6 ms·

I wonder how this works tax- and social security-wise. Normally, the employer must pay social security in the country where the employee is physically located.

I wonder how this works tax- and social security-wise. Normally, the employer must pay social security in the country where the employee is physically located. Also the employer must adhere to any employment laws for that country. At least that’s what HR tells me in my current job, as a reason why they won’t let me go full remote. Are they right? How are full-remote companies handling this? Edit: Context is EU/UK.

matthewowen 5y ago
A lot of remote first companies constrain themselves to certain countries. I don't consider that a contradiction: they're still remote first, they're still distributed, they just have _some_ constraint within that. Beyond that, it's not uncommon for remote first companies to "hire" people as independent contractors as workaround to these problems.
- ghaff 5y ago
  Mitchell Hashimoto has written about this. Think there's at least a comment on HN somewhere but don't immediately find. Basically especially spanning countries there are a lot of considerations and you almost certainly can't just work wherever you want--especially as a full-time employee.
i_have_an_idea 5y ago
It's a half-truth. Yes, for you to be an employee, they must do all of that. However, in practice, a remote worker can move anywhere, create a company (in the country where they live), send invoices and get paid. The catch is you need to take care of more taxes and admin work and there are none of the employee protections. You're essentially providing B2B services. So, there are no legal issues for your old employer, as long as you're comfortable with that. It's mostly that employers would rather own you, as that gives them certain rights and benefits vs. just purchasing services from a contracting firm.
- periheli0n 5y ago
  Thanks! In my case it would indeed be difficult to work as a service-provider, since some of the income streams I generate require that I have a permanent employment contract with my employer.
  - em-bee 5y ago
    what does that mean? are you getting money from somewhere that you are only entitled to if you have a job?
    - periheli0n 5y ago
      I'm talking about research grants. I need a permanent employment contract with an academic institution in order to be eligible.
- marcosdumay 5y ago
  > However, in practice, a remote worker can move anywhere, create a company (in the country where they live), send invoices and get paid. Many countries will forbid that. Employment is characterized by more than the wording of a contract.
  - isbvhodnvemrwvn 5y ago
    Plus you have a number of disadvantages - cost of complying with commercial laws, likely reduced credit score, no legal right to time off, your entire wealth might be on the line etc
    - em-bee 5y ago
      in which situation do you have no legal right to time off? as an independent contractor you can take time off as much as you want. you just need to factor that into your fee. the rest is up to you to work out with your employer/client. sure, if you are desperate for work there is a potential for abuse, and then the only thing you can do is to look for other work. on the other hand, there is no penalty for you or them for cancelling the contract (other than the usual contractual stipulations, if legal and enforceable). cancelling a contract is not the same as quitting a job or being fired.
bberenberg 5y ago
We have this issue, and the answer is "it's complicated". We have some people as FTEs, this is done via a PEO who handles a lot of the overhead for us. This works within the USA. We also have some contractors within the US that we work with directly. We also have staff in other countries, we either pay a US entity they own, or we pay a company as a vendor in that country, and that company takes care of paying the individuals. We also have a few direct international contractors for whom we ensure we're compliant on the US side of things, but they're responsible for everything on their side of the equation. One thing to understand about fully remote is that it can mean a lot of things to HR. For example, if they approve 100% remote, does that mean you're outside of an office? Outside of a city? Outside of a state? Country? Are you nomadic? I can tell you that when I was previously employed by a company where one of my conditions was I want to be 100% remote in another state, the agreement was I was hired in State A, and then my boss didn't enforce butts in seats, and they ignored that I was in State B from their side of the fence, and I paid taxes in State B. It was illegal, and I wouldn't recommend doing this.
- periheli0n 5y ago
  Yep, I figured that it’s not the best idea to pretend to be working in country A while actually living in country B. Health insurance, social security are the Prime issues. Besides, the company could get rid of me anytime simply by stating that I’m in violation of my contract since I’m not in country A.
- ghaff 5y ago
  And a number of states are getting much more concerned with collecting any taxes they're owed. Someone was even telling me that their business travel will be audited on an ongoing basis to ensure someone isn't working sufficient days in a different state to require a separate tax filing. In practice, I could almost certainly work from laptop in an adjacent state (on my own dime) for a bit and no one would care but actively misleading about your address of record is not advised.
  - bberenberg 5y ago
    This is a good point I forgot to mention. We have to be careful to never let staff from outside of NY enter the state and do any kind of business here or they can hit fairly serious tax issues.
Ozzie_osman 5y ago
Kind of. There are companies that provide this service (the ability to pay people in different countries). You can Google "Employee of Record" (EoR) or "Professional Employer Organization". A few more modern providers that cater to tech startups specifically are Deel and Pilot. Basically they let you pay anyone in any country, and easily draft locally compliant contracts. Often they'll ask you to set yourself up as a local entity in the company you want to be paid, so you might lose some benefits (you'd be more of a contractor than an employee). That said, it's never fully plug-and-play. If you're small enough you can skirt some of the complications, but every country has very different laws around mandated time off, taxes, social security, the ability to classify a worker as a contractor vs employee, benefits, protections like whether/how you can lay someone off, etc. So it's doable, but it's not seamless.
