Taking On Uk Clients As A Us Freelancer

[girlx]

i am an american IT freelancer who lives in thailand, with several stateside clients who pay me via direct deposit in US$ to my account in NY.

now i have an opportunity to take on a client who is in the UK and who wants to pay me in euros via paypal. how can i do this legally? my friend suggested setting up a company in the UK, but a google search has gotten me no closer to figuring out what is entailed in that for a US citizen. can anyone give any advice?

[GungaDin]

Hi, I don't see any problem, just tell him your paypal email address and nominate the currency you want to be paid in.

A no-brainer, unless I'm missing something?

Good luck.

[qualtrough]

As the previous poster said, I see no problem with them just depositing directly into your PayPal account. You can keep the euros in euros in your account as well, and only change them to dollars or other currencies when you want.

[Prakanong]

Of course UK companies pay invoices to companies outside the UK every day - you will invoice them from your company as normal.

How do you think Indian and other freelancers get paid in your industry ;-))

[girlx]

but is it legal for me to work for a UK company? or is this considered "under the table"?

[endure]

If you're earning income in the UK the Inland Revenue will want a slice of the pie.

[Edonista]

but is it legal for me to work for a UK company? or is this considered "under the table"?

Tell them to wire the money to your bank account in Thailand and keep your mouth shut with the IRS

[samran]

If you're earning income in the UK the Inland Revenue will want a slice of the pie.

you'd have to be resident there though. Performing work in thailand, then you'll be Taxed on it if you repatriate that money to Thailand.

[DavidOxon]

No problems in the UK with you being paid by a UK company in any way or currency.

No UK tax due on it if you're not living there.

No additional tax due in Thailand if you don't bring it into Thailand in the year that it's earned -

just the normal monthly witholding tax paid through your Thai company.

Do you have to charge them Thai VAT though?

david

[endure]

If you're earning income in the UK the Inland Revenue will want a slice of the pie.

you'd have to be resident there though. Performing work in thailand, then you'll be Taxed on it if you repatriate that money to Thailand.

I suspect that HMRC might want to argue about that. Many expats who are no longer resident (for tax purposes) in the UK still have to pay income tax on any income generated in the UK. It's not where you live, it's where the income is generated as far as the UK taxman is concerned.

[MrsExpat2B]

If you're earning income in the UK the Inland Revenue will want a slice of the pie.

you'd have to be resident there though. Performing work in thailand, then you'll be Taxed on it if you repatriate that money to Thailand.

I suspect that HMRC might want to argue about that. Many expats who are no longer resident (for tax purposes) in the UK still have to pay income tax on any income generated in the UK. It's not where you live, it's where the income is generated as far as the UK taxman is concerned.

This is only relevant if you have a UK domicile. If you are not UK domiciled (and I assume the OP is american and thus this is unlikely) then this is not an issue. It would be difficult to see just what the proposed arrangement would have to do with UK HMRC. UK Domiciled individuals are liable for UK tax on worldwide earnings, this is not the case for non domiciled individuals who only have a UK tax liability for UK earnings if they are actually resident in the UK.

[DavidOxon]

Yes, that's true, but you can't generate income in the UK if you're not IN the UK by working outside the UK.

UK expats are liable for tax on Rent from UK properties and profits on investments held in the UK.

but are not liable for income paid in the UK whilst non resident for tax purposes as long as the work is done

outside of the UK.

I had this very conversation with HMRC this week so it's fresh in my memory.

UK expats are able to still receive income generated inside the UK up to the value of their tax allowance

tax free and an sign forms NLR1 and R85 to get monies paid gross provided they are within

the personal allowance.

An American living and working outside the UK but being paid by a UK company/Person is not

liable for any UK income tax. But is taxable in their country or residence in this case Thailand.

Income generated abroad is only taxable in Thailand if brought in in the year of earning it.

If brought in later it is counted as savings and therefore tax free.

I'm not sure how you prove it or they disprove it though . . .

David

[endure]

Would she be liable for VAT?

