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Ask HN: How to contract for US companies as EU national

58 points by iExploder 3y ago

Hi folks, does anyone have experience they could share about contracting for US companies from Europe as EU national? I'm investigating this as being a bit tired with the lack of contract / remote / engineering first culture in the EU. I hope this will be an interesting topic for a few people. After some googling, I'm under the perception that US companies are mostly looking for remote workers inside the US, however, there must be companies in the US who are looking to find specialists in the EU. Are there any sites that bring together companies and offshore contractors (not upwork, I'm thinking about niche or expert sites)? I'm not sure about the legal obligations on either end. Does the company or the contractor need to register somewhere or pay special taxes in the US to provide services in the US?

nness 3y ago
The larger tech companies all have a presence in the EU, could you not contract with those? (Otherwise, the main issue which comes to mind is double-taxation, you may have to pay income tax in both the US and wherever you are in the EU, as the US seldom has tax treaties with other countries that avoid double-taxation.)
- hocuspocus 3y ago
  Unless OP incorporates in the US there shouldn't be any double-taxation.
- iExploder 3y ago
  > The larger tech companies all have a presence in the EU, could you not contract with those? my experience so far was working with small to medium sized businesses and this is where I felt the most comfortable. no experience with big tech, not even sure if they would want to employ me, probably not.
  - andsoitis 3y ago
    > no experience with big tech, not even sure if they would want to employ me, probably not. why not? if you're interested, what have you got to lose by interviewing?
    - isbvhodnvemrwvn 3y ago
      Most are only allowing employment, they don't contract single people to not fall under false employment laws (even if unenforced in the given country).
- rcarmo 3y ago
  Most large US companies only have sales and support offices in the EU.
necovek 3y ago
Contracting work happening outside US territory by non-US citizens is not taxed in US. From a US company perspective, you can do your work as an individual or a local registered business entity: you agree to gross terms, and that's what you get, and they have that as an expense. However, many European countries require you to incorporate (at least a Ltd company) to gain proper "employment" and stop people from using contractor relationship as a tax loophole. Depending on your country of residence, your tax rates will differ. Estonia has started to offer completely digital companies, but I am unsure how that fits inwith your goals or legal requirements.
- iExploder 3y ago
  > From a US company perspective, you can do your work as an individual or a local registered business entity: you agree to gross terms, and that's what you get, and they have that as an expense. this seems the most sensible > However, many European countries require you to incorporate (at least a Ltd company) to gain proper "employment" and stop people from using contractor relationship as a tax loophole. I'm aware of UK's or Germany's regulation in this regard, the contracts have to be limited in duration and contracting for one customer for more than 1 year or so is prohibited, is this what you mean? Otherwise I'm not sure what the loophole would be, it's standard b2b relationship in my eyes...
  - comprev 3y ago
    As a regular PAYE employee your employer pays corporation tax too. If a US company gave an individual a lump sum, not a company, the government would lose out on this additional revenue.
    - beojan 3y ago
      They don't pay corporation tax on your salary. They do pay employer's NI, though.
  - nonethewiser 3y ago
    > contracting for one customer for more than 1 year or so is prohibited Why?
carlsborg 3y ago
Smaller US based companies are more likely accommodate you, if they like what you bring to the table. Common arrangement is to start a company in the EU and your company will invoice the US company. Taxes: I am not a lawyer, pay a specialist to confirm this part. You fill in either a W-8 BEN (as an individual) or a W-8BEN-E (as a company) and the company keeps this on their records, which basically says "the US has a double taxation treaty with my country so the US co should not withhold taxes", which for most EU countries is in place. You might have to dig through the specific treaty and find the appropriate section that describes withholding percent on the type of income. Search for information regarding those two forms. IIRC Upwork makes service providers fill and send those forms, or used to back in the day.
- iExploder 3y ago
  > You fill in either a W-8 BEN (as an individual) or a W-8BEN-E (as a company) thank you for this info. Ive heard something similar with relation to dividend payments from US, which in the end might complicate things, but its a good indication of what needs to be done.
- kypro 3y ago
  > Smaller US based companies are more likely accommodate you, if they like what you bring to the table. Common arrangement is to start a company in the EU and your company will invoice the US company. Any thoughts on how you find them? US job boards? Recruiters? Cold emails?
- voytec 3y ago
  I've only filled W-8 BEN forms for personal trading. As a small business in Poland, I'm issuing invoices to North American businesses with no added VAT (netto==brutto) and a side note that tax is a liability of the party receiving an invoice. When purchasing services from countries that have "no double tax" treaty with Poland, I'm gathering "certificates of tax residency" which abroad businesses get from revenue government bodies like IRS or CRA.
  - iExploder 3y ago
nonethewiser 3y ago
I have been at some US companies that had people from Europe working there. They were fully remote companies.
gumballindie 3y ago
A good question. The UK has nearly killed off its contractnig industry with increased IR35 (regulatory) requirements. Given tax hikes pay is rather low too.
anonzzzies 3y ago
