[ned]

When you are full-time employed, remotely, by a european company, and living in another european country, does anyone know :

— do you set yourself up as a freelance consultant, and pay your healthcare and retirement fund yourself?

— …or do you let the company pay that for you in the country they are based in, and somehow benefit from that?

How does it work exactly for these social benefits that are very important in the european welfare model?

[stevoski]

Disclaimer: I am not an accountant nor an employment lawyer.

Anti-disclaimer: I run a company in Spain, and pay people in other countries money to do things for the company.

My understanding is that in the EU your income tax, social security, etc, must be paid to the government in the country you are "tax resident" in. Typically, you are "tax resident" if you spend more than 180 days per year in a country. (Note: that doesn't mean that if you split your time equally between three countries you avoid being tax resident at all. If only avoiding tax was that easy...)

The company employing you _might_ be willing to help with the necessary headaches of abiding by the employment law of the country you are in. But they would more than likely prefer that you are self-employed/freelance/autonomous in the country you are in. Abiding by the employment law and tax law in your country of resident becomes your problem.

How exactly that works for your social benefits depends on the country in which you are tax resident. For example, here in Spain, a freelancer ("autónomo") is not automatically entitled to state unemployment benefits ("paro") if the work ends. But you are entitled to maternity leave and retirement pension. You'd need to talk to an accountant in your country to understand exactly how exactly being a freelancer affects your social welfare rights and responsibilities.

There certainly are some tax advantages to being a freelancer: eg. being a freelancer in Spain entitles you to claim a VAT refund on any business-related expense. That new computer you want to buy? Expect that in a year or so the tax department will refund you roughly 17% of the total purchase price (21/121 of the retail price).

[metachris]

> Typically, you are "tax resident" if you spend more than 180 days per year in a country. (Note: that doesn't mean that if you split your time equally between three countries you avoid being tax resident at all. If only avoiding tax was that easy...)

I've been informed by my tax consultant that you are tax-resident in the country where you spent the majority of time in a year. If you split your time between three or more countries this still applies.

[peteretep]

That's far too simplistic, sadly. It's perfectly possible to be tax resident in multiple countries - I am tax resident in two, for example, neither of which is the US.

Here's how you try and work out if you're tax resident in the UK:

https://www.gov.uk/tax-foreign-income/residence

There are automatic resident and non-resident qualifiers, but everything else involves a whole range of factors.

[ruirr]

It depends in the country really. In Portugal and Spain it is really that simple, you do not live more than 180 days in a year in the country, you are not tax resident.

[mahyarm]

So if I spend 125 days in the UAE (a no income tax country) and 120 days each in 2 EU countries, I pay no income tax?

[monort]

Actually it's that easy to be a non-resident (except for US citizens):

https://en.wikipedia.org/wiki/Perpetual_traveler

[charlesdm]

By far the easiest way is to become self employed and take care of everything yourself. You could be "trading" as an individual, or through a legal entity. Your salary (i.e. a lump sum you invoice each month) would be a bit higher to account for these. If you'd make $8k as an employed engineer, maybe you'd get paid $12k to account for that.

You might also end up with more money in your pocket, since the tax situation can be different (but not always, depends on the country). One advantage is that you can deduct most tech expenses as business expenses (i.e. laptops/software/conferences/etc)

The alternative is that your employer sets up a local "shell" company that pays you for services performed, with you being the only employee.

[DominikR]

I'm doing exactly that, I'm self employed and take care of everything myself or at least I have someone taking care of it in my place.

Of course I charge much more than a normal employee would, I make around 20k Euros per month. (pre-tax)

Sounds like a lot - almost to the point where I sometimes feel like I have to excuse myself for it, but you also have to take into account that I have 10 years of all-round experience and I'm working harder and more focussed than most normal employees and spend a lot of time in improving my skill set in my spare time.

Not only the higher income is a good reason to be self employed, the other thing is that once you work remotely for someone, it's less likely that you will count a lot for that company.

So by letting that company employ you, you basically take a lower pay with less job security while making everything more complicated for that company. I'd rater be self employed and have a much higher than usual pay that offsets the lower job security.

[charlesdm]

And right you are. Once you account for all the taxes and expenses that you have to pay yourself, you lose a significant amount of money each month.

Most people just read the 20k number, and think, "he's making 20k a month!!!1111".

[DominikR]

Yes, I pay a 50% tax here. Additionally one has to consider that you might have some down time between two projects where you don't have any income.

But still I'd encourage anyone interested to try. You'll not just improve your tech skill set, but if you make it work you'll also learn how to sell and to negotiate, which is a generally helpful skill to have in all areas of life.

[charlesdm]

Where are you based?

[danmaz74]

Thanks for the very interesting data point. If you can share this, may I ask you how many hours you need to work per week to get that amount?

[kyriakos]

out of curiosity what kind of jobs you take up that pay off so much?

[DominikR]

Native mobile development for big businesses like banks or telcos. No startups as they often have lower budgets.

But I know much more self employed professionals working on Java Web backends for big companies that earn equal or much more than I do.

[vfc1]

But that's not remote, right?

[DominikR]

Depends on the project. For banks it's less likely that you'll be able to do something remote, but for telcos it's less of a problem as they rely less on security by obscurity and both use and give back to Open Source projects a lot.

