
Ask HN: Is it legal for US companies to hire remote non-US contractors? - mettamage
I sometimes interviewed for US companies that stated they will hire an accepted candidate as a remote contractor first,  then get the H1B visa process started and relocate within 6 to 24 months.<p>Is this legal?<p>If so, why don’t more US companies do this? I’ve heard that companies with about 20 to 40 employees do this [1].<p>Edit: this blew up, which is really cool! I want to note that it might be wise to view the replies in this thread as inspiration for your own research and not as legal advice.<p>[1] The hiring managers told me themselves. And Basecamp even states it publicly on their latest job ad.<p>P.S. If you&#x27;re in the US&#x2F;EU&#x2F;World education space, checkout my profile :)
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ghaff
The short answer is generally yes. The longer answer is you may need to
establish a legal entity in the country in which you're hiring [ADDED:
probably just for employees] as well as conform to employment rules etc. See
this comment:

[https://news.ycombinator.com/item?id=17022563](https://news.ycombinator.com/item?id=17022563)

The bottom line is that it can certainly be done but the legalities may be
more than a small company would want to deal with for a one-off hire. Note
that there is some paperwork even associated with hiring someone in a state
where you don't already have employees in the US--though those tend to be less
and can be somewhat outsourced.

If there are a lot of timezones involved, companies may also not want
employees who are, say, more than a few timezones away long-term.

~~~
gravypod
Are there any companies that help you incorporate all across the world with a
single button press and manage the employee pay & PTO stuff in accordance with
local laws?

~~~
pjc50
Largely you can't; while Anglosphere jurisdictions generally have easy company
formation, it can get increasingly difficult and complicated in other
countries, and there's usually an ongoing filing effort to maintain the
company presence.

Some countries like China simply won't let you incorporate there without a
local "partner".

~~~
codegeek
Same with India. You need a "local" Director.

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gtirloni
It's perfectly legal to hire non-US contractors that work remotely. That's the
easiest part.

Getting the visa and relocating the person from overseas is the hard part.

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sourceless
Yes, but make sure you know what your country's tax laws are. US companies can
even hire foreign workers as employees, so long as the contract meets to
requirements of each country's working laws (e.g. paid time off and minimum
wage in the EU). In that case it's best to get an accountant that has done it
before.

~~~
paulie_a
Isn't that upto the individual tonoaybthpse taxes?

~~~
gambiting
"depends". In the UK the employer pays taxes on behalf of the employee, so if
you only work for someone(instead of running a company) you never have to file
a tax return, everything is calculated and done for you.

~~~
barrkel
Until you start earning more than 100k or so, when HMRC will ask you to fill
out a return anyway.

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bob33212
Yes, but there are a couple issues.

1\. International wire transfers over 10k could get flagged by your bank as
suspicious. Then you would need to work out with your bank how to prove that
this isn't money laundering.

2\. Intellectual Property laws can be hard to enforce across borders. If a
contractor takes your source code you may never get any money from them as
damages

~~~
gruez
>1\. International wire transfers over 10k could get flagged by your bank as
suspicious. Then you would need to work out with your bank how to prove that
this isn't money laundering.

Isn't that only per-transaction? Paying $9000 biweekly gets you to $234k
annual salary. Unless you're hiring rockstar engineers, this should be more
than enough.

~~~
estebarb
No, actually is more complex: banks may share data so the amount moved can
include several transactions, across several banks and time. I triggered the
system once, just for moving my own salary to another bank and then to another
account in the second bank.

To be safe, the employee must give the bank a proof of be hired: contract with
amount, certificate of salary, proofs of service selled (it depends). Asking
the bank before the first payment can help too.

In summary: it's perfectly fine to receive sums greater that $10000, but the
employee have to justify it, and the company must provide documentation.

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mettamage
I didn't know this would blow up. Thank you for answering! :D

I know that all of this shouldn't be interpreted as legal advice [1], strictly
speaking, but it is hugely helpful that I now have a much more targeted vision
on what to think about and to look for.

The reason I'm asking this question is because it's Saturday and I'm in a
daydreaming mood. But upon reflection, I realized I'd love to work for a US
company as I want to see the difference between US software development and
Dutch software development. This is especially the case for silicon valley.
Reading HN almost daily since 2015 definitely contributed to that. Based on
the upvotes, I don't think I'm the only one.

So I hope I'm planting the seed for some US companies to think about this
option more often.

[1] I almost accidentally did interpret this thread as legal advice, which is
why I am making this explicit for if others tend to do the same.

~~~
biztos
Why not just set up a Dutch LLC (whatever the form is there) so it’s easier
for US companies to do business with you without worrying about Netherlands
labor laws?