Even just applying for US companies who are looking for remote-in-US sometimes works if you have all your ducks in a row (if they don't have to do much to get you on board). I would say opening a one-person company is enough (it is in my experience). Personally I go for a little more complex constructions because it's often quite hard to optimise for tax with the one person structures in the EU (as far as I know them here). Besides signing all kinds of contracts (under US law), I haven't seen many issues.
gigatexal 3y ago
The contractor can use a service like gusto.com and boom bob’s your uncle.
jehrudakeu 3y ago
Network did it for me. Many people in different functions in the company won't like the arrangement, so you will need an insider who personally fights to hire you.
fatfingerd 3y ago
Aside from directly incorporating a company yourself, there are also payroll firms that will basically take a cut to turn your (possibly international) freelance/contract income into a salary. It's kind of your own company as a service so naturally it is more expensive than doing everything yourself before considering your time cost/efficiency.
rightbyte 3y ago
I did contract work for an American company from the EU for 6 months. I set up a one man company (with unlimited liability ...) and just sent invoices to the American company and they paid to my bank. Then I paid the taxes myself locally. [Edit: My company was not based in the US.] It is very doable if you got a lead.
- tough 3y ago
  Yep, you just basically need to set up a US LLC or whatever via firstbase/stripe atlas and other alternatives. The costs will vary but mostly is the accountant, should be more than worth the cost tho. There's also deel/remote which can handle this for the companies not having to require you to become a contractor, but they take their cut so YMMV, also your hiring company would need to -hire- their services
  - Kwpolska 3y ago
    I think the OP meant a sole-tradership in their country. Businesses from different countries can trade, and it's easier to deal with one tax and legal system instead of two.
  - rightbyte 3y ago
    I set up the company where I live, not in the US. I can't imagine the trouble to setup an American company and bank account without living there. It was total liability too, otherwise I would have needed a board and accountant. But since the company had no assets (other than the invoice money for some days) or debt it was low risk.
    - iExploder 3y ago
      this makes sense, however I'm thinking having setup a local US llc might be better for optics
      - khuey 3y ago
        Setting up a US company is going to make your life far far harder than it needs to be from a tax perspective.
version_five 3y ago
> Are there any sites that bring together companies and offshore contractors (not upwork, I'm thinking about niche or expert sites)? The best you'll likely do on that front is the monthly Freelancer / Seeking Freelancer post on HN. I don't know what kind of success rate people have with those. Most contracting ends up being through personal relationships though.
impish9208 3y ago
> I'm investigating this as being a bit tired with the lack of contract / remote / engineering first culture in the EU. A little beside the point of the question, but what’s needed to change that culture? Surely, organizing labor is not difficult over there.
- iExploder 3y ago
  I think a lot of managers would prefer to see someone sitting in a chair and being able to control them on a fixed (low) salary, than to let people work remotely and have freedom of managing their own time and a competitive edge of freelancing.
ed_elliott_asc 3y ago
TopTal does exactly this - it isn’t easy to get into but the rates are good and they have plenty of us based roles. https://www.toptal.com/talent/apply https://www.toptal.com/talent/apply Or my signup link (we both get 100 USD if you start a role): https://www.toptal.com/BGnO1x/worlds-top-talent https://www.toptal.com/BGnO1x/worlds-top-talent
- ed_elliott_asc 3y ago
  Downvoting buggers, why?? Lol
sahillavingia 3y ago
We’re building this for ourselves at Gumroad: Flexile.com It’s currently SaaS to manage contracts, onboarding, and payments. It will expand over the course of this year into a marketplace.
ipsi 3y ago
As far as legal obligations go, that's mostly going to depend on the country you're in, and how they're engaging you. If you're a full-time employee with an unlimited contract, ideally they'd employ you under their local legal entity. If they don't have one, they might use an "Employer of Record" service like Remote.com (never used them myself, and there are other companies that offer similar services). If, however, you're a "contractor" but with an unlimited contract (or a contracted renewed repeatedly), and potentially a few other things that would give the impression you're an employee, then you might have some issues - I know that Germany will make your life miserable if you're determined to be engaging in "Scheinselbstständigkeit (or arbeitnehmerähnliche Selbstständiger)," or "Bogus self-employment (or quasi-employee self-employed)." The way around that is to file taxes as if you were employed and pay all the taxes that the company would ordinarily pay, which means that you need to account for that in your negotiations, plus the costs of a tax accountant if you're not comfortable doing that yourself. I don't know which country you're in, but it's something to look into. If you're a genuine contractor who regularly switches companies (or at least multiple regular clients, depending on local law/etc) then I don't think there are any issues that would be specific to the US - you'd have to deal with things like VAT, currency conversion issues, possibly different tax years, etc, etc, but I'd also expect those to be common issues with any local contractor who works with clients in other countries.
ReDeiPirati 3y ago
I have done contractor work for American startups (mostly YC) based in Silicon Valley for the last 7 years. Like many others in this thread, I set up a one man company, and I invoice my client[s] every month to receive the money on a Wise (previously Transferwise) business account in USD, then every year I do take care of paying taxes in my country with the help of my accountant. I'd like to highlight that Wise is likely the best option to receive USD for EU contractors/consultant, during my first year I didn't use it and I lost something around 1.5K USD because of opaque exchange rates and fees... :facepalm: If they are really pedantic and careful, they might ask you to fill W-8 BEN / W-8BEN-E form, however the majority of my clients didn't.