[RAZZELL]

Yes, that's true, but you can't generate income in the UK if you're not IN the UK by working outside the UK.

UK expats are liable for tax on Rent from UK properties and profits on investments held in the UK.

but are not liable for income paid in the UK whilst non resident for tax purposes as long as the work is done

outside of the UK.

I had this very conversation with HMRC this week so it's fresh in my memory.

UK expats are able to still receive income generated inside the UK up to the value of their tax allowance

tax free and an sign forms NLR1 and R85 to get monies paid gross provided they are within

the personal allowance.

An American living and working outside the UK but being paid by a UK company/Person is not

liable for any UK income tax. But is taxable in their country or residence in this case Thailand.

Income generated abroad is only taxable in Thailand if brought in in the year of earning it.

If brought in later it is counted as savings and therefore tax free.

I'm not sure how you prove it or they disprove it though . . .

David

From what I remember the OP doesn't have a WP or pay taxes in Thailand...She's convinced she doesn't need too

RAZZ

[DavidOxon]

where . . . . in the uk? No

In Thailand? well . . . .that all depends

UK Domiciled . . . . isn't what it means to be resident . . . it's more to do with ones, and ones parents (father's)

country of origin. It doesn't change depending on where you are, unlike residency. . . .

David

[sriracha john]

If you're earning income in the UK the Inland Revenue will want a slice of the pie.

Performing work in thailand, then you'll be Taxed on it if you repatriate that money to Thailand.

Doesn't that require a work permit in order to be legal?

Edited November 26, 2007 by sriracha john

[girlx]

From what I remember the OP doesn't have a WP or pay taxes in Thailand...She's convinced she doesn't need too

Doesn't that require a work permit in order to be legal?

not according to immigration, and the ministry of labor has never answered me. my jobs are in the US and i pay taxes in the US.

[the scouser]

Would she be liable for VAT?

No, because she's not a UK/EU entity. No matter how much they like to believe to the contrary, HMRC do not have extra-territorial influence upon those who, as Expat2B stated, are non-domiciled. Girlx will be bound by the taxation laws of the country from which she operates and that in which she is domiciled.

By the way, "domicile" is a complex legal issue and does not equate simply to where one lives: it is more to do with where one's perceived affinities lie. For example, girlx, an American, may spend most of her time outside of the USA, but, as a US passport-holder, she will, generally, be seen to be domiciled in her country of origin: that is unless she eschews the benefits that citizenship may bring.

Scouse.

[sriracha john]

From what I remember the OP doesn't have a WP or pay taxes in Thailand...She's convinced she doesn't need too

Doesn't that require a work permit in order to be legal?

not according to immigration, and the ministry of labor has never answered me. my jobs are in the US and i pay taxes in the US.

Just to clarify for others, immigration is not in charge of work permits, the Labour Ministry is. To be legal when working in Thailand, it requires either a work permit or a work permit exemption letter, both of which are controlled by the Labour Ministry... and not immigration.

[kudroz]

If you perform the work in Thailand, it is deemed Thai source income and therefore you will be liable to pay taxes on that income regardless of where it is deposited. I find it amusing when people think that they can use an "offshore company" or any other entity in another jurisdiction and claim that their activities is carried in that country while they perform all the work in Thailand. Again: If the location of the activity for which your being paid is being carried in Thailand, it is deemed Thai source income and you must pay taxes in Thailand.

It would surprise me if the labour office advise you correctly if you are misrepresenting your situation. The right way of describing what you're doing is "I am an independent contractor taking on contracts with foreign companies. I am being remunerated for the work I do when I am physically present in Thailand." It does not matter if it's on the Internet, why would it? You are performing an activity on your computer while being physically present in Thailand for which you are remunerated.

You might want to try your regional revenue department office and ask to speak with an auditor or someone in authority (don't ask the poor clerk at the front). Or, if you are in the mood, consult with a reputable tax professional like KPMG. Don't bother going into some bookkeeping-shop where all they do is file tax returns for rice farmers and motorbike-restaurants owners, you will get bad advise.

