as a Romanian national, if you continuously receive income as a freelancer, you must obtain a legal status of PFA – Persoană Fizică Autorizată (Authorized Physical Person). Once registered, you gain the legal capacity to issue invoices to your clients, declare your income, pay the requisite dues, taxes, and contributions.

Consider the example of a graphic designer once again. Let’s say for this example that you get paid €1,000 each month through PayPal. If your are unregistered as a PFA, this income is not recognized anywhere and can become problematic for you in relation to loans and mortgages. With PFA registration however, not only do you achieve legal compliance but you can also claim several other deductions such as your laptop, software expenses, or even internet bills as expenses which lowers your taxable income.

As previously mentioned, staying compliant also encompasses the passive aspect of managing accounting records. Each invoice from Paypal, payment confirmations received, and every currency exchange transaction requires tracking. You don’t need any advanced system – a spreadsheet may suffice alongside a folder full of PDFs. Eventually, however, the investment in accounting software or hiring a professional for piece of mind might be worth it.

And yes, speaking of professionals, one of the best ideas is getting the guidance of a local accountant who specializes in online income, freelancing and digital payments. A big mistake many freelancers make is viewing payment platforms like Paypal as under-the-table payments. The Romanian tax authority (ANAF), for instance, is on the lookout, as these services provide a trail of documentation. A well-versed accountant can legally limit your tax obligations, file your declarations appropriately, and even provide recommendations regarding the optimal business structure to achieve your objectives.

Tax obligations are necessary whether you’re established or just starting. Safekeeping your reputation, income, and even your future plans whether it’s scaling your business or preparing for visa or credit applications is vital.

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