58 points by iExploder 3y ago

nness 3y ago

The larger tech companies all have a presence in the EU, could you not contract with those? (Otherwise, the main issue which comes to mind is double-taxation, you may have to pay income tax in both the US and wherever you are in the EU, as the US seldom has tax treaties with other countries that avoid double-taxation.)

hocuspocus 3y ago
Unless OP incorporates in the US there shouldn't be any double-taxation.
iExploder 3y ago
> The larger tech companies all have a presence in the EU, could you not contract with those? my experience so far was working with small to medium sized businesses and this is where I felt the most comfortable. no experience with big tech, not even sure if they would want to employ me, probably not.
- andsoitis 3y ago
  > no experience with big tech, not even sure if they would want to employ me, probably not. why not? if you're interested, what have you got to lose by interviewing?
  - isbvhodnvemrwvn 3y ago
    Most are only allowing employment, they don't contract single people to not fall under false employment laws (even if unenforced in the given country).
rcarmo 3y ago
Most large US companies only have sales and support offices in the EU.

necovek 3y ago

Contracting work happening outside US territory by non-US citizens is not taxed in US. From a US company perspective, you can do your work as an individual or a local registered business entity: you agree to gross terms, and that's what you get, and they have that as an expense. However, many European countries require you to incorporate (at least a Ltd company) to gain proper "employment" and stop people from using contractor relationship as a tax loophole. Depending on your country of residence, your tax rates will differ. Estonia has started to offer completely digital companies, but I am unsure how that fits inwith your goals or legal requirements.