[sriracha john]

Hmmm.... not paying Thai taxes AND not having the required Thai work permit...

Edited December 1, 2007 by sriracha john

[Prakanong]

Hmmm.... not paying Thai taxes AND not having the required Thai work permit...

My view on this is that they are breaking both the letter and the spirit of the law.

The fact that the Labour Department has not answered or lots of people have not been caught is neither here nor there.

If they want to chance it and get away with it its up to them but the old time and crime phrase comes to mind if they ever get caught.

If a Thai official ever wanted them they could use rhis and it only takes a pissed off ex, neighbour, landlord etc to cause this.

The old arguments are traipsed out about answering work emails while on holiday or checking stock markets but its qualitively different doing online IT work in Thailand.

Say for example I relocated to our Bangkok office - do you think I would not need a WP - I mean the computers I work on are in the USA, India, Belgium and the UK and the people i manage with and support are all over Asia?

De Nile is a river in Egypt though!

[kudroz]

I don't think that the Ministry of Labour puts a high priority on foreigner working from home for foreign clients, as this does "not" harm Thailand. Although, the Revenue Department wants to collect taxes; it is irrelevant to them if you have a work permit or not. What they care about is if you are performing work from Thailand and being remunerated for such work. A simple visit to your local Revenue Department will confirm this - I've been there, done that.

[OxfordWill]

I have clients in both countries who pay me via bank and paypal and its never been a problem. You will be getting funds from paypal into your us account presumably, where you declare and pay taxes so its no different where the client lives. Think tax treaties.

Edited December 1, 2007 by OxfordWill

[mouse]

Wow! GirlX! I thought that by now you had either given up, registered an Amity firm or gone back to the big Apple.

Seems you continue to try to burn the candle at both ends. Tsk..Tsk..! No work permit?, no Thai Taxes? Many of us have chosen the proper route and done other than you.

One thing for you to keep in mind is that the IRS tracks foreign residents and shares their tax data with the countires they reside in, if a Tax treaty exists.

Guess what...A Treaty does exist between the US and Thailand and you just might find yourself busted here and there.

I would strongly suggest a Work permit and Amity company registration. It is a pittance to set up and maintain and you will be given additional credit for your Thai taxes when you claim and get the $84,000 USD annual exemption, which requires that you are properly set up over here. If you already claim that exemption, which I am sure you do, then they will eventualy talk to Thailand about you. Just a matter of time. There is no statue of limitation with the IRS. I would never want to piss them off or try to pull the wool over their eyes. I am sure they have heard it all. Shame cause you do such good work.

Oh about your post.............know nothing about the Uinited Kingdonm and their rules.

Edited December 2, 2007 by mouse

[RAZZELL]

Wow! GirlX! I thought that by now you had either given up, registered an Amity firm or gone back to the big Apple.

Seems you continue to try to burn the candle at both ends. Tsk..Tsk..! No work permit?, no Thai Taxes? Many of us have chosen the proper route and done other than you.

One thing for you to keep in mind is that the IRS tracks foreign residents and shares their tax data with the countires they reside in, if a Tax treaty exists.

Guess what...A Treaty does exist between the US and Thailand and you just might find yourself busted here and there.

I would strongly suggest a Work permit and Amity company registration. It is a pittance to set up and maintain and you will be given additional credit for your Thai taxes when you claim and get the $84,000 USD annual exemption, which requires that you are properly set up over here. If you already claim that exemption, which I am sure you do, then they will eventualy talk to Thailand about you. Just a matter of time. There is no statue of limitation with the IRS. I would never want to piss them off or try to pull the wool over their eyes. I am sure they have heard it all. Shame cause you do such good work.

Oh about your post.............know nothing about the Uinited Kingdonm and their rules

Good post... Govt tax departments have long memories.

Another plus would be if GirlX ever wanted to stay longterm in Thailand, ie. apply for PR, maybe even Thai citizenship, it's imperative that a certain level of tax has been paid.