- periheli0n 5y ago
  Thanks, I’ll check those out!
jobvandervoort 5y ago
If you hire someone in another country, you (employer) must fully comply with local labor laws, tax requirements, run payroll and pay any local dues in local currency. This is only solved by either setting up a local office and hire local experts yourself, or working with an employer of record. Source: I'm the CEO of Remote.com and we do this for other companies across the world, and run all our own entities and compliance.
- periheli0n 5y ago
  Thanks for the answer and stating your background ;) I see how this is true in general, but aren’t there special cases e.g. within the EU, between the EU and the UK, or when an employee moves country while still being employed, where simpler solutions may exist?
  - jobvandervoort 5y ago
    Generally: no. There are cases and/or ways where you can e.g. hire someone under a local contract without owning a local entity, but that doesn't scale much beyond that, and you'd still need to run local payroll somehow, and be locally compliant. The one big thing the EU solves is mobility: any EU citizen can work freely from anywhere else in the EU. That's a massive hurdle to cross otherwise. Beyond that, even between EU countries there are absolutely massive differences in labor laws, standards, etc.
    - periheli0n 5y ago
      Ok. But when working through a EoR, will the employee be employed by the EoR or the company for which the work is done? And how is the situation when the employees come in from time to time (commuting across borders) but work the majority of their time in another country?
      - jobvandervoort 5y ago
        The employee would be employed by the EoR on paper. Hence employer _of record_. But otherwise acts as a normal employee of the actual employer. > And how is the situation when the employees come in from time to time (commuting across borders) but work the majority of their time in another country? This is a gross simplification, but: You must comply with where you spend the majority of your time. Spending a few days/weeks outside of your homebase is normal (see: all business travel) and doesn't make you immediately liable. That said, this gets really complex and murky when you think about e.g. nomads or people that really split their time between countries.
lvice 5y ago
I've recently started a remote job with a UK-registered company, and I am working from Italy. If the company does not have a local office in the country (which mine doesn't), the easiest way is just to become a contractor/freelance and send invoices for b2b services. I had to hire an accountant to manage taxes, but it's doable.
- periheli0n 5y ago
  Thank you for sharing your experience! Unfortunately this wouldn’t work for me since I need to have a permanent employment contract in order to be eligible for the sources of income I usually leverage (research grants).
redisman 5y ago
I worked for a small EU company from the US and what they did was that we all set up a "consulting" company (sole proprietor is fine for minimal paperwork) and sent invoices to them. Then just calculate the rate to cover the normal taxes that you end up paying fully. It's not that great since the burden to file business taxes is definitely a ton more work than W-2.
heipei 5y ago
I am a German living in Germany and worked remotely for a US company for a few years before they set up a German subsidiary. I was employed by the US corporation (so no employer of record), had a bi-lingual work contract which included all the necessary clauses for Germany (minimum vacation time, minimum termination period, "Probezeit"). My employer paid all social security contributions but did not automatically withhold income tax as a German company would have done, so I had to pay those taxes myself after filing my tax return. The employer worked with a big-ish professional services company who did all the necessary payroll and paperwork for them. Overall it was super smooth and except the taxes nothing was different than working for a Germany company. But I know that the ease of hiring really depends on each country, and I know that the company was only considering opening up remote positions in countries where there was an ample talent pool, basically where they could except to hire enough people to be worth it.
- periheli0n 5y ago
  Hey thanks this is exactly what I would need. So it can be done - it's just a matter of convincing HR to go the extra mile. "Just" ;)
  - em-bee 5y ago
    in the worst case, if you can't find a service company you work as an independent contractor and pay everything yourself. figure out what it takes to get insurance, retirement funds and what ever other payments you want/need to make and ask your local tax office or an accountant how you can make those payments. then factor all that into your salary/contractor fee.
doopy1 5y ago
They just hire them as "contractors" but provide sufficient benefits to make up for it.
loloquwowndueo 5y ago
My company is remote-first and employs people all over the world. For countries where they don’t have an incorporated entity (the vast majority) employees work as “contractors”. The onus is on them to figure out how to set up to be able to invoice an overseas company and get paid via wire transfer to their bank account. But this usually just means “hire an accountant to figure things out”. It is doable.
jakobdabo 5y ago
I had this bookmarked, not sure if it's valid or up to date: "How to Hire Foreign IT Talent Legally for your US Startup" - https://6nomads.medium.com/how-to-hire-foreign-it-talent-legally-for-your-u-s-startup-in-3-steps-b848b7a84a5e https://6nomads.medium.com/how-to-hire-foreign-it-talent-leg...
mulmen 5y ago
HR doesn't work for you, they exist to advance the interests of the company. Do not believe anything they say other than "you're fired". If you are curious about labor laws you need to talk to a lawyer.
- merth 5y ago
  so.. did I get promotion last week or not?
  - mulmen 5y ago
    Depends what you mean by "promotion". If you mean "more responsibility" it's irrelevant because if you want to stay employed you'll do whatever keeps management happy, regardless of job description. If you mean "more money" then keep an eye on your paycheck.
inshadows 5y ago
I guess you work for them as a contractor, not employee.
moralestapia 5y ago
That's a startup in itself

