What is the Best Choice for Contractors: Work Remotely or Move Abroad?

 In Contractors

The gaining popularity of remote work presents many contractors with an interesting choice as they look for international clients.  You may either move abroad to work onsite or offer to work remotely from home (or another country).  This choice only works for roles that are easily performed online through virtual platforms. As such, it is not a fit for every position.

If you are recruited by a foreign client this issue may come up. This is especially so as the world emerges from the pandemic with more work options available.  This article will go through the pros and cons of each choice. It will also examine how to evaluate which is best for you.

Do you have a choice when working for clients abroad?

In the end, the client will decide how they want you to work with them, either onsite or remotely.  They may likely state a preference in the recruitment process. In this case, you usually won’t have to be the one the suggest the best method.

From their point of view, it may depend on a few factors, including the overall cost of hiring you.  If you live in a country that has a lower economic level, they could save money by hiring you remotely and paying a rate that is ‘localized’ to your country.  Another factor could be the ease/difficulty of securing work permits for you in their home country, where there may be caps or quotas.

Some clients may prefer that you are onsite at least initially, for training, supervision and ease of evaluation.  It is also possible they will offer you the choice, albeit with different compensation rates.

Moving to Work Onsite for a Client

Overview

Working onsite is a more traditional way to fill either a temporary or long-term role.  It will entail moving to the client’s home country, along with all the expenses and logistics that requires.  They will likely assist you with some of those steps (such as work permits) but the expenses should be shouldered by you to avoid appearances of disguised employment.

Pros

  1. Ease of integration with the company – Working onsite does give a contractor a chance to work directly with management and other staff in real-time.  This can lead to a feeling of belonging and engagement that remote work does not offer.
  2. Paid at rates customary in the host country – Your rates won’t be capped based on your home economy. Also, you can charge rates similar to others working in the host country.
  3. Opportunity to live in a new country – For many contractors, working onsite offers an adventure as they get to explore and learn a new country and culture.  This adds a whole new dimension to a contract that has value beyond income and work satisfaction.
  4. Easier to work into an employee role – If you have the desire to eventually become a full-time employee, this may be easier when working onsite.  You have a chance to demonstrate your value, commitment and involvement daily which could lead to an ongoing position.

Cons

  1. Relocation expenses – As a contractor, all of your expenses to relocate, obtain visas and get settled are paid by you.  This is quite different from employees who have many expenses reimbursed, so your rates should reflect these costs.
  2. Work permit – Your client may or may not be willing to sponsor a work permit if needed, so you might have to work with immigration directly.  Your other option is to be hired through an umbrella company that can sponsor your work visa and facilitate client payments.
  3. Language/cultural barriers – Moving to a new country and joining the workforce will often bring language and cultural changes.  This can add a degree of stress for new contractors if the country is unfamiliar or quite different from home.
  4. Subject to ‘benching’ and loss of income – As a contractor, you can be laid off or ‘benched’ with little notice and no recourse.  If the client is unhappy with your work or no longer needs you, there are no employee protections to rely on.  The solution is to build a termination clause into your local contract that details notice periods and termination penalties.

 

Work Remotely from Home for Clients

Overview

Remote work can be performed either from your home country or from a third country.  That could be a country that offers a digital nomad visa or does not require a work permit (such as the EU for members).  This does offer you the maximum flexibility in terms of location. This is because you just have to navigate time zones and internet connectivity.

Pros

  1. Flexible work location – As a remote contractor, you can work from anywhere or simply remain in your home country with no disruption to your life.  As long as you fulfil your project and role requirements, your client won’t be concerned about your physical location.
  2. Autonomous work environment – Remote work lends itself to those who are ‘self-starters’ and can create a structured work environment.  This can create a feeling of freedom and autonomy, while still maintaining a professional work role.
  3. Less administrative work for the client – Your client will only have to remit payment to your preferred account after invoicing and will have no other obligations.  This is different from onsite roles where the client has to be concerned about tax withholding, disguised employment claims, social contributions and other compliance issues.
  4. Can easily work in temporary roles or for multiple clients – When you work remotely you can engage with multiple clients across any time frame that is needed, without concern for reliance on a single client.  If clients leave or projects end, new work can be found to replace the income.

Cons

  1. Communication and time zone challenges – Sometimes you may live several time zones away from your client (or other remote workers). In these cases, this will require additional organization and planning.  Because internet connectivity is crucial, that responsibility is yours alone to ensure smooth communication and collaboration.
  2. Less connected to the office environment – There are numerous online platforms for communication and collaboration. However, remote workers may feel disconnected from the client at times.   Virtual communication became the norm during the pandemic, but it’s hard to replace the in-person office environment for some workers.
  3. Responsible for own travel/visa/living arrangements – As a remote worker, you are managing your business independently without assistance or support.  If you remain at home to work that is not a problem, but those who are drawn to the digital nomad life will have another layer of planning, expense and effort to manage.
  4. Perceived ‘value’ to the client may be lower – Remote contractors are often quite far away and may be temporary. Thus, it can be more difficult to show your value to the client.  It is natural to perceive an in-office worker as more valuable than one that is solely online, and where the work may be asynchronous across time zones.

 

Tax and Expense Considerations

As mentioned, both remote and in-office options carry expense considerations for the contractor. However, remote workers are left to cover their costs on their own. For an office-based worker, a client may find a way to include some relocation or visa expenses by including it in the paid rate, but that won’t be the case for the digital nomad.

Tax residency is an issue for both remote and local contractors, and this can affect your take-home earnings.  For example, if you decide to move to your client’s home country, you could find yourself being taxed at rates higher than you expected.  If you work remotely from home or in a third country, you have more control over your tax situation (many digital nomad visas exempt workers from tax liability).

How Can Contractor Taxation help you decide whether to work remotely or move abroad?

Contractor Taxation has a global network of umbrella companies that can be your partner when working with international clients.  Whether you choose to work remotely from home or onsite for your client, an umbrella company can ensure timely payment and tax withholding.  This takes the guesswork out of international contracting at every stage of the client relationship.

Other benefits of umbrella companies include:

  • Manages all client payments, tax withholding and any social contributions
  • Issues you a payslip each month, to a local or foreign account
  • Sponsors work permits
  • Helps set up the contract with the client
  • Moderates any disputes with your client
  • Advises on access to totalization and double taxation treaties

If you have questions about how an umbrella company can help you as an international contractor, please contact us at Contractor Taxation. Whether you’re deciding to work remotely or move abroad, we can always help.

Have a question? Send it our way! Get in Touch +44 (0) 208 935 5339
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