Also the financial sector doesn't consist only of banks, there are many well funded areas one could work for remotely.

[nraynaud]

In France it's risky to be self-employed and have only one customer, that could be re-qualified as a disguised employment.

I don't know exactly how that works with foreign companies.

edit: my remark on foreign company is that, by having no nexus in the country of the consultant, going after them seems difficult

[stevoski]

Same in Germany. It is risky for the company, not for the "disguised employee", because the company can find that the freelancer subsequently demands back-payment of entitlements.

I've never actually heard of this happening, but I've encountered difficulties as a freelancer because a company was scared this could happen.

True ridiculous story: a German bank I did a consulting gig at for several months would not allow consultants to have their names on the office doors, unlike employees. They thought that having our names on the doors could be enough to turn us into "disguised employees".

[ccozan]

No is not ridiculous at all: having your name on a door means that you are "forced" to work there, thus rendering you in a employee since you cannot determine for yourself the place and location of work, the cornerstones of beeing a freelancer.

I do consulting for a big technology company in Munich and they have special freelancer areas where you can have any place you want, since there is no concept of "office" for a freelancers like. Some colleagues always have to chase me, since I can choose to take another place than they are used to :).

Also, you have to bring your own coffee machine, water, you are not allowed to use the ones from the kitchen, since they are only for employees. But I just don't care :), and use them anyway.

PS. i had some other crazy contract where I had to show them proof I am working also for another client, otherwise not able to take the gig. Germany is quite special :)

[DominikR]

I heard this has to do with the fact that once social services prove that you are not actually self employed the employer would have to pay back a significant amount to social services AND a fine on top of that.

I understand that these laws should prevent abuse of employees by big corporations, but it's hilarious that they go after self employed consultants that make several 100k Euros per year and already pay the maximum amount of social security that is possible.

And it's not like these companies have 2 or 3 consultants, they will likely have 10, 100 or even more. We are talking about fines that could be as high as many millions for these companies.

[k__]

In Germany you need to make about 60000€ a year to get private health insurance (better service, lower price) OR you have to be self-employed, where it doesn't matter how much you make. (500€ private, 750€ public)

Yes, this doesn't matter for an engineer who makes about 100000€ a year. :)

But!

If you're an employee, you have to pay into a government-controlled retirement fund, if you're self-employed you don't.

If you make about 100k, you (and your employer) would have to pay more than 10k a year.

So, no, if you're self-employed and make good money, you don't necessarily have to pay "the maximum amount of social security" :)

[germanier]

For the retirement fund only the first 74,400€ (west) or 64,800€ (east) of your income is used (2016 numbers, different rules if you work in mining). For anything over you don't pay into the retirement fund.

There are some self-employed that need to pay into the retirement fund, including teachers (which is applied broadly, e.g. training supervisors and moderators), journalists, and artists.

Also don't forget about the unemployment fund into which employees must pay.

> lower price, 500€ private

Heavily depends on your health and age. Additionally family members are insured for free in public but not private insurance which might tip the scale. Also important to note is that it's close to impossible for most to switch back to public insurance once they decided to go private (e.g. if the premiums rise in the future).

[lllllll]

A software engineer can make 100k€ in Germany? Where's that!?

[furyg3]

It's similar in The Netherlands. If you are self-employed and have more than one customer it's pretty demonstrable that you are autonomous, can decline work, and the relationship is not solely to avoid an employment contract.

Contrary to popular (Dutch) belief, you do not have to have more than one customer... it's just that if you do it can be difficult to prove that you are autonomous. One test is if you are doing the same type of work that other employees in the company are doing.

I'm not sure how this works for for international agreements (self-employed in NL but only customer in DE).

[oddsignals]

I'd assume the rules are the same in principle but you would be more likely to be considered autonomous in practice if audited. Also because you're probably providing your own equipment, office etc.

I actually did this for a while - self-employed in NO, only customer in NL. After a while I had more than one customer, making the issue moot :-)

[peteretep]

And the UK, the relevant legislation being IR35.

https://www.gov.uk/guidance/ir35-find-out-if-it-applies

[mtbcoder]

The IRS in the US also has regulations regarding single employer contractors/consultants. A company cannot turn its employees into independent contractors to skip out on things such as payroll taxes.

[dordoka]

It's exactly the same situation in Spain. (I'm freelance, spanish, working in Spain).

[pmontra]

Same in Italy.

[lukasm]

It varies from country to country. I think most of EU countries require you be more than 6 months in the country to be an employee. Usually people have LTD for more flexibility and lower taxes.

US based companies can hire remote workers as 1099 contractors.

https://github.com/tadast/switching-to-contracting-uk/tree/f... https://github.com/lukasz-madon/awesome-remote-job

[dabrorius]

It depends on the country, but you will probably have to found some kind of legal entity. For questions like these you can ask for help on our slack community: http://europeremotely.com/community.html

[i_don_t_know]

If your employer has a branch office in your country of residence, they could make you a regular employee of that branch and take care of all the legal/tax issues for you.

But you're just employed by the branch. You're not working for them. You're still working remotely with your colleagues elsewhere.