matthewowen 5y ago

A lot of remote first companies constrain themselves to certain countries. I don't consider that a contradiction: they're still remote first, they're still distributed, they just have _some_ constraint within that. Beyond that, it's not uncommon for remote first companies to "hire" people as independent contractors as workaround to these problems.

ghaff 5y ago
Mitchell Hashimoto has written about this. Think there's at least a comment on HN somewhere but don't immediately find. Basically especially spanning countries there are a lot of considerations and you almost certainly can't just work wherever you want--especially as a full-time employee.

i_have_an_idea 5y ago

It's a half-truth. Yes, for you to be an employee, they must do all of that. However, in practice, a remote worker can move anywhere, create a company (in the country where they live), send invoices and get paid. The catch is you need to take care of more taxes and admin work and there are none of the employee protections. You're essentially providing B2B services. So, there are no legal issues for your old employer, as long as you're comfortable with that. It's mostly that employers would rather own you, as that gives them certain rights and benefits vs. just purchasing services from a contracting firm.

periheli0n 5y ago
Thanks! In my case it would indeed be difficult to work as a service-provider, since some of the income streams I generate require that I have a permanent employment contract with my employer.
- em-bee 5y ago
  what does that mean? are you getting money from somewhere that you are only entitled to if you have a job?
  - periheli0n 5y ago
    I'm talking about research grants. I need a permanent employment contract with an academic institution in order to be eligible.
marcosdumay 5y ago
> However, in practice, a remote worker can move anywhere, create a company (in the country where they live), send invoices and get paid. Many countries will forbid that. Employment is characterized by more than the wording of a contract.
- isbvhodnvemrwvn 5y ago
  Plus you have a number of disadvantages - cost of complying with commercial laws, likely reduced credit score, no legal right to time off, your entire wealth might be on the line etc
  - em-bee 5y ago
    in which situation do you have no legal right to time off? as an independent contractor you can take time off as much as you want. you just need to factor that into your fee. the rest is up to you to work out with your employer/client. sure, if you are desperate for work there is a potential for abuse, and then the only thing you can do is to look for other work. on the other hand, there is no penalty for you or them for cancelling the contract (other than the usual contractual stipulations, if legal and enforceable). cancelling a contract is not the same as quitting a job or being fired.

