Can a US Citizen work remotely in US from EU?

Question

I'm a software engineer and I hold a dual citizenship, American and of an EU country. I currently work in the US but recently I have been contemplating returning to Europe while working remotely in the US. It'd be really great if I could hear from someone who has actually done this.

I do not want to discuss reasons for this here and instead I want to focus on feasibility and details of such a project.

I have just passed a two years of experience mark and I'm reasonably confident that my performance would not suffer from being a remote worker, granted that my employer did their part in accomodating me. I would also be okay with taking a salary cut.

So now that we're past the introductions, I'd like to ask some questions:

1. Is this workable from tax perspective? I fully intend to pay whatever taxes I owe on both sides of the pond. Would keeping a US account without living in the country be problematic?i

2. How would employers view me as a potential employee? Additionally, many remote companies like to fly out their employees once in a while. Would that dissuade them?

3. Are there any companies out there that have been known to do this? I don't necessarily mean ones that specialize in this sort of thing since I'd expect them to underpay me, but ones that would be cool with that sort of thing.

4. Any other advice is welcome.

Answer 1

I have done this. I worked a couple years for a US company, and then moved to Germany, working remotely for a little over a year.

• Salary: I kept my same US salary, and it's a good thing I did, because taxes in Germany are high. I wouldn't recommend offering to take a salary cut unless you're moving to a country where the cost of living is far lower (e.g. somewhere in Eastern Europe).

• Taxes: The IRS told me that the physical location where I work determines where I get taxed, meaning regardless of the company's location, if I live and work in Germany, that's my tax home. For the first six months, Germany didn't collect any taxes. Then suddenly after I'd stayed more than six months, they wanted taxes, including that previous six months' worth.

  I still haven't completely worked out the tax situation, but the bottom line is that you pay taxes in the European country first, and you get a US tax credit (to a certain limit) based on the European taxes you paid. You can get a form from the IRS to give your employer to ask them to stop withholding from your paycheck. I was able to get them to stop withholding and to return what they'd already withheld for my first full calendar year here, so that I had that money to pay my German taxes.

• Legalities: In my case, the company said I had to pick a country where they already had offices. I'm not really sure why, as legally I wasn't under that country's branch anyhow. They called my situation secondment. The benefit was that I kept the same US salary. The drawback was that they kept paying into US unemployment, not German, so when they decided they didn't want to have a remote worker anymore, I discovered that I couldn't get German unemployment benefits. (Luckily I was able to find another job very quickly.)

I'm not sure what other kinds of information would be helpful, but feel free to let me know in the comments.

Answer 2

Your location of work for remote work across borders is still your physical location. So if you are doing remote work for a US company while present in EU you are working in EU. Companies regularly hire offshore contractors exactly this way.

You would be paying the US income tax for income made abroad. Not because your employer is in the US but because of your US citizenship. You would also need to pay any and all local taxes.

As for whether if you can work in the EU for a remote position for a US employer, sure if you have work permit for your physical location which you do as a citizen.

Answer 3

As pointed out in Victor S's answer, you would be working in EU country X, not in the USA.

Typically, country X will have laws and regulations that a company employing people there must follow, covering many topics such as workplace safety, benefits, discrimination, employee rights, working hours, and taxation. Most US companies will not even know all the rules.

There are two common solutions, subsidiary and contractor.

Some large companies have an EU subsidiary that is set up to employ people in country X, and conforms to the relevant rules. You would not be direct employee of the US company but of that subsidiary. For example, my first job was working for NCR Ltd. in London. It was a wholly owned subsidiary of a US company, but was registered in the UK and followed UK law, including employment laws and regulations. In this case you would be paid in the local currency, and would have to handle any transfers to a US account yourself.

An alternative is for you to create a consulting business based in country X, with yourself as its only employee. The US company pays the consulting business for your work, rather than employing you. You would have to manage any benefits yourself. The currency and location of payments would be part of the contract.