
Ask HN: How do remote workers deal with taxes? - galfarragem
The question is simple - probably the answer is not: How do remote workers deal with taxes when working for a foreign company?<p>a) Do you pay taxes in your country or in the company&#x27;s country?<p>b) Do you pay taxes as freelancer, &#x27;LLC&#x27; or as dependent worker? In my country (Portugal) being a freelancer means paying an huge amount of taxes (~50%) when making more than 25K&#x2F;y.<p>(updated)
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danieka
a) I pay taxes in the country I reside in.

b) I have set up a LLC. Of course I have to pay a lot of tax. If I want to
have 100 dollars deposited to my account I have to charge my client 250
dollars. Still there are several benefits to having an LLC. It enables me to
optimise how much I pay in tax, usually I can go from 60% tax to somewhere
around 50%. I buy everything related to my business via the business.
Conference trips, computers, headsets, screens, books. That way I can spend
money "pre-tax", before I lose the 50% by paying it from the LLC as salary.
Essentially I get those items for 50% off compared to if I had bought them
with my own money. I can also get the VAT back.

When you have an LLC the contract between you and the client will actually be
between the LLC and the client. That means you are not personally liable for
any damages, for example if you get sick and can't deliver the client can't go
after you personally. Also should you for some reason go bankrupt you are
(typically) not personally liable.

Note that this is how it works in Sweden, but some of it might be applicable
in Portugal.

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nodesocket
60% tax, how absurd. I cringe at my US based 24% (+ 10% self employment)
bracket. By the way, love Sweden (summers) though. Been to Stockholm a few
times, the first for nearly 3 months.

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galfarragem
Scandinavia is known for high benefits supported by high taxes. The real
problem is when you have low benefits and high taxes. In my country, an high
income freelancer (paying ~50% taxes) will hardly ever get unemployment, sick
leave or child care benefits.

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anon1253
It's the same in the Netherlands. I pay upwards of 50% taxes, but don't get
any unemployment, pension or other benefits/insurance. It's ridiculous in my
book.

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kalleboo
a) Own country. Generally most countries use residence-based taxation (where
you live most of the year is where you pay your taxes), with a few very
specific exceptions (the USA, ship crew, diplomats, deployed military, etc).

b) Freelancer because I'm too cheap to set up a company/hire an accountant,
and it's really simple to just do my own taxes. Those extra taxes are thinks
your employer now doesn't have to pay (healthcare, unemployment insurance,
etc) so ask for a raise to match.

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kypro
Where are you based? In the UK you can register for self assessment and file
your own. You can complete self assessment yourself quite easily. If you want
to contract through an LLC you'll probably want an accountant.

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nodesocket
I don't do any international, all US based. I keep track of all my expenses
(credit cards and banks accounts) and tag them using Quickbooks Self Employed.
It even estimates federal quarterly taxes and allows me to make quarterly
online payments using EFTPS.gov. At tax time it exports everything into
TurboTax which saves a ton of time on deducations and reporting my quarterly
federal tax payments.

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gamblor956
a) Generally, you pay the taxes in the country where you reside or the country
where you perform the work (if not the same country). Despite popular belief,
most major countries tax individuals on their worldwide income (US, China,
France, Germany, off the top of my head)...however, most of these countries
exempt the first $xxx thousands of income from tax (or from certain types of
taxes, like payroll taxes) or certain types of income from tax.

b) Depends on your legal risk profile. If you are a contractor, an entity may
shield you legally but will incur greater tax and compliance costs.

If you are a dependent worker (i.e., an "employee"), you shouldn't need to ask
these questions because your employer will take care of the tax withholding
for you as generally most countries require foreign companies to register for
payroll withholding once they hire employees locally.

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ilammy
a) Paying in my country of residence.

b) Paying as an 'independent' contractor. We have reeeeeally lax rate of 5%
(not including VAT) if you earn less than $190k/year (with average salary
around the country being around $4k/year).

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galfarragem
Can I ask you which country is it? :)

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ilammy
Ukraine.

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gambiting
If you're doing work for a foreign company it's best to pay an accountant to
sort out the tax for you. I know people who work in UK for foreign companies
usually set up and LTD company and then pay themselves through that, through
dividends etc, effectively only paying about 20% tax on everything.

~~~
kypro
As someone who contracts in the UK, I'd say it really depends on how much
you're making and for what duration. If you're going to make £10,000 on a
three month contract you're probably better off just registering for self
assessment. I did this for a while when I was making around £28,000/annum
because it was the most tax effective and easiest solution in my case. Also
accountants are expensive.

If you're making £60,000+ you're probably going to want to set up an LTD
company, but at that point you're really best off talking to an accountant and
discussing your options.

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gregjwild
I'm on about £28k per annum as a remote contractor -- I'd second this advice.

