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The legal implications of remote working cross-border
- deleted 5y ago[deleted]
- pseingatl 5y agoAn interesting article, but as the author admits, much is missing, including: --applicable tax regime<br> --immigration<br> --social security/pension schemes --workmen's compensation (it's more than just ergonomic home furniture)<br> --presence of employees means doing business?<br> --exposure to corporate tax<br> --commercial territory restrictions<br> and more. A book is needed on this subject.
- whitesilhouette 5y agoAlso salary considerations based on sociological and geographic locations. This ideally should never come up, but do come up eventually, mostly from the HR side.
- foogazi 5y ago> mostly from the HR side. what is different wrt budget here ?
- whitesilhouette 5y agowhen it's about budgetary constraints, it's coming from the tax angle, but applied uniformly otherwise. When it's coming from HR, your imagination is the limit like a person's physical location, skin colour, sex, sexual orientation etc.
- ghaff 5y agoThe problem with even a book is that this stuff changes all the time. It's not hard to see why, for smaller companies, the answer is often just No.
- nerdponx 5y agoNote that even within the USA, complications arise when you live in one state and work in another. Some (many?) states have mutual arrangements where you can take a tax deduction for income taxes paid to another state, but I don't think they all do. You might end up paying double taxes! And even if the two states do have an arrangement, your employer might not set up tax withholding correctly between the two states, so you have to carefully check your W-2s to make sure you didn't overpay (or underpay, leaving you with a big bill in tax season) throughout the year. Also, health coverage tends to be very state-specific, so you might get stuck with less-than-ideal coverage for your local health providers if you're on a health plan intended for another state.
- alphabettsy 5y agoI’m not aware of any state where you would pay taxes without being a resident. Afaik it’s only complicated when you’re residence changes often or you technically qualify as a resident of multiple states because of travel. edit: I should have stated, assuming you are not physically working in that state.
- nerdponx 5y agoMost states have a "nonresident" filing option for income taxes. Whether you actually pay tax in that state depends on the specifics.
- alphabettsy 5y agoTrue, but that’s almost always for work actually performed in their state.
- ghaff 5y agoYes, but if you are working remotely from a state (or attending an event, meeting customers, etc.), you are performing work in that state. You're not if you're just on vacation. Historically, most people and most states didn't really pay attention to routine business travel but that's starting to change.
- tjr225 5y agoThe tax implications in the US alone are fairly complicated. I expect they will get more complicated as stated wise up to companies based in one place but with workers in others. A few years ago I was at an all remote company and there were several all staff emails along the lines of: “you absolutely need to talk to your manager before you move to another state.” Certain states were not allowed. I’m not positive but I think you owe state income tax in the state that you are physically in even if it is only for a couple of weeks or a month or so. Think of all of the tax fraud that has happened in the last two years.
- ghaff 5y ago>I’m not positive but I think you owe state income tax in the state that you are physically in even if it is only for a couple of weeks or a month or so. The details vary by state. In some it's as short as one day but there may also be some minimum dollar cutoff--the laws are basically aimed at pro athletes and entertainers. I know I didn't have to file out of state taxes this year for some short business travel; all our expense reports are now audited for out of state working days. Of course, you can usually get off with a certain amount of personal digital nomadism if you're not filing expense reports. But working for extended periods of time is getting into tax fraud territory. And you're absolutely right that a lot of people have been doing it, often without really thinking about it.
- bombcar 5y agoI’ve heard that baseball player taxes are an absolute nightmare because they have to file in every jurisdiction their team plays in.
- jleyank 5y agoIncluding Canada. Well, at least non-covid Canada. I’m sure the team or the union has a healthy list of CPA’s and lawyers who specialize in this. More so in hockey, possibly soccer as well.
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- jupp0r 5y agoI see lots of potential for a legaltech startup that offers an easy way for companies and their employees to not have to deal with this and to compute tax implications beforehand.
- spoonjim 5y agoAren’t those Deel and Remote?
- ghaff 5y agoWhat I've heard from people who have had to deal with this sort of thing is that you can outsource it to some degree but there can still be a fair bit of legal effort and cost. Especially for smaller companies, it's often just not worth the effort.
- nickkell 5y agoI think this is the reason umbrella companies exist. You invoice them and they make the appropriate deductions for tax and social security contributions.
