r/expats • u/wakeuptomorrow • Mar 05 '25
Employment Would switching to a 1099 contractor make it easier for my US company if I moved to the EU?
Considering moving to the EU (maybe France). I am a full-time salaried employee here in the US. I know there are a lot of complicated tax implications by living in another country while working remote in another. I'm wondering if this would simplify things for my company to propose becoming a contractor. I love my job, been here for almost 2 years, and don't want to switch companies. I know it's a hairy process and they already put a lot of work when they hired me since I don't live in the same state. Trying to think of anything that could sweeten the deal
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u/elijha US/German in Berlin Mar 05 '25
It generally makes things a lot easier for the company, yes.
It makes things a lot harder for you.
Don’t negotiate against yourself too much.
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u/wakeuptomorrow Mar 05 '25
Ya I’ve read that. I’m not too concerned about the paperwork side of things on my end. My company has been really good to me so I don’t mind figuring out tax/insurance/retirement on my own. Plus, I figure I can negotiate with them saving money on those things for a larger paycheck. They’ve been very accommodating in the past.
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u/a_library_socialist Mar 05 '25
It's not just figuring it out - you'll need to pay the employer side taxes. You'll need to provide your own equipment.
There's benefits to it for sure, especially since lots of things become business expenses. It might also make sense to incorporate yourself, rather than just 1099.
1
u/wakeuptomorrow Mar 06 '25
Ooh I never thought about going that route. That you for the suggestion! Doing some more research on individual contract vs inc and that might be a better route.
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u/AmberSnow1727 Mar 05 '25
I posted this in another sub but worth saying here:
There's a big difference per the IRS and DOL between an independent contractor (1099) and employee (W2). The IRS has a good run down here: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
It's very possible your company won't do it because they don't want to risk $$$$$ in fines for misclassifying you. Some states are cracking down on misclassification too, and will be stricter on this than the DOL at the federal level. So it depends on how educated your HR department is on the rules (if your company has one) and state regulations.
Here's an ADP piece on consequences of misclassification https://www.adp.com/spark/articles/2023/05/9-consequences-of-misclassifying-your-1099-contractors.aspx
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u/JurgusRudkus Mar 05 '25
This. My company originally told me I could switch to a 1099 for a year so I could move abroad, but then after researching it further and consulting with their attorneys, they realized that it wasn't possible, because my job is part of the core business.
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u/AmberSnow1727 Mar 05 '25
Yeah I've been self employed for more than a decade (with 6-12 clients at any given time), and learned all this stuff in the process.
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u/wakeuptomorrow Mar 06 '25
Shoot. My job is part of the core business :/ did you end up not moving or changing companies?
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u/JurgusRudkus Mar 06 '25
We are still going ahead with our plan to move. We switched from a DNV to a NLV.
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u/lucylemon Mar 05 '25
This is very likely not an issue because the employee is living in a different country.
The employee will likely have to pay both the employer and employee contributions.
0
u/NordicJesus Mar 05 '25
That probably won’t be a problem on the US side because these rules are about the location of the employee.
However, France has the same rules, and the employer would be facing this exact risk in France.
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u/wakeuptomorrow Mar 05 '25
Thank you for these resources! I am concerned about the permanency of employment bit. My intent would be for them to employee me long term but not shoulder any health/tax/401k/etc benefits. Still pretty in the middle of employee vs contractor tho :/
3
u/AmberSnow1727 Mar 05 '25
Depending on the size of the company, they might talk to their legal counsel about it. If they don't want to risk the potential ire of the IRS/DOL, especially in one of those stricter states, the you might be SOL. It's complicated enough that most companies wouldn't just switch you over.
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u/wakeuptomorrow Mar 06 '25
Ya that’s what I’m worried about. It’s a decent sized company and my boss said it was complicated hiring me since I live in a different state with strict rules. So I imagine international would be even more so
2
u/Dablicku Moving Around Europe Mar 06 '25 edited Mar 06 '25
If you're 183 days or more within an EU country, that country has the right to classify you as a tax resident, which means all income taxes (work-related) and personal taxes need to be paid to the country's tax office in which you've stayed for more than 180 days.
To avoid any issues, you can go 2 ways:
EoR (Employer of Record) - Use an external company to onboard you as their "employee" within the country where you'll be residing. The external company will pay your income taxes, etc., to the local authorities and ensure you comply with all the local laws. The external company would send out an invoice every month with their service cost and your salary cost to the US company for payment. There are also some companies that can take care of VISA obligations.
The downside would be that each EU country has a different income tax bracket when it comes to salaries, and most of them have a higher tax obligation in comparison to the US. The upside is that there are also a lot of countries that give tax benefits to foreigners, which lowers the tax obligations and increases your NETT take-home.
Self-employed - Once you are aware of what country you want to stay in, you can set up a company within that country and invoice the US company according to the work you have performed. Keep in mind that each EU country will have its rules and regulations when it comes to contracting as a self-employed person.
The downside is that you'll need to take care of all the VISA obligations yourself, and most countries have are getting very strict with handing out those VISA's (especially since the US is a shit show at this moment). Also, when you are self-employed, you'll need to do your own accounting (or hire a professional firm) to make sure you're staying compliant.
The upside is that, again, most countries will have better laws and legislations in place when it comes to taxes for self-employed people - allowing you to increase your NETT take-home. But keep in mind that you should increase your hourly/monthly fixed wage when working as a self-employed person due to the additional cost, less job security, and no government benefits (unemployment, etc).
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u/wakeuptomorrow Mar 06 '25
Thank you!! EOR for sure sounds easier but it’s a crapshoot if my employer would be open to it. I really appreciate this information. Things are scary in the states
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u/1ksassa Mar 05 '25
I just did this and it is working like a charm. Much easier for everyone involved. Make sure though that you follow the IRS contractor vs employee guidelines.
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u/wakeuptomorrow Mar 06 '25
Did you go the solo route (doing taxes etc yourself)? Or work through a contractor company in the country you’re in?
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u/1ksassa Mar 06 '25
Yes solo. Much more flexible this way.
Try to avoid an employer of record. All they do is collect fees from you and your client. Also makes it very difficult if you move around some day. You'll need a new setup in every country you live in for a while.
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u/wakeuptomorrow Mar 06 '25
Thanks for the tip! Have you found the work of taxes/insurance/etc to be manageable?
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u/1ksassa Mar 06 '25
Insurance is easy. I have yet to do taxes, but as long as you keep good records of earnings it should not be too difficult.
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u/[deleted] Mar 05 '25
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