Non-US Citizens Work for US Companies and Live Abroad

Can Non-US Citizens Work for US Companies and Live Abroad as Digital Nomads?

Non-US citizens can work remotely for a US company from their home country or anywhere in the world as long as they have consent from their employer, follow local laws regarding visas, and file taxes with their country of tax residence.

Jemima Owen-Jones
Written by Jemima Owen-Jones
May 9, 2022
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Working remotely for an American company while living abroad as a non-US citizen is totally viable. However, there are a few legal factors to be aware of to ensure you’re complying with foreign jurisdictions.

US citizens working abroad have access to special US tax laws, like foreign earned income exclusion and tax treaties, to avoid double taxation. But non-US citizens don’t necessarily have access to the same tax rules and benefits.

Let’s look at five areas digital nomads and non-US citizens living abroad should understand when seeking a remote job with a US company.

1. Get consent from your employer and establish your worker classification

Not all companies are open to their international hires traveling abroad with their work. This may be an arbitrary preference of the US employers, or it may be for legal reasons.

You should share your desire to work remotely abroad early in the interview and hiring process. This will ensure you and the company are a good match for each other in advance. It will also give the company time to determine the appropriate worker classification.

Your worker classification is important when deciding to work remotely from a foreign country as it will set out your working relationship with the US company.

The main two types of worker classifications are an employee and an independent contractor. When it comes to remote working while living abroad, working as an independent contractor has advantages.

Unlike full-time employees who must work according to a company-regulated schedule, independent contractors have much more freedom and independence over their work.

Countries each draw the line between contractor and employee in slightly different places. But generally, contractors decide how, when, and most importantly, where they complete a given project.

Should you decide one day to relocate to a country with an entirely different time zone, working as a contractor gives you the autonomy to adapt your working schedule as you see fit. This also frees the company from navigating different employee benefits and tax laws as you move from country to country.

If a US company already employs you, the employer could consider reclassifying you as an independent contractor. But be aware that the working relationship must also change to reflect this. Suppose the company continues to treat you like an employee, such as controlling your work methods. In that case, the company will be subject to misclassification and could face penalties.

It’s also worth mentioning that independent contractors do not receive employee benefits and have different tax obligations to employees, which we will explain in the next section.

Employees are entitled to the same mandatory benefits they would receive in their home country.

2. File taxes with your country of tax residence and complete form W-8BEN

All non-US citizens working for US companies–regardless of worker classification–will pay taxes in their home country even if living abroad. The difference is how you pay the tax return.

Paying tax as an employee working abroad

Employees have little tax obligations since it is the US employer’s responsibility to withhold payroll tax contributions on behalf of the employee. The US employer must determine the employee’s country of residence, which can be difficult for digital nomads.

We recommend employers reach out to a legal employment expert to understand the amount and jurisdiction of their employee’s taxes.

Paying tax as an independent contractor working abroad

Unlike employees, independent contractors are self-employed, which means they are responsible for withholding and paying their own tax contributions. Again, this is simple if you’re stationary: you pay self-employment taxes in your country of residence.

If you move around as a digital nomad, you pay taxes wherever you have the most residential ties. You may need to file multiple tax returns if you qualify as a resident in multiple countries.

Avoid US tax implications with form W-8BEN

The United States Internal Revenue Service (IRS) states that all non-US citizens working for a company outside the US must complete Form W-8BEN to prove they are exempt from paying federal income taxes in the US.

Remote foreign employees and contractors working for a US company are not subject to social security or Medicare deductions.

3. Know the local visa and permit requirements before you travel

Before booking your flights, look into your chosen country’s unique visa requirements and permit regulations. Different countries and regions allow different lengths of stay and have specific eligibility criteria.

Apply for a tourist visa for short-term stays (90-180 days)

Many countries allow non-residents to work remotely for a maximum of 90 days or 180 days, depending on the country, without obtaining a work visa or sponsorship. This arrangement works well for those who choose to live the digital nomad lifestyle and are happy to move to a new country every few months.

Apply for a remote work visa for medium-term stays (6, 12, or 24 months)

If you hope to stay in one country for an extended period, you can choose from these countries that offer digital nomad visas. This type of visa became especially popular since travel restrictions from the pandemic continue to lift. Be sure to check the conditions, application process, and costs for each country.

Apply for a work permit or residency permit for long-term and permanent stays

If you intend to live in a foreign country long-term, be aware of the local regulations as they vary between countries. Many countries require you to apply for the appropriate visa and, upon arrival, obtain a work permit or residency permit, depending on your nationality. Sometimes, these visas require sponsorship from your employer.

After a certain period, you may be able to apply for permanent resident status. At which point, the country becomes your new country of tax residence. If you are an independent contractor, you must fulfill the local tax obligations of this country.

If you are an employee, you must inform your employer of your change in residency as this will impact their corporate tax liability and compliance with employment laws.

4. Do not interact with the local market as a remote worker

It is against local labor laws to interact with the local workforce or participate in “economic activities” as a remote worker for a US company. This includes:

  • Performing work for domestic subsidiaries or local employers
  • Employing, soliciting, or contracting workers from the local labor force
  • Providing services or selling goods to the local market

For example, suppose the company asks you to attend a networking event with local people, or you decide to outsource your work to a local freelancer. In that case, you have interacted with the local market and have participated in economic activities within that country.

If the local authorities catch you, they may revoke your visa and charge you with immigration fraud. This could waiver any future visa applications or result in deportation.

Top tip: Request a Digital Nomad Policy from your hiring company that outlines which work activities are acceptable across borders and which aren’t.

5. Understand the different payment options

There are several dozen payment methods for getting paid as an international remote employee or contractor.

Employees can receive payment through traditional international wire transfers into their US bank account or via SWIFT transfer. However, these are not very cost-effective since fees and exchange rates can be steep. And if you’re a digital nomad, you may not have convenient access to a single bank account wherever you travel.

Independent contractors can take advantage of more flexible payment options such as PayPal, Payoneer, and Wise. However, these aren’t available in every country.

Companies that partner with EORs, like Deel, can provide their contractors access to a special card that gives them immediate access to funds in a more stable spending currency without SWIFT fees. These preloaded cards are versatile because they work like a standard debit card, a nearly universally usable option.

Embrace the digital nomad lifestyle with Deel

Whether you’re a remote worker trying to navigate the global workplace or a US company looking to hire a remote expat living abroad, Deel can help.

Deel takes care of all of the paperwork, legal compliance, and global payroll procedures involved in international hiring. But it doesn’t end there. We also provide tailored training and onboarding services, localized employee benefits and support, and additional features contributing to an excellent international employee experience.

Want to learn more about how Deel works? Book a demo today.

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