iExploder 3y ago
> From a US company perspective, you can do your work as an individual or a local registered business entity: you agree to gross terms, and that's what you get, and they have that as an expense. this seems the most sensible > However, many European countries require you to incorporate (at least a Ltd company) to gain proper "employment" and stop people from using contractor relationship as a tax loophole. I'm aware of UK's or Germany's regulation in this regard, the contracts have to be limited in duration and contracting for one customer for more than 1 year or so is prohibited, is this what you mean? Otherwise I'm not sure what the loophole would be, it's standard b2b relationship in my eyes...
- comprev 3y ago
  As a regular PAYE employee your employer pays corporation tax too. If a US company gave an individual a lump sum, not a company, the government would lose out on this additional revenue.
  - beojan 3y ago
    They don't pay corporation tax on your salary. They do pay employer's NI, though.
- nonethewiser 3y ago
  > contracting for one customer for more than 1 year or so is prohibited Why?

carlsborg 3y ago

Smaller US based companies are more likely accommodate you, if they like what you bring to the table. Common arrangement is to start a company in the EU and your company will invoice the US company. Taxes: I am not a lawyer, pay a specialist to confirm this part. You fill in either a W-8 BEN (as an individual) or a W-8BEN-E (as a company) and the company keeps this on their records, which basically says "the US has a double taxation treaty with my country so the US co should not withhold taxes", which for most EU countries is in place. You might have to dig through the specific treaty and find the appropriate section that describes withholding percent on the type of income. Search for information regarding those two forms. IIRC Upwork makes service providers fill and send those forms, or used to back in the day.

iExploder 3y ago
> You fill in either a W-8 BEN (as an individual) or a W-8BEN-E (as a company) thank you for this info. Ive heard something similar with relation to dividend payments from US, which in the end might complicate things, but its a good indication of what needs to be done.
kypro 3y ago
> Smaller US based companies are more likely accommodate you, if they like what you bring to the table. Common arrangement is to start a company in the EU and your company will invoice the US company. Any thoughts on how you find them? US job boards? Recruiters? Cold emails?
voytec 3y ago
I've only filled W-8 BEN forms for personal trading. As a small business in Poland, I'm issuing invoices to North American businesses with no added VAT (netto==brutto) and a side note that tax is a liability of the party receiving an invoice. When purchasing services from countries that have "no double tax" treaty with Poland, I'm gathering "certificates of tax residency" which abroad businesses get from revenue government bodies like IRS or CRA.
- iExploder 3y ago

nonethewiser 3y ago

I have been at some US companies that had people from Europe working there. They were fully remote companies.

gumballindie 3y ago

A good question. The UK has nearly killed off its contractnig industry with increased IR35 (regulatory) requirements. Given tax hikes pay is rather low too.

anonzzzies 3y ago

Even just applying for US companies who are looking for remote-in-US sometimes works if you have all your ducks in a row (if they don't have to do much to get you on board). I would say opening a one-person company is enough (it is in my experience). Personally I go for a little more complex constructions because it's often quite hard to optimise for tax with the one person structures in the EU (as far as I know them here). Besides signing all kinds of contracts (under US law), I haven't seen many issues.

gigatexal 3y ago

The contractor can use a service like gusto.com and boom bob’s your uncle.

jehrudakeu 3y ago

Network did it for me. Many people in different functions in the company won't like the arrangement, so you will need an insider who personally fights to hire you.

fatfingerd 3y ago

Aside from directly incorporating a company yourself, there are also payroll firms that will basically take a cut to turn your (possibly international) freelance/contract income into a salary. It's kind of your own company as a service so naturally it is more expensive than doing everything yourself before considering your time cost/efficiency.

rightbyte 3y ago

I did contract work for an American company from the EU for 6 months. I set up a one man company (with unlimited liability ...) and just sent invoices to the American company and they paid to my bank. Then I paid the taxes myself locally. [Edit: My company was not based in the US.] It is very doable if you got a lead.