- taylortrusty 5y agoThis is what Deel and Remote do for international employees. PEOs do this domestically (Justworks and Insperity, for instance)
- Semaphor 5y agoIt’s a very common question/misunderstanding coming up in /r/Germany (English subreddit about Germany), people thinking they can just move to Germany while working for a company in the US. Technically, not an issue. But you now need to be employed according to German law, including all the taxes and similar payments that includes for employees, but also for the employer.
- deutschew 5y agoits really amazing for me to see the amount of kurzsichtigkeit
- ChuckNorris89 5y agoSame in Austria, if I want to work here remotely for any foreign company, then that foreign company would have to have a legal entity opened in Austria and hire me according to Austrian laws and pay employer taxes in Austria, for it to be legal and by the book, which of course, unless they already have an office there or you're John Carmack, Linus Torvalds or Fabrice Bellard, no foreign company would go through all this hassle just to hire you remotely. Everyone says this insane amount of legal red tape and gatekeeping is the government's way to prevent remote talent brain drain to places like the US and prevent local remote work turning to outsourcing which, if true, is complete BS reasoning as every company who wanted to outsource did that already, before remote work became popular. I feels it's just German and Austria having a cultural and national obsession with red tape and regulations for the sake of preserving the status quo, and not for improving things for the ambitious workers who wish for better opportunities than the local market can provide. ATM, the only way to legally work remotely is either as a freelancer or opening your own company and contracting which come with their own set of pros and cons.
- hackerfromthefu 5y agoIsn't the simple way to setup a company and issue invoices? Any thoughts on how common this is, and benefits/pitfalls/challenge?
- ghaff 5y agoThere's nothing simple about setting up a company. Hiring people as contractors rather than employees probably does simplify things. But a contractor may, for example, not be able to work for you full-time and you may not be able to offer them benefits beyond base salary. The bottom line is that, for a small company especially, hiring an individual who requires a lot of special care and feeding is probably more trouble than it's worth.
- Ekaros 5y agoYou may not even be able to offer them salary. But instead some other payment for work done, or just hourly/daily rate.
- tw20212021 5y agoWhy would a contractor require special care? On the contrary. They supply you the work, you pay for their services, like you would a software company. The benefits they choose for themselves and factor those in in the rate they ask you. There are differences of course, an employee may be more loyal, but that's a different discussion.
- duped 5y agoIt may be illegal for certain roles in your organization to be filled by contractors.
- ghaff 5y agoBecause if you've been following gig work/contractor debates, there are constraints on who you can classify as a contractor in many places. And depending upon the circumstances, that person also loses out on things like RSUs--and hourly rate probably won't compensate. To be clear, companies do do this but it's not as simple as we'll pretend you're a contractor and you can send us an invoice each month.
- noisefridge 5y agoFrom the other perspective, I’ve also wondered about what it would mean to have a union for international remote employees. Unions for tech workers are rare but if you’re working for a company with people scattered all over the planet, it’s a massive increase in complexity. I’ve never done any serious organizing, and the companies I’ve worked for have been relatively benign. But after almost ten years in satellite offices or remote work from home, it feels like I’m taking on risks here if I ever get into a dispute. According to one organizer I talked to, you need to form unions in each country with “recognized units” of a handful of people. At my current company there are knots of employees here and there but we are starting to look like the General Assembly of the UN with one person per country. Then there’s all the varying rules on when the employer has the recognize a union. Are there any precedents for doing this?
- verve_rat 5y agoGood questions. I unfortunately can't help with any insight. But my personal policy is to only take jobs that I could walk away from and quit the moment anything I'd want union support for comes up. A union for international employees seems next to impossible, especially with the employer of record thing getting in the way. Luckily the market for my skills is such that I can afford that policy. You should probably only consider international employment relationships if you are going to be paid a butt load of money and can find a replacement job very easily.
- withinboredom 5y agoI’ve also thought of this. IMHO, it would be like a professional union, not one tied to a specific employer (so opt-in only). The job of the union would be to provide legal assistance to the employee and consult with employers who hire remote workers. I have lots of thoughts for this, and it’s something I think about quite a bit as a remote worker. If this is something you are serious about, or just want to chat about, look me up.
