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.

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

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.

Basically, if you’re not in the US, they know they’ll have a hard time suing you. The LLC won’t help obscure that.

If you go the US LLC route, make sure you understand the tax implications. Preparing your American tax return may be very expensive. (When I lived in NYC as a European expat, the paperwork for my private tax return cost several thousand dollars each year. American tax advisers who have experience handling foreign professionals know their price.)

Optics of your local tax office ? Definitely not, they're going to view you as trying to skip around local taxes.

Locally, in Finland, I declared my income and paid the taxes and made other withholdings as appropriate, but the whole thing wasn't a big deal.

And highly improbable without n > 0 leads.

He simply sends an invoice.

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.

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.

I have no knowledge of it being in any way related to my small business but there's a possibility that my accountant is doing it. Unlikely and I've only heard of W-8 BEN in relation to trading shares, bonds etc which I'm doing as a private person.

Any thoughts on how you find them? US job boards? Recruiters? Cold emails?

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.

It’s currently SaaS to manage contracts, onboarding, and payments. It will expand over the course of this year into a marketplace.

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.

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...

If you incorporate, then it is a standard B2B relationship.

Why?

In Denmark(same rule) I contracted for a single foreign company for years and just got lump sum into my personal account every month, after which I paid the corresponding taxes. I specifically called the tax authorities to ask and that's how they said to do it.

in germany for example, afaik, you can be considered employee if abusing this by providing services long term to a single customer (hence being considered dependent and not a free acting contractor), in austria the taxes for contractors are the same as for employees, this is my current experience.

in slovakia where I'm originally some people setup 1 person llc's and pay themselves dividends instead of drawing salary as an employee (dividends are taxed with much lower rates than salary income + there is no social or health care deductions on dividend income)

This is news to me. At least in Germany all income (except capital gains) is taxed more or less the same. The one thing that's different between employees and freelancers is social security.

I think your sibling comment got it right: The stipulations are in place to prevent companies from avoiding the responsibilities of employment.

It's definitely the case, in UK, that contractor pay can be significantly higher than regular employees' pay, because a) it lowers the tax burden for the hiring company, so they are willing to allocate some of that saving into pay, and b) it allows the contractor to optimize costs in tax-efficient ways.

Is it really the tax burden or the social security burden?

> so they are willing to allocate some of that saving into pay

Sure, but as a contractor you will also have to take care of social security etc. yourself, which adds to your costs.

> b) it allows the contractor to optimize costs in tax-efficient ways.

I'd be interested in hearing what that would look like exactly! In Germany you have a bit of leeway but your overall taxes (at the LLC & personal level together) will still be comparable.

If you got paid 150k gross you’d end up with 80k net in your bank account after paying both parts of NI (23k) and income tax (46k)

If you “earnt” 150k from renting out a property you only pay the income tax, so net 96k.

If you made 150k capital gains you net 108k.

Or did you mean to say that you (the person) only receive money from your LLC in the form of yearly dividends? In this case, however, it'd be 12% taxes at the LLC level + whatever the Polish tax rate is on capital gains.

However, social security caps used to be much lower for self-employment or single-person entreprenuerships in some countries, which resulted in local companies asking de-facto employees to set up self-employment single-person businesses, and pretend to have a b2b relationship, with no employee protections and smaller taxes.

imo its a question of time when EU decides to clamp down on this if they can

paying 0 % tax on capital gains and 7% tax on dividends, no social and health care charges is quite a thing when you compare the laws that govern this in western europe

What do you mean by "do it right"? They tax you to death as a self employed contractor while you carry the risk and don't benefit from pension and any kind of state benefits like sick leave. You're basically fucked from both ends, you pay the same amount of taxes as an employee, and receive nothing from the state. That's absolutely mental.

>things that are possible in some eastern EU countries can be easily considered tax avoidance at best and deliberate holes in laws that benefit certain people

How is it tax avoidance when they're just following the local law? The law is made to tax self employed people less because they usually work more hours, receive less social benefits, and take on more risks than regular employees.

You want talk about tax avoidance? Ok, let's talk about the cash driven underground "Schwarzgeld' economies in Germany and Austria where family small business owners, especially in rural areas, don't issue receipts and pay no taxes on their business dealing in cash, while amassing missive wealth and real estate empires.

I was recently in some villager festival in Austria, it was 10 Euros for a cheap fast-food schnitzel served from a trailer, and 10 Euros for a cheese sausage that costs max 50 cents from Metro in bulk, basically over 1000% markups and all took only cash, and issued no receipt, while the family had several houses here and in Croatia and drove Porsches and other expensive sports cars.

Now that's tax avoidance, and the holes in the city/government budgets for welfare are taken out of the average salaried worker who can't do cash drive tax avoidance.

The specific case you described is not tax avoidance but tax fraud and anyone can replicate it or report it depending on their preferred moral inclination.

I'm talking about tax avoidance, again, I'm from eastern Europe and I know a _lot_ of people who have dependant sources of income but act as independent contractors despite working countless years for one employer and as a result paying much less on taxes despite having 5x income of average employee and this is taken out of said average employees salary who don't have the opportunity to work in high demand IT field whether due to education or not having above average IQ.

Of course there are a lot of people like you described in food, entertainment, maintenance or house building service who take cash on hand and never report it, but as said this is fraud not avoidance.

How is working as a freelancer for a foreign entity tax avoidance, when your following the freelancing laws in your country and what you're doing is 10% legal? Just because you're working for a foreign company remotely because the company doesn't have an office here, doesn't mean you're a tax dodger.

It just reads like you have a personal vendetta against people working as freelancers for paying less taxes in some countries even though what they're doing is 100% legal.

Why are you so upset about some SW dev freelancing remotely for some foreign company to provide for his family, and not upset about all those mega-corporations who have perfected the art of tax avoidance down to a T, that they basically pay no taxes in your country because they siphon everything trough some Dutch/Irish/Luxemburgish funnel.

However, I don't see them being upset at anyone. In Serbia, I fully used similar benefits before they were forbidden, but I never considered this to be "fair": it was simply available for other reasons (avoid bookkeeping overhead for tiny businesses) and my foreign contractor (really, employment) relationship fit in just well. Yes, it was 100% legal, but it would be disingenious to claim how a local employee making similar tax and social security contributions was making roughly 5 times less net income is "fair". State was certainly benefiting from me exporting services, but not 5x as much.

When it became abused by local companies, those independence provisions were added in, effectively prohibiting it, but I wasn't "upset" even though it meant a larger tax burden and a more complicated setup (an LLC I am employed in).

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.

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.

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.

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.

(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.)

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.

why not? if you're interested, what have you got to lose by interviewing?

A little beside the point of the question, but what’s needed to change that culture? Surely, organizing labor is not difficult over there.

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