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In my totally unscientific assessment of remote job boards, US companies seem to be the only ones requesting US-only applicants, and I have no insight as to why

In my totally unscientific assessment of remote job boards, US companies seem to be the only ones requesting US-only applicants, and I have no insight as to why this happens. In my -South American- country the trend is to look outwards if you're hiring remotely; European countries seem to fit this description too.

hopia 6y ago
I've made the same observation. Does it have something to do with US tax or other regulations?
- gamblor956 6y ago
  Yes, recent changes in the tax code made it less enticing for US companies to offshore US jobs. The company can potentially end up losing a lot of (otherwise legitimately acquired) tax benefits. With respect to R&D, for example, the US no longer allows foreign R&D activities to qualify for the R&D tax credit.
  - phkahler 6y ago
    >> With respect to R&D, for example, the US no longer allows foreign R&D activities to qualify for the R&D tax credit. From what I've seen, many companies will shoehorn regular product development into the R&D category. I'm not sure if it's supposed to cover next iteration of existing products that most company should be doing anyway.
    - deleted 6y ago
      [deleted]
    - jkaplowitz 6y ago
      If there's anything innovative in the new version of the product, I don't see why not.
    - tonyedgecombe 6y ago
      That would be the development part of R&D.
    - gamblor956 6y ago
      That's fine, as long as the R&D work is done in the US. R&D doesn't require something to be socially innovative; it's evaluated at a per-company level. It's intended to incentivize companies to recreate wheels in-house (if it is otherwise financially reasonable to do so).
      - phkahler 6y ago
        Companies should not need a financial incentive to develop new products. They already have an existential incentive to do so. This also creates a barrier to entry for small companies that don't have the resources to ensure compliance and claim the benefit. It also subsidises product development engineers - a profession that is doing well already. I'm an engineer so I appreciate the artificial wage inflation, but if I take that hat off I don't think it's appropriate for the government to subsidize us.
        gamblor956 6y ago
        You're missing the context. The point of the R&D credit is for companies to engage in R&D activities in the US as opposed to other countries. Additionally, it was introduced in reaction to other countries introducing R&D credits to steal R&D work from the US. It does not create a barrier to small companies. If you're not big enough to handle the paperwork for the R&D credit, you're not spending enough to derive meaningful benefit from the credit anyways. And generally, there exist plenty of accounting firms that will prepare the R&D documentation on a % basis (of the allowable R&D credit identified). It also subsidises product development engineers - a profession that is doing well already In the software world, sure. There are plenty of industries where product development staff (many of whom aren't engineers) don't make anywhere close to 6 figures.
  - exclusiv 6y ago
    I did the R&D tax credit this last year and it seems to me the savings for offshoring would drastically make up for the loss in R&D tax credits in most cases. Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. In a more remote work culture, even ignoring offshoring/nearshoring, this is going to be really bad for people in certain states. And it will be bad for those states themselves. The increased competition among states to attract higher income workers will be interesting. States like Tennessee, North Carolina, etc have a massive opportunity in front of them as they were already pretty well poised to attract younger professionals. [1] https://www.labor.ca.gov/employmentstatus/abctest/ https://www.labor.ca.gov/employmentstatus/abctest/
    - subhobroto 6y ago
      > Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. This is exactly right. People seem to think all these regulations are doing them a favor and increasing their freedom but what's actually happening in reality is pretty much the opposite. It's now literally cheaper even after accounting for delivery risks to hire people from Tennessee, North Carolina, etc.
    - gamblor956 6y ago
      Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. This explains why so much R&D happens in CA. Because it's too expensive to do it in this state... The reason R&D happens in CA is because any company that wants to sell to CA is already going to be subject to CA taxation anyway, however they try to apportion their state income. If you develop R&D in another state and use that to sell to CA, you've just added an additional state to your tax compliance burden. Moreover, if you generate the R&D in say, Nevada, but the overwhelming majority of your income is CA sales, CA can (edit: changed from will) simply disregard your chosen allocation as fraudulent. I did the R&D tax credit this last year and it seems to me the savings for offshoring would drastically make up for the loss in R&D tax credits in most cases. This was true...before GILTI and BEAT were passed in the TCJA in 2017. It's no longer true. And as a downside, you must also contend with transfer pricing requiring your offshored entity to show a profit, and thus pay foreign taxes which likely would not be recoverable in the US under the GILTI regime.
- tomg 6y ago
  It's my understanding that if a US company wants to hire someone outside of the US to work remotely from outside of the US; they must treat the employee as an independent contractor. Additionally, the US company would have to abide by any local labor laws / tax laws in the country they are hiring in.
  - ghaff 6y ago
    >It's my understanding that if a US company wants to hire someone outside of the US to work remotely from outside of the US; they must treat the employee as an independent contractor. Depends on what legal structure they've established within the country where the employee resides (and the laws regarding such things).
    - deleted 6y ago
      [deleted]
dudul 6y ago
European countries are outliers due to EU regulations. Any EU "citizen" can work anywhere in the EU, so pragmatically speaking, why would you only want to hire Spanish people instead of opening the door to French, Italian or German candidates? It comes at literally zero cost to the company. Some industries are heavily regulated in the US and having non-US based employees can become a real headache for US companies. A lot of US companies have background check as part of their hiring process, pretty hard to do for someone not US-based. Also, if you target only the continental US you're already talking about companies that may be spread across 4 major timezones. If you start including Europe you're now dealing with people that are gonna be more than 6 hours removed from your HQ's timezone.
- hocuspocus 6y ago
  > European countries are outliers due to EU regulations. Any EU "citizen" can work anywhere in the EU, so pragmatically speaking, why would you only want to hire Spanish people instead of opening the door to French, Italian or German candidates? It comes at literally zero cost to the company. The employer needs to pay social contributions in the employee's residence country. And more often than not, the employee cannot just become a freelancer or incorporate a single-person company and bill only one customer, as this is considered disguised employment. So no, it's not necessarily trivial for an EU company to hire a remote worker somewhere else in the EU, unless they have a local presence already.
  - jedberg 6y ago
    It’s the same in the US to hire someone in a different state. Every state has their own tax scheme. Every new employee in a new state is a big set up cost and ongoing maintenance.
    - deleted 6y ago
      [deleted]
    - betaby 6y ago
      Why so? I though all payroll/tax details are outsourced to the accounting firms and very straightforward in fact.
adventured 6y ago
The US has 330m people, you generally (emphasis, as there are certainly exceptions) don't need to look beyond its labor base to find what you're looking for. If you're in Estonia and looking to hire a software engineer for remote work, maybe you end up hiring someone from Poland or Spain. That's still EU hiring in the EU, more akin to what you're referring to with the US. On average the smaller the country, it probably increases the odds that more of the labor you're looking for is going to be outside of your own borders.
- conanbatt 6y ago
  Its about finding it cheapest, not about finding it. The argument you are making can be said for doing imports of any kind as well.
ianwalter 6y ago
From what I've seen, European countries often require applicants to be in European time zones.
deleted 6y ago
[deleted]
nthj 6y ago
A lot of software companies’ customer contracts specify that only U.S. employees can access customer data, also. Ops, customer support engineering, and many kinds of bug fixes all require that access.
dominotw 6y ago
> European countries seem to fit this description too. No I don't think so. They look with within EU.