tough 3y ago
Yep, you just basically need to set up a US LLC or whatever via firstbase/stripe atlas and other alternatives. The costs will vary but mostly is the accountant, should be more than worth the cost tho. There's also deel/remote which can handle this for the companies not having to require you to become a contractor, but they take their cut so YMMV, also your hiring company would need to -hire- their services
- Kwpolska 3y ago
  I think the OP meant a sole-tradership in their country. Businesses from different countries can trade, and it's easier to deal with one tax and legal system instead of two.
- rightbyte 3y ago
  I set up the company where I live, not in the US. I can't imagine the trouble to setup an American company and bank account without living there. It was total liability too, otherwise I would have needed a board and accountant. But since the company had no assets (other than the invoice money for some days) or debt it was low risk.
  - iExploder 3y ago
    this makes sense, however I'm thinking having setup a local US llc might be better for optics
    - khuey 3y ago
      Setting up a US company is going to make your life far far harder than it needs to be from a tax perspective.

version_five 3y ago

> Are there any sites that bring together companies and offshore contractors (not upwork, I'm thinking about niche or expert sites)? The best you'll likely do on that front is the monthly Freelancer / Seeking Freelancer post on HN. I don't know what kind of success rate people have with those. Most contracting ends up being through personal relationships though.

impish9208 3y ago

> I'm investigating this as being a bit tired with the lack of contract / remote / engineering first culture in the EU. A little beside the point of the question, but what’s needed to change that culture? Surely, organizing labor is not difficult over there.

iExploder 3y ago
I think a lot of managers would prefer to see someone sitting in a chair and being able to control them on a fixed (low) salary, than to let people work remotely and have freedom of managing their own time and a competitive edge of freelancing.

ed_elliott_asc 3y ago

TopTal does exactly this - it isn’t easy to get into but the rates are good and they have plenty of us based roles. https://www.toptal.com/talent/apply https://www.toptal.com/talent/apply Or my signup link (we both get 100 USD if you start a role): https://www.toptal.com/BGnO1x/worlds-top-talent https://www.toptal.com/BGnO1x/worlds-top-talent

ed_elliott_asc 3y ago
Downvoting buggers, why?? Lol

sahillavingia 3y ago

We’re building this for ourselves at Gumroad: Flexile.com It’s currently SaaS to manage contracts, onboarding, and payments. It will expand over the course of this year into a marketplace.

ipsi 3y ago

As far as legal obligations go, that's mostly going to depend on the country you're in, and how they're engaging you. If you're a full-time employee with an unlimited contract, ideally they'd employ you under their local legal entity. If they don't have one, they might use an "Employer of Record" service like Remote.com (never used them myself, and there are other companies that offer similar services). If, however, you're a "contractor" but with an unlimited contract (or a contracted renewed repeatedly), and potentially a few other things that would give the impression you're an employee, then you might have some issues - I know that Germany will make your life miserable if you're determined to be engaging in "Scheinselbstständigkeit (or arbeitnehmerähnliche Selbstständiger)," or "Bogus self-employment (or quasi-employee self-employed)." The way around that is to file taxes as if you were employed and pay all the taxes that the company would ordinarily pay, which means that you need to account for that in your negotiations, plus the costs of a tax accountant if you're not comfortable doing that yourself. I don't know which country you're in, but it's something to look into. If you're a genuine contractor who regularly switches companies (or at least multiple regular clients, depending on local law/etc) then I don't think there are any issues that would be specific to the US - you'd have to deal with things like VAT, currency conversion issues, possibly different tax years, etc, etc, but I'd also expect those to be common issues with any local contractor who works with clients in other countries.

ReDeiPirati 3y ago

I have done contractor work for American startups (mostly YC) based in Silicon Valley for the last 7 years. Like many others in this thread, I set up a one man company, and I invoice my client[s] every month to receive the money on a Wise (previously Transferwise) business account in USD, then every year I do take care of paying taxes in my country with the help of my accountant. I'd like to highlight that Wise is likely the best option to receive USD for EU contractors/consultant, during my first year I didn't use it and I lost something around 1.5K USD because of opaque exchange rates and fees... :facepalm: If they are really pedantic and careful, they might ask you to fill W-8 BEN / W-8BEN-E form, however the majority of my clients didn't.