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?
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.
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.
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.
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.
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.
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.
That seems extreme? I know NY is especially stringent but people do attend conferences and the like. I haven't seen a few days here and there being an issue AFAIK. I think at one point the metric was 14 days but don't even see that currently. I'm pretty sure if someone headed to the Javits for a day had to file a NY tax return that would be pretty much the end of Javits conferences.
My wife is a lawyer who works for a firm that is mostly remote most of the time. This worked out well during COVID, because they could easily switch to 100% remote, all the time.
She rarely travels for business, but because the firm has people in many of the states in the US, she ends up filing taxes in something like 37 states, every year. Because the firm has a locus in that state, and she is a partner in the firm, that means she has to file taxes there, even though she has not visited that state this year, and has not done any work for any client in that state this year.
Yes, it’s a pain in the ass. But that’s why we have professional tax accountants to deal with the complexity.
There is nothing I have found in business that matches the complexity of HR and tax accounting.
...and the wiseguys that run things there, er, 'dere, would not be happy...
But kidding aside, I feel that the restriction may be an overreaction. Lawyers and accountants can sometimes overcompensate when it comes to stuff they don't fully understand.
I had a friend that wrote a 99-cent iOS app (I don't think he made enough to cover hosting and licensing fees), and his accountant was a bit "over the top." He insisted that my friend could get into serious tax jeopardy over the App Store stuff, and insisted that he pay about a 50% tax.
Hearing about it was painful. Sounded like the guy needed "help," but I'm told that otherwise, he was an outstanding accountant.
It really depends on the individual, more so than the company. We have one team member who previously lived in NYC, then moved during the pandemic. This has been classified as a "convenience" and requires a continuation of taxes in the state. If they re-enter the state in the new tax year, the state can argue a continuation of this. The point isn't that the state is right, the point is the risk of an audit and overhead of dealing with it is high and we don't want to expose team members to that nightmare.
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.
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?
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.
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?
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.
OK, thanks! That's really interesting and helpful. By the way, I'm sure you are aware, there's a ton of universities in the UK who right now have exactly this problem: Lecturers/professors/researchers living somewhere in the EU and commuting in for a few days per week during the semester. Their HR departments are freaking out because of it. They could use some help and maybe a special deal :wink: :wink:
For that matter, I'm not sure how well nomadism AFAICT is really handled within the US. Systems are not really setup for people to not have permanent addresses with respect to things that require them (drivers licenses, passports, W-2s, state taxes, etc.). Pre-pandemic I spent literally months away from home but I had a clear permanent address.
if i am in the european union, and i work for a company outside of europe, isn't all that my own responsibility? i pay taxes, insurance, retirement funds out of my own pocket, and i just need to factor that into what i am getting paid.
the only complication is that i have to figure out myself what and how to pay.
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.
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.
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.
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.
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.
they can't enforce that if the employer is in another country, unless there are agreements between those countries.
the employer can't employ you in their country, and they can't be forced to set up a business entity in yours.
the only thing your country could do is to prevent you from doing business with foreign companies as an individual contractor, but that would be counterproductive as it would not get you the employment they want you to have
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
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.
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.
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.
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.
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).
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.
1Password is remote-first. We do have 2 office buildings but even the headquarters has less than 20 people in it on a given day. During COVID I’m pretty sure that number has gotten even lower. I’m not even in the same country so I’m never in :)
We have lots of people outside those countries. If you or anyone else is interested but live outside those countries I encourage you to apply anyway. I think that restriction is listed because we only have business entities in those countries so if you’re outside them you’d be a contractor. Almost all of us used to be contractors and we weren’t treated as second class so being a contractor here isn’t a bad thing like it can be elsewhere.
Heap¹ is virtual-first and actively hiring (not to mention, scaling like crazy). I have colleagues in North America, Europe, Asia, and Australia. We have an excellent engineering culture and need more hands on deck. :)
Hit me up (email in profile) if any of the roles listed here² look interesting to you.
We have several teams where the majority of engineers live in Europe and/or Australia. If you apply through the generalist loop and we're a mutual fit, we will make it work. :)
Odd not to see DigitalOcean on this list, given at least when I left (before covid), remote was ~55% of the company and very much a first-class citizen. They certainly are actively hiring at much higher rates than most of the companies on this list.
Can you elaborate a bit on how they facilitated remote workers being first class citizens? I'll be in a similar position soon but would like to see some things I and the company could do to not alienate me and the other remote members.
Back when I was there, DO was the best of both world. I'd work remotely 95% of the time, with most of my teammates remote. Then I could visit the NYC office multiple times a year and hangout in the random desks of the offices, or just hangout with the "onsite" people (who were also very much almost remote and showing up in the office for fun, it seems). Never had a problem with feeling out of touch due to being remote: everything that gets done is online, from my experience. It was maybe 55% remote but the _experience_ was more like if the company was fully remote.
1) An office that was well-constructed to support remotes connecting in. It can be surprisingly challenging to ensure a positive experience for partially remote meetings, and this wasn't consistently perfect, but the effort was put in.
2) Having people team members who were fully focused on 'remote experience', and ensuring that perks for in-office folks had comparable events and such for remotes.
3) ~Almost all roles being eligible for remote. There were a few organizational exceptions outside of eng, but for the most part any team could hire remotely with fairly little friction.
Really, it was a learning experience over time, and it requires intentional effort to be a 50/50 company, but despite some other flaws, DigitalOcean was ~generally good at this while I was there.
While factually correct, I think it helps to highlight that Basecamp was a company of about 60 people at that point. Without commenting on the clash that lead to this, it is a big difference whether 30% of people left at a company of a few dozen or a company of thousands.
I wonder if any of these companies would be interested in paying Monero and just avoiding taxes entirely. Taxes are such a huge headache for both parties. Of course it's illegal, but hard to trace if done right. I think it would be worth being exposed to a wider variety of talent.
How would you convert monero back to fiat without alerting your bank?(converting to fiat is also necessary cause you can't pay your veggie bills in monero). Any deposit to your bank would easily raise suspicion. Monero to cash is possible but its more difficult to arrange and chances of honeypot are more.
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.