Other posters on this board have claimed to be "smart" by not paying taxes in Thailand for "years"...Then all of a sudden have found their immigration "status" (or rather lack of it)...means perhaps it wasn't such a smart thing to do after all

RAZZ

[girlx]

Seems you continue to try to burn the candle at both ends. Tsk..Tsk..! No work permit?, no Thai Taxes? Many of us have chosen the proper route and done other than you.

usual suspects... again, mouse, my situation is different from yours. as i remember, you are consulting, as your own business. you have a family and a house and plans to live/retire in thailand. you have gone the correct path for your situation. setting up a treaty of amity company would be ridiculous for me as i am an employee (not a consultant) of a company that is located in the US and does not have offices in thailand. i do occasionally take on individual projects for other companies (see OP), but am a w2 employee of my full time job. this is a gray area which is not covered by current visa or labor laws, no matter how vehemently you guys say otherwise. i am happy to pay taxes to thailand, and will do so once they have figured out how to handle a situation like mine and respond to my inquiries. however, i really don't care one way or the other if they "come after me", not that they ever would or could justify doing so ... i am very flexible and mobile, another reason NOT to set up a Thai company. i definitely have no intention of staying in Thailand forever or maybe even through the next year. i am tired of several aspects of this country, not least of which are self righteous and small minded expats. and Thailand can only benefit from my spending money in their country until i decide to do otherwise.

Edited December 5, 2007 by girlx

[RAZZELL]

Seems you continue to try to burn the candle at both ends. Tsk..Tsk..! No work permit?, no Thai Taxes? Many of us have chosen the proper route and done other than you.

usual suspects... again, mouse, my situation is different from yours. as i remember, you are consulting, as your own business. you have a family and a house and plans to live/retire in thailand. you have gone the correct path for your situation. setting up a treaty of amity company would be ridiculous for me as i am an employee (not a consultant) of a company that is located in the US and does not have offices in thailand. i do occasionally take on individual projects for other companies (see OP), but am a w2 employee of my full time job. this is a gray area which is not covered by current visa or labor laws, no matter how vehemently you guys say otherwise. i am happy to pay taxes to thailand, and will do so once they have figured out how to handle a situation like mine and respond to my inquiries. however, i really don't care one way or the other if they "come after me", not that they ever would or could justify doing so ... i am very flexible and mobile, another reason NOT to set up a Thai company. i definitely have no intention of staying in Thailand forever or maybe even through the next year. i am tired of several aspects of this country, not least of which are self righteous and small minded expats. and Thailand can only benefit from my spending money in their country until i decide to do otherwise.

Well, good luck in the IDC

RAZZ

[tjo o tjim]

Girlx- as a W2 employee, do you claim the foreign income exemption in the US? If not, I am pretty much on your side wrt the balance of legality and practicality. Your consulting income though really should be done as a Thai entity, as you acknowledge your independent situation. Some tax man, somewhere needs to get paid. Amity sole proprietorship would be the logical way to go.

Thanks to the geniuses in HR at my old company being paranoid about workers comp issues, I had transitioned to 1099 status and tripled my pay. At the time, I stayed "casual" in LOS, partly because I was back and forth so often I wasn't really sure where to call my home. Now I'm just going for amity to reduce the hassle factor long term...

[chiang mai]

i am an american IT freelancer who lives in thailand, with several stateside clients who pay me via direct deposit in US$ to my account in NY.

now i have an opportunity to take on a client who is in the UK and who wants to pay me in euros via paypal. how can i do this legally? my friend suggested setting up a company in the UK, but a google search has gotten me no closer to figuring out what is entailed in that for a US citizen. can anyone give any advice?

I am a Brit who works in more or less the same industry with clients in many countries - I am neither resident nor domiciled in the UK and I live in Thailand.

I have used a Hong Kong based "umbrella" company for all my invoicing and funds transfer purposes for the past fifteen years - it's a legit company that is run by a Big 6 firm and it's very convenient, reliable and cost effective. PM me if you would like details.