The gig economy is in full blossom. In the US alone, there will be 86.5 million freelancers by 2027. This number will grow by an additional 3.6 million in 2028, accounting for well over half of the entire US workforce. In part because of the pandemic, remote workers now have access to a wider range of career opportunities. But what if you’re a non-US citizen who wants to work for a US company remotely?
Is working remotely abroad for a US company possible for non-US citizens?
If you’re a non-US citizen, yes: You can work abroad for an American company. However, you need to make sure you’re correctly classified—either as an employee or contractor. If you’re misclassified, both you and the hiring company face a very real risk of legal consequences and possible financial penalties.
How to work remotely for a US company—a step-by-step guide
Let’s take a deeper dive into what you need to do to work legally for an American company—either as a contractor or employee.
Note: The following information is for informational purposes only and isn’t intended to be legal advice.
1. Make sure you’re classified correctly
If working remotely is high on your priority list, then before applying for your dream job check if they’re looking for a full-time employee or a contractor—this is usually included in the job description. How you’re classified will impact your ability to work remotely.
So, how do these two worker classification options differ?
- An independent contractor is an individual or a business that performs services for clients under a written agreement in exchange for a fee. Independent contractors typically control when and how they work. The client is simply paying for the service or end product. Independent contractors often have multiple clients.
- An employee, on the other hand, is an individual who typically works exclusively for one organization. The employer has control over when and how the employee works.
If you’re classified as an independent contractor, then you’re free to choose where you work. However, if you’re classified as an employee, you’ll have to ask your employer for permission to work remotely. In both cases, you’ll need to abide by local labor laws and check if you require a work permit.
What happens if you’re an employee and would like to work remotely? You can ask your employer to reclassify you as an independent contractor but keep in mind that your working relationship also has to change. If the company continues treating you like an employee, they’ll be at risk of misclassification. In the US alone, up to 30% of employers have misclassified at least one worker.
To learn more about this, take a look at our worker classification analyzer.
Pro tip: If you own a sole proprietorship, but the job ad specifies an employment contract only, reach out to the hiring manager before you apply for the role. Ask them if they’d consider working with an independent contractor. And remember that you’ll have to revisit the responsibilities and working hours to minimize the risk of misclassification.
2. Discuss how you can work as a remote worker
“Remote work” can be interpreted in many different ways. Maybe you’re spending 100% of your time at home, using cafes and co-working spaces while you backpack around Europe, or working out of your camper. Whatever you choose, if you’re planning on doing your remote job in a foreign country, you need to inform your employer.
Some foreign countries forbid travelers from working on tourist visas. If you fail to get a right-to-work permit, either you (if you’re an independent contractor) or the hiring company (if you’re an employee) can be fined or banned from the market. So, while you don’t have to present your future employer with a detailed itinerary of your travels, they must be aware if you’re on the move.
Speaking of formalities, we’ll discuss the types of visas, permits, and other legal obligations next…
3. Navigate taxes, permits, and other paperwork
Agreed on where you’ll be working from and how you’ll be classified? Perfect, let’s move on to how to handle payroll and other formal obligations.
In a nutshell, if you’re an employee, the employer will handle most of the paperwork on your behalf. If you’re an independent contractor, the client won’t be legally required (or able) to take as much off your plate. Let’s dive into this below.
Taxes and statutory benefits
When it comes to non-US citizens working remotely abroad for an American company, both employees and independent contractors should have their taxes and statutory benefits contributions paid in their country of residence. If you’re an employee, you’ll need to fill out a W-8BEN form—a tax declaration document your employer will submit to the IRS. If you’re an independent contractor and operate a sole proprietorship, you’ll receive a slightly different document: a W-8BEN-E. Both of these documents help the hiring/contracting company prove that you aren’t eligible for US taxes.
If you work as an employee, tax laws require your employer to pay your tax and social security deductions for you, in your country. If you’re a contractor, tax laws require you to pay them yourself. Both of these processes will be fairly easy if you’re mostly working from home, as it’ll be clear where you’re based.
But what if you’re a digital nomad? Your “country of residence” refers to where you’re registered as a permanent resident. For example, where you own an apartment or where you’ve lived and settled taxes before becoming a working traveler. If you have a residence permit in multiple countries, then it’s worth checking tax laws to see if you are subject to double taxation.