~~~
mettamage
I do have one (a Dutch sole proprietorship), but I never mention it. I guess I
should mention it in my cover letters and on my resume.

~~~
literallycancer
Most clients only care whether you can make proper invoices. Sole
proprietorship vs Ltd. doesn't really matter, unless there's something strange
about sole proprietorship regulation in the Netherlands.

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sinatra
Yes. But the companies need to keep in mind that they’ll have to review the IP
laws of not only US but also the country of the candidate. Just because they
sign a contract with the candidate that’s valid in US doesn’t mean that the
candidate doesn’t have full IP ownership of the code in her own country. And
the company needs to do this review of IP laws for each country from where
they get such candidates.

------
emteycz
It should be as legal as buying any other service or product from foreign
businesses.

~~~
gambiting
Well, not quite. If the remote worker is contracting for you - then yes, it's
extremely simple. They do the work for you, send you an invoice, you pay the
invoice and that's it. It's on them to pay the correct tax, health insurance,
work the correct number of hours etc etc.

But if you are actually employing them remotely then yes, it's legal, but you
need to make sure to follow the employment law where they are located, not
where your company is. So if you employ someone from the EU you need to give
them 25 days of paid time off, pay into that country's healthcare system etc
etc. It's easier to contract instead.

~~~
kxyvr
Even if the foreign entity sends an invoice and pays their own tax, I don't
think it's quite that simple. If the company hiring the contractor wants to
deduct their expense from their taxes, the IRS will want to know why because
typically a 1099 would be filed. I am not an accountant nor tax attorney, but
I think that at the very least something like a W-8BEN would need to be filed:

[https://www.investopedia.com/terms/w/w8form.asp](https://www.investopedia.com/terms/w/w8form.asp)

[https://www.irs.gov/instructions/iw8ben](https://www.irs.gov/instructions/iw8ben)

Long story short, at the very least, the person should speak with an
accountant familiar with these filings to make sure all forms are filed. There
will be some amount of paperwork to ensure they can survive an audit. These
tax issues are separate from any additional legal considerations that may
apply.

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egman_ekki
there's a startup to help companies hire and pay people around the world

[https://pilot.co/](https://pilot.co/)

(not affiliated, just heard about them)

~~~
Ozzie_osman
There is a whole industry of them. Professional employment organizations or
Employer of Record (PEO / EoR).

Companies like Pilot (not affiliated either but heard good things) are a
modern take on that and try to streamline it as much as possible.

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flowerlad
Recently I hired a graphic artist on
[https://dribbble.com/](https://dribbble.com/) and paid him $150 for a page
design. It was only when it came time to pay that I realized he is located in
Bangladesh. Are there any legal issues here?

~~~
khuey
Tax authorities are not going to chase you around the world for $150.

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not_a_moth
Word of caution, the activities of the employee can trigger a PE for your
company and expose you to corp income tax, and depending on possible
"technical service" clauses in domestic law or tax treaty between the two
countries, you can be liable to more taxation in the host country even without
a PE.

Plenty of tax treaty case law showing audits do happen to all of MNCs, small
companies, and individuals in these matters, with financial and even criminal
penalties for your directors in some jurisdictions.

BEPS is also now cracking down on PE avoidance and types of
arrangements/facilitators out there.

Sometimes better, and easier, to just declare and manage a PE. Employment
services firms don't offer actual legal protection here since doesn't matter
if direct or indirect employed.

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sahin-boydas
I am Sahin founder&CEO RemoteTeam.com.

In RemoteTeam.com we can help you to pay and manage contractors very easily.
We have a solid payments platform (fastest, cheapest and dollar transfers for
most popular countries). Also we help you to do in a more compliant way.
(W8ben forms and contractor aggrements with specific sections for each
countries). Our in house lawyer works with 40+ lawyers globally.

We have hundreds of companies with team sizes of 20-40 and they are mostly
remote and non-US contractors.

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ludamad
I work from Canada for a US contracting firm with little issues. Through them
I work for Cisco which does have a Canadian office, however

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juskrey
Yes, just be sure to open a legal entity and file a form W-8BEN-E, or IRS will
want a 30% cut from US company at the end of the year.

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ghufran_syed
Looks like this startup school company is trying to work on this problem:
[https://heyportal.io/](https://heyportal.io/)
[https://www.startupschool.org/posts/36040](https://www.startupschool.org/posts/36040)

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yread
What about the other way around - non-US corp hiring a US contractor?

~~~
mettamage
I know this is possible in The Netherlands, it happens all the time. Dutch
companies also specifically state whether they are open to this in their job
postings.

From my experience, what Dutch companies have trouble with is matching the
salaries from US-based companies, and in general they don't. So people from
the US that do come to The Netherlands specifically have other reasons than
money to come here.

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trevyn
As you develop as a human, you start to understand that legal/illegal is often
not a black-and-white thing.

There is the obviously legal, and widely practiced.

There is the obviously illegal, and clearly enforced.

And there is a huge gray area, where people and states just make things up as
they go along. Law that crosses national boundaries is particularly exciting
in this regard.