hopia 6y ago

I've made the same observation. Does it have something to do with US tax or other regulations?

gamblor956 6y ago
Yes, recent changes in the tax code made it less enticing for US companies to offshore US jobs. The company can potentially end up losing a lot of (otherwise legitimately acquired) tax benefits. With respect to R&D, for example, the US no longer allows foreign R&D activities to qualify for the R&D tax credit.
- phkahler 6y ago
  >> With respect to R&D, for example, the US no longer allows foreign R&D activities to qualify for the R&D tax credit. From what I've seen, many companies will shoehorn regular product development into the R&D category. I'm not sure if it's supposed to cover next iteration of existing products that most company should be doing anyway.
  - deleted 6y ago
    [deleted]
  - jkaplowitz 6y ago
    If there's anything innovative in the new version of the product, I don't see why not.
  - tonyedgecombe 6y ago
    That would be the development part of R&D.
  - gamblor956 6y ago
    That's fine, as long as the R&D work is done in the US. R&D doesn't require something to be socially innovative; it's evaluated at a per-company level. It's intended to incentivize companies to recreate wheels in-house (if it is otherwise financially reasonable to do so).
    - phkahler 6y ago
      Companies should not need a financial incentive to develop new products. They already have an existential incentive to do so. This also creates a barrier to entry for small companies that don't have the resources to ensure compliance and claim the benefit. It also subsidises product development engineers - a profession that is doing well already. I'm an engineer so I appreciate the artificial wage inflation, but if I take that hat off I don't think it's appropriate for the government to subsidize us.
      - gamblor956 6y ago
        You're missing the context. The point of the R&D credit is for companies to engage in R&D activities in the US as opposed to other countries. Additionally, it was introduced in reaction to other countries introducing R&D credits to steal R&D work from the US. It does not create a barrier to small companies. If you're not big enough to handle the paperwork for the R&D credit, you're not spending enough to derive meaningful benefit from the credit anyways. And generally, there exist plenty of accounting firms that will prepare the R&D documentation on a % basis (of the allowable R&D credit identified). It also subsidises product development engineers - a profession that is doing well already In the software world, sure. There are plenty of industries where product development staff (many of whom aren't engineers) don't make anywhere close to 6 figures.
- exclusiv 6y ago
  I did the R&D tax credit this last year and it seems to me the savings for offshoring would drastically make up for the loss in R&D tax credits in most cases. Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. In a more remote work culture, even ignoring offshoring/nearshoring, this is going to be really bad for people in certain states. And it will be bad for those states themselves. The increased competition among states to attract higher income workers will be interesting. States like Tennessee, North Carolina, etc have a massive opportunity in front of them as they were already pretty well poised to attract younger professionals. [1] https://www.labor.ca.gov/employmentstatus/abctest/ https://www.labor.ca.gov/employmentstatus/abctest/
  - subhobroto 6y ago
    > Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. This is exactly right. People seem to think all these regulations are doing them a favor and increasing their freedom but what's actually happening in reality is pretty much the opposite. It's now literally cheaper even after accounting for delivery risks to hire people from Tennessee, North Carolina, etc.
  - gamblor956 6y ago
    Also, some states, like CA, are very unfriendly which regard to the extra costs required for employees in terms of benefits, wages (salary exempt) and classification of employees with the ABC test [1], so the wins that states make for employees incentivizes many employers to look elsewhere instead. This explains why so much R&D happens in CA. Because it's too expensive to do it in this state... The reason R&D happens in CA is because any company that wants to sell to CA is already going to be subject to CA taxation anyway, however they try to apportion their state income. If you develop R&D in another state and use that to sell to CA, you've just added an additional state to your tax compliance burden. Moreover, if you generate the R&D in say, Nevada, but the overwhelming majority of your income is CA sales, CA can (edit: changed from will) simply disregard your chosen allocation as fraudulent. I did the R&D tax credit this last year and it seems to me the savings for offshoring would drastically make up for the loss in R&D tax credits in most cases. This was true...before GILTI and BEAT were passed in the TCJA in 2017. It's no longer true. And as a downside, you must also contend with transfer pricing requiring your offshored entity to show a profit, and thus pay foreign taxes which likely would not be recoverable in the US under the GILTI regime.
tomg 6y ago
It's my understanding that if a US company wants to hire someone outside of the US to work remotely from outside of the US; they must treat the employee as an independent contractor. Additionally, the US company would have to abide by any local labor laws / tax laws in the country they are hiring in.
- ghaff 6y ago
  >It's my understanding that if a US company wants to hire someone outside of the US to work remotely from outside of the US; they must treat the employee as an independent contractor. Depends on what legal structure they've established within the country where the employee resides (and the laws regarding such things).
  - deleted 6y ago
    [deleted]

dudul 6y ago

European countries are outliers due to EU regulations. Any EU "citizen" can work anywhere in the EU, so pragmatically speaking, why would you only want to hire Spanish people instead of opening the door to French, Italian or German candidates? It comes at literally zero cost to the company. Some industries are heavily regulated in the US and having non-US based employees can become a real headache for US companies. A lot of US companies have background check as part of their hiring process, pretty hard to do for someone not US-based. Also, if you target only the continental US you're already talking about companies that may be spread across 4 major timezones. If you start including Europe you're now dealing with people that are gonna be more than 6 hours removed from your HQ's timezone.

hocuspocus 6y ago
> European countries are outliers due to EU regulations. Any EU "citizen" can work anywhere in the EU, so pragmatically speaking, why would you only want to hire Spanish people instead of opening the door to French, Italian or German candidates? It comes at literally zero cost to the company. The employer needs to pay social contributions in the employee's residence country. And more often than not, the employee cannot just become a freelancer or incorporate a single-person company and bill only one customer, as this is considered disguised employment. So no, it's not necessarily trivial for an EU company to hire a remote worker somewhere else in the EU, unless they have a local presence already.
- jedberg 6y ago
  It’s the same in the US to hire someone in a different state. Every state has their own tax scheme. Every new employee in a new state is a big set up cost and ongoing maintenance.
  - deleted 6y ago
    [deleted]
  - betaby 6y ago
    Why so? I though all payroll/tax details are outsourced to the accounting firms and very straightforward in fact.

adventured 6y ago

The US has 330m people, you generally (emphasis, as there are certainly exceptions) don't need to look beyond its labor base to find what you're looking for. If you're in Estonia and looking to hire a software engineer for remote work, maybe you end up hiring someone from Poland or Spain. That's still EU hiring in the EU, more akin to what you're referring to with the US. On average the smaller the country, it probably increases the odds that more of the labor you're looking for is going to be outside of your own borders.

conanbatt 6y ago
Its about finding it cheapest, not about finding it. The argument you are making can be said for doing imports of any kind as well.

ianwalter 6y ago

From what I've seen, European countries often require applicants to be in European time zones.

deleted 6y ago

[deleted]

nthj 6y ago

A lot of software companies’ customer contracts specify that only U.S. employees can access customer data, also. Ops, customer support engineering, and many kinds of bug fixes all require that access.

dominotw 6y ago

> European countries seem to fit this description too. No I don't think so. They look with within EU.