How to manage your income stream

PiggybankThe main obstacle you’ll find, or as I found, was to find a bank which will have you as their customer. Sometimes simply because they won’t help you. In some other cases they can’t, and sometimes they don’t understand what you want. Which is really annoying.

This page outlines my findings and some things I’ve learned on how to deal with this in a legal and acceptable way.

I’ve talked to all the big banks here and only one seemed to be able to comprehend of what I was going to do and bring a workable solution.
Another big hinderance are local regulations and European Union laws which basically prevent you from doing anything across the border.

Clearly define your requirements

If all you need is a bank account, maybe a savings account and a debit or credit card you’re probably better off opening an account at a local bank in the Philippines.

If your requirements are a bit more complex or you do business with companies that do not deposit money in ‘foreign’ accounts things get a bit more complicated. It’s useful to clearly define what you need and want. That way you can use those requirements in your inquiries at banks and financial institutions.
I have researched my options and defined my requirements as follows;

  • I need to be able to receive money from Paypal without penalties
  • I need to be able to receive money from my Credit card Processor
  • I need an account that can handle Euros as a currency
  • I want a credit card and ATM card which works world wide

That looks simple enough. But rest assured, it wasn’t all that simple. And even less easy to figure out. But the solution, in the end, turned out to be fairly straightforward.

Choose the right bank

Take your time finding the right bank. My bank at the time was a local bank with franchises all over the Netherlands. They are all operating under the guise of a unified whole. But the truth is that they all follow their own specific little policies inside the general policies laid out by the main office. I got local knowledge. This almost by default means that the bank either won’t know how to handle me as a customer once I leave the country or they simply don’t offer the options I need. In my case, once I moved out they would cancel my credit line and prevent me from having a credit card.

After some searching and being disappointed a lot of times I found a more internationally oriented bank which would have me. They have some restrictions and requirements like any other bank but also a workable solution for getting a credit card while living in the Philippines. On top of that, they have offices in Hong Kong. This means they (should) know how the region works.

Receiving money/salary/pension

As part of my money comes via my Paypal account and from a credit card Processor. Paypal will let me open a new account in the Philippines. But I will loose my merchant benefits. So that’s no use as a replacement. To keep my current account they require that I have an address in the Netherlands. Something with EU Laws about money laundering or whatever.

For the Credit Card processor it’s simpler, they don’t do business with banks outside the United States and Europe. Period. To use them I need an address and bank account in the country from where I opened the account. So if I want to keep using those two as I have been, I need a Dutch Address and a Dutch bank account.

Taxes

Everyone living in the Netherlands pays income taxes. Every business earning money in the Netherlands pays taxes. But here’s the thing; If you do not live in the Netherlands and your business is conducted from elsewhere you only have to pay taxes in the Netherlands for the VAT/BTW tax I charge my European customers. The Dutch Tax Administration assumes that you will pay your income tax in the country you’re living in. Which is the Philippines.

Now the thing is that foreigners in the Philippines do not easily get an actual work permit and as such not a TIN number (Tax id) either. To submit taxes in the Philippines you need a TIN number. As a business in the Netherlands you only have to pay the VAT you’ve charged in Europe via a ICP Tax Application. I have my accountant handle the finer details on this. So I don’t have to bother with it.

Daily transactions

For my regular spendings and money keeping I will open a checking account at a Philippine bank. Just so I have easy access to things. My Dutch account I’ll manage via Internet and Paypal and the Creditcard Processor are happy because, as far as they are concerned, I have a presence in the Netherlands with accompanying bank account.

Proposed Money Stream

What I did

I have a Dutch checking and savings account. As well as a MasterCard from that bank. Next to that I have also opened a Filipino bank account with debit card. And to finish I’ve also created a 2nd Paypal account here in the Philippines. The Paypal account is linked to my Filipino Bank account.

This allows me to transfer money a little easier from Europe to the Philippines. It’s cheaper too. I can also do a bank transfer from my Dutch bank to the Philippines bank account. This takes a lot longer and costs a few euros more. But for larger sums of money it’s the better way because the transfer limits are simply higher.

Ultimately I have decided to close my registered business to make things easier, no more business stuff to deal with equals easier everything, and I now do some freelance stuff only.

Important: This page is accurate in so far that I have had an accountant and financial advisor take a look at my specific requirements and they came up with this. Always consult a certified accountant about your financial situation and which solutions will work for you.