bberenberg 5y ago

We have this issue, and the answer is "it's complicated". We have some people as FTEs, this is done via a PEO who handles a lot of the overhead for us. This works within the USA. We also have some contractors within the US that we work with directly. We also have staff in other countries, we either pay a US entity they own, or we pay a company as a vendor in that country, and that company takes care of paying the individuals. We also have a few direct international contractors for whom we ensure we're compliant on the US side of things, but they're responsible for everything on their side of the equation. One thing to understand about fully remote is that it can mean a lot of things to HR. For example, if they approve 100% remote, does that mean you're outside of an office? Outside of a city? Outside of a state? Country? Are you nomadic? I can tell you that when I was previously employed by a company where one of my conditions was I want to be 100% remote in another state, the agreement was I was hired in State A, and then my boss didn't enforce butts in seats, and they ignored that I was in State B from their side of the fence, and I paid taxes in State B. It was illegal, and I wouldn't recommend doing this.

periheli0n 5y ago
Yep, I figured that it’s not the best idea to pretend to be working in country A while actually living in country B. Health insurance, social security are the Prime issues. Besides, the company could get rid of me anytime simply by stating that I’m in violation of my contract since I’m not in country A.
ghaff 5y ago
And a number of states are getting much more concerned with collecting any taxes they're owed. Someone was even telling me that their business travel will be audited on an ongoing basis to ensure someone isn't working sufficient days in a different state to require a separate tax filing. In practice, I could almost certainly work from laptop in an adjacent state (on my own dime) for a bit and no one would care but actively misleading about your address of record is not advised.
- bberenberg 5y ago
  This is a good point I forgot to mention. We have to be careful to never let staff from outside of NY enter the state and do any kind of business here or they can hit fairly serious tax issues.

Ozzie_osman 5y ago

Kind of. There are companies that provide this service (the ability to pay people in different countries). You can Google "Employee of Record" (EoR) or "Professional Employer Organization". A few more modern providers that cater to tech startups specifically are Deel and Pilot. Basically they let you pay anyone in any country, and easily draft locally compliant contracts. Often they'll ask you to set yourself up as a local entity in the company you want to be paid, so you might lose some benefits (you'd be more of a contractor than an employee). That said, it's never fully plug-and-play. If you're small enough you can skirt some of the complications, but every country has very different laws around mandated time off, taxes, social security, the ability to classify a worker as a contractor vs employee, benefits, protections like whether/how you can lay someone off, etc. So it's doable, but it's not seamless.

periheli0n 5y ago
Thanks, I’ll check those out!

jobvandervoort 5y ago

If you hire someone in another country, you (employer) must fully comply with local labor laws, tax requirements, run payroll and pay any local dues in local currency. This is only solved by either setting up a local office and hire local experts yourself, or working with an employer of record. Source: I'm the CEO of Remote.com and we do this for other companies across the world, and run all our own entities and compliance.

