I am an EU instructor and I sell mainly in the Italian market. As you can imagine I have my accountability in EUR and pretty much all my customers pay Udemy in EUR, but Udemy automatically converts all EUR into USD and of course in every conversion there are hidden currency exchange fees.
Also, we are paid in USD, but all EU instructors have to convert back to EUR. So, we lose twice on exchanges. How much do we lose? It's hard to tell, but roughly is something around the 5%. Finally, this losses in hidden currency exchange fees are hard to deduce as costs in tax declarations, so you might lose a third time. If you cannot detract the conversion fees as costs because PayPal hides them, you pay taxes on them like you do with your profits.
Let’s wrap it up. Your customer pays Udemy in EUR, Udemy converts in USD applying conversion fees (1). You are paid by Udemy in USD, and you convert back to EUR paying hidden conversion fees (2), which according to PayPal are around 3% or 4%. After a double conversion-pointless fee you have to pay taxes but PayPal and Payoneer do not provide you with any clear statements on hidden currency conversion fees so you can hardly deduce them as costs on the tax declaration and you might pay taxes on them as well (3) depite they are no profit at all. As you can see you can lose 3 times with this system
Now, of course I would like to have my turnover increased by +5% with a better system. I would like also to simplify my accountability. And, since Udemy pays the VAT to EU Governments in EUR, not in USD, I would suggest an implementation of the payment system in order to pay us straight in EUR
In the spirit of collaboration and in order to create a better working environment for everybody, who would like to talk about a more efficient system like this?
It would be a very nice piece of implementation
Hey @Matteo_Olla, we hear you loud and clear that payout in local currency is a big pain point for many non-US instructors. We know we haven't been able to address this need yet, but it is still on our radar as we consider additional payout methods for instructors.
Local currency instructor payouts were in consideration for previous roadmaps but were bumped out due to the significant demands of GDPR compliance and other major backend efforts. Adding instructor payout options is a goal in 2020, but will always be weighed against the potential impacts of adding additional student payment methods. We always want to make the choice with the biggest positive impact on instructor revenue.
Regardless of the current roadmap, we appreciate you continuing to raise the issue, and we'll keep letting our Product team know that this is important to instructors.
Yeah, this would be great, particularly considering how much us Euro-types are losing with the drop of USD. I think the solution you are referring to is that European students pay in euros, that money stays in the SEPA area, and then we get paid in euros.
I'm not an international corporate tax expert, but I believe this is actually a lot more difficult than you might realize. Udemy is a US company, and it has to be taxed on its profits, which get routed through the US. The "simple" solution would be to have Udemy split into two companies, one for US and one for Europe. I don't see that happening. I'm also pretty sure that the IRS will be suspicious of this being used as a tax-evasion scheme, because a US company is off-shoring their revenue in a way that prevents it from entering the US financial system. In general, since 2017, it has become increasingly complex and difficult for US companies to operate overseas -- or for overseas companies to be owned by Americans.
I suspect what might happen is that Udemy will pay us in euros, but the money still goes from euro -> USD -> euro. It's just that we get paid directly instead of via payoneer/paypal. Is that even a better solution? It might be more convenient, but then the exchange rates will be set by the banks, which are generally worse than what payoneer offers. I think the best option is for Udemy to pay us via transferwise, which most people agree has the best conversion rates.
I use the Payoneer prepaid card option and transfer my USD's to Revolut without any fee.
In Revolut, I can change to EUR (or whatever other currency) at interbank rate, so no losses at all.
But I agree: TransferWise would also be a good option and if I'm well informed, it's also possible to change to EUR (and other currency) at interbank rate.