- CaliforniaKarl 5y agoGitLab is a great place to check out how this is implemented: https://about.gitlab.com/handbook/people-group/employment-solutions/ https://about.gitlab.com/handbook/people-group/employment-so... Their Handbook talks a lot about what legal entities (first-party, third-party, etc.) are in place in different countries, for employees in those countries.
- jimkleiber 5y agoI think one of the biggest questions we are facing is how do geography-based governments make rules for interactions that transcend geographical boundaries? Whose laws apply when people from multiple jurisdictions interact with each other in a digital space? Which law takes precedence? I think we see this with property rights, privacy rights, workers' rights, business law, tax law, and so much more. I think web3 may partially be driven by a desire to have a shared global system of currency, business registration, property registration, and more. For example, registering a DAO is global whereas registering a company, in the US, is at a state level. I feel both afraid and excited at how we will start to more collectively govern global spaces.
- jleyank 5y agoN American example: Canadian living/working in the US, pay the US and state. American living/working in Canada, pay Canada/province and US. Trying to work from country A and live in country B adds complexity - larger companies probably have a tax nexus, but smaller ones might only deal with contractors so they can offload the costs/hassle. And unless you win the lottery, USians in Canada don’t have to pay the US, really. Just file and summarize your worldwide investments.
- mabbo 5y agoCross border work burned me so very hard a few years ago. I live in Canada, but got a position with Amazon where I'd fly around the US (and occasionally other countries) to do upgrades and launches of Amazon warehouses. Paid in US dollars because I was working in the US. A lot of fun, working with some of the best co-workers I've ever had. Most Monday mornings, I'd get an Uber to YYZ Toronto and fly to some new city and be back by Friday night. Where I got burned was the weeks I did not fly anywhere and worked from home doing prep work. I didn't sync correctly with payroll and HR that I was doing this work in Canada, which implies that the Canada Revenue agency was owed my taxes for those days, not the IRS. But the company paid my taxes to the IRS since I was a US worker. (To be clear, they had a system to avoid this problem but I didn't understand and didn't set it up right). Come tax time, I owed the CRA $15,000, and the IRS owed me $15,000. But there was 3-month long gap between the date to pay and the date I'd get my refund. We managed, but yeah that wasn't fun at all.
- xwdv 5y agoHow could you have such a lucrative career and somehow not have $15k liquid somewhere? You could even just take out a margin loan from your brokerage and not liquidate any securities.
- withinboredom 5y agoIn my experience, when the tax man comes calling, it’s always just after a big move, big purchase, far away death in the family, or some other life event where you have less savings than normal.
- pyuser583 5y agoHad the same thing happen between US states. Not fun. The worst part is the horrible tax advice I’d get.
- aunty_helen 5y agoHonestly? 1500 words before this post even gets anywhere. >In only a few months, the coronavirus (‘COVID’) pandemic had devastating economic, social, and health impacts worldwide. Today, millions of lives have been lost, and the end of the crisis seems it may finally be in sight Here's 37 words that literally no one needed to read.
- mpalmer 5y agoNo one reading it in 2022, maybe. Easy to imagine someone reading it in 20 years and benefiting from the context. Have some perspective.
- rmbyrro 5y agoHow many people will read it today and how many are likely to read in 2040? I would argue it's better to optimize for today's readers. Not that difficult for 2040's readers to pick the context.
- aunty_helen 5y ago>The pandemic has also accelerated an already existent movement of remote working. The very next line that will allow for that. This info also doesn't have a long lifespan as laws are always changing and digital nomad visas are becoming more common. In 2 years time much of the information may not even apply to the country that you're living in.
- rmbyrro 5y agoAnd even when it gets to the point, I don't understand why they have to complicate matters so much. I may be an outlier, but have been working cross-border remotely for 6+ years and absolutely never needed this legal stuff. Quite opposite, I was super thankful to have an excuse to escaping local legal insanity and also ignoring insanities abroad. It's like being "country-less" in terms of these crap legal stuff. It's a dream. Again, my personal experience here. Don't know if it works the same for all...
- aunty_helen 5y ago
- jt2190 5y ago> I owed the CRA $15,000, and the IRS owed me $15,000 I’ll just add that there are extensive trade treaties between the U.S. and Canada that prevent workers from being double taxed on income, which is why in this particular case it nets out. This might not have been the outcome if this was the U.S. and another country.