Before you travel from one country to another, it’s important to check how long you can stay without violating immigration laws. It’s also important to make sure you enter the country on the right visa or right-to-work title.
Many countries let travelers work remotely for anywhere between three to six months before they need to legalize their stay. Here’s what to do if you want to remain in the same country for longer and the factors to consider.
Say you have an Italian passport and want to work from Denmark for more than 90 days within six consecutive months. Since both of these countries are in the European Union, you have to apply for a residence permit. As a citizen of an EU member state, you’ll be granted a right-to-work permit upon request. You’ll also start paying your income taxes in Denmark.
Now, if the country you’re from and the one you want to stay in don’t have any special treaties, you might need to apply for a visa. The good news is that, as of early 2023, as many as 49 countries offer digital nomad visas.
If you work on an employment contract, then some countries might require visa sponsorship from the hiring company. In any case, whenever you change your residence status, it’s vital to let your company know so that they can double-check for any unique tax or legal requirements.
Pro tip: To avoid checking immigration laws for each country you visit, prioritize traveling to those that offer digital nomad visas. As you can see, the choice is wide!
1. Avoid permanent establishment risk
While working remotely abroad for a US company you’ll have to learn what you can and cannot do under your work permit to avoid permanent establishment risk. It’s illegal for remote workers—both contractors and employees—to take part in any “economic activities” such as:
- Outsourcing work to the local workforce
- Working for domestic subsidiaries or local employers
- Selling goods or services in the market where you’re based
Let’s assume you’re a content writer. If you wanted to outsource a couple of articles to a local freelancer, you’d be breaking the law as it would count as an economic activity. If you’re unlucky, and local authorities spot what you did, they might revoke your visa and even charge you with immigration fraud.
2. Agree on the payment method
If you’re an employee, then chances are you’ll get paid via a bank transfer. As an independent contractor, there are multiple possibilities:
- Bank transfer. Convenient, but costly, as you have to account for transfer fees and exchange rates. You can eliminate the latter if you open a bank account in USD and get paid in dollars.
- Virtual accounts, like Revolut. Cheaper than traditional banks. They allow you to create “payment request” orders, letting your clients settle payments in seconds.
- International transfer services, like Western Union. You can either receive the money online or pop into one of their brick-and-mortar offices. If you go with the latter, you might have to pay extra.
- Rippling, which allows you to get paid either as an employee or a contractor. The company can use Rippling to pay all their international staff, including freelancers and full-time employees. You get paid quickly, avoid costly conversion fees, and receive money in your currency of choice.
Pro tip: Choose a payment method that is convenient and financially friendly for both you and your client. If they’re flexible, suggest that they look into Rippling as the most versatile system for international hiring and payments.
Companies can automate their international payments with Rippling.
3. Remote-proof your ways of working
Remote work is all about asynchronous communication, and, with that, sometimes miscommunication can creep in. If you aren't careful, a lack of in-person interactions can also negatively impact your working relationship.
That’s why it’s best to agree up front on the communication channels you’ll use and how often you’ll talk. For example, you can decide to hold weekly team meetings via Zoom or Google Meet and use Slack to discuss more urgent matters.
If you’re based in a different time zone, and the time difference is significant, then agree on a time when you should be online, to ensure some overlap. This will also help you draw a line between work and personal life: according to Statista, as many as 27% of remote employees fail to disconnect from their jobs. They either work past their regular hours or through the weekend, which eventually leads to burnout.
Pro tip: Ask your manager if they’d consider recording team meetings so you and other team members with conflicts (e.g. time zone differences or life circumstances) can watch later.
Rippling, the best solution for working with employees and independent contractors
Becoming a digital nomad requires a bit of planning. For starters, if you’re going to work remotely for a US company, you need to agree if you’ll be hired as an employee or offer your services as an independent contractor. The former often means less administrative or compliance responsibility for you, since your employer will often handle it. The latter generally gives you more freedom to decide where and how you perform your job.
A good sign to keep an eye out for while considering which company to work with is whether they use software like Rippling to handle global payments.
Rippling is the best solution to make international payments for both full-time employees and contractors. It’s also the only system that offers native global payroll software. This means you can get paid in minutes! Other global HR providers use third-party vendors to handle payroll, which often means you’ll have to wait for up to 25 days to receive payment.
Want accurate payments on time, every time? With Rippling, as soon as your data is in the system, we take care of the rest. Learn more.
Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.