periheli0n 5y ago
Thanks for the answer and stating your background ;) I see how this is true in general, but aren’t there special cases e.g. within the EU, between the EU and the UK, or when an employee moves country while still being employed, where simpler solutions may exist?
- jobvandervoort 5y ago
  Generally: no. There are cases and/or ways where you can e.g. hire someone under a local contract without owning a local entity, but that doesn't scale much beyond that, and you'd still need to run local payroll somehow, and be locally compliant. The one big thing the EU solves is mobility: any EU citizen can work freely from anywhere else in the EU. That's a massive hurdle to cross otherwise. Beyond that, even between EU countries there are absolutely massive differences in labor laws, standards, etc.
  - periheli0n 5y ago
    Ok. But when working through a EoR, will the employee be employed by the EoR or the company for which the work is done? And how is the situation when the employees come in from time to time (commuting across borders) but work the majority of their time in another country?
    - jobvandervoort 5y ago
      The employee would be employed by the EoR on paper. Hence employer _of record_. But otherwise acts as a normal employee of the actual employer. > And how is the situation when the employees come in from time to time (commuting across borders) but work the majority of their time in another country? This is a gross simplification, but: You must comply with where you spend the majority of your time. Spending a few days/weeks outside of your homebase is normal (see: all business travel) and doesn't make you immediately liable. That said, this gets really complex and murky when you think about e.g. nomads or people that really split their time between countries.

lvice 5y ago

I've recently started a remote job with a UK-registered company, and I am working from Italy. If the company does not have a local office in the country (which mine doesn't), the easiest way is just to become a contractor/freelance and send invoices for b2b services. I had to hire an accountant to manage taxes, but it's doable.

periheli0n 5y ago
Thank you for sharing your experience! Unfortunately this wouldn’t work for me since I need to have a permanent employment contract in order to be eligible for the sources of income I usually leverage (research grants).

redisman 5y ago

I worked for a small EU company from the US and what they did was that we all set up a "consulting" company (sole proprietor is fine for minimal paperwork) and sent invoices to them. Then just calculate the rate to cover the normal taxes that you end up paying fully. It's not that great since the burden to file business taxes is definitely a ton more work than W-2.

heipei 5y ago

I am a German living in Germany and worked remotely for a US company for a few years before they set up a German subsidiary. I was employed by the US corporation (so no employer of record), had a bi-lingual work contract which included all the necessary clauses for Germany (minimum vacation time, minimum termination period, "Probezeit"). My employer paid all social security contributions but did not automatically withhold income tax as a German company would have done, so I had to pay those taxes myself after filing my tax return. The employer worked with a big-ish professional services company who did all the necessary payroll and paperwork for them. Overall it was super smooth and except the taxes nothing was different than working for a Germany company. But I know that the ease of hiring really depends on each country, and I know that the company was only considering opening up remote positions in countries where there was an ample talent pool, basically where they could except to hire enough people to be worth it.

periheli0n 5y ago
Hey thanks this is exactly what I would need. So it can be done - it's just a matter of convincing HR to go the extra mile. "Just" ;)
- em-bee 5y ago
  in the worst case, if you can't find a service company you work as an independent contractor and pay everything yourself. figure out what it takes to get insurance, retirement funds and what ever other payments you want/need to make and ask your local tax office or an accountant how you can make those payments. then factor all that into your salary/contractor fee.

doopy1 5y ago

They just hire them as "contractors" but provide sufficient benefits to make up for it.

loloquwowndueo 5y ago

My company is remote-first and employs people all over the world. For countries where they don’t have an incorporated entity (the vast majority) employees work as “contractors”. The onus is on them to figure out how to set up to be able to invoice an overseas company and get paid via wire transfer to their bank account. But this usually just means “hire an accountant to figure things out”. It is doable.

jakobdabo 5y ago

I had this bookmarked, not sure if it's valid or up to date: "How to Hire Foreign IT Talent Legally for your US Startup" - https://6nomads.medium.com/how-to-hire-foreign-it-talent-legally-for-your-u-s-startup-in-3-steps-b848b7a84a5e https://6nomads.medium.com/how-to-hire-foreign-it-talent-leg...

mulmen 5y ago

HR doesn't work for you, they exist to advance the interests of the company. Do not believe anything they say other than "you're fired". If you are curious about labor laws you need to talk to a lawyer.

merth 5y ago
so.. did I get promotion last week or not?
- mulmen 5y ago
  Depends what you mean by "promotion". If you mean "more responsibility" it's irrelevant because if you want to stay employed you'll do whatever keeps management happy, regardless of job description. If you mean "more money" then keep an eye on your paycheck.

inshadows 5y ago

I guess you work for them as a contractor, not employee.

moralestapia 5y ago

That's a startup in itself