Table of contents
- Guide to Work Permits for International Contractors
Guide to Work Permits for International Contractors
International contractors face a number of unique compliance challenges when they decide to work abroad.
You will be entering a foreign country as an expat, and subject to local laws and regulations with each step.
Foremost among those, are the immigration permissions in place, especially those related to work permits for contractors.
- If you have never worked in another country, how will you go about learning the work permit rules of your destination country?
- What is the application process and who needs to be involved?
- How long is the work permit validity period and can it be renewed?
Every expat contractor will need the answer to these questions, well before arriving in the country.
Take Charlotte as an example. She was an IT specialist in Singapore who was getting interest from several Japanese firms that needed her expertise.
She already was employed in Singapore, but was intrigued about the opportunity to work in Japan as a contractor.
Charlotte knew she would need a work permit and wondered if she could work for more than one client at a time. She really wanted to be a true freelancer instead of an employee.
Work Permits for Contractors
Foreign nationals that work abroad typically need a work permit, unless you are an EU citizen working in a member country. Very simply, countries want control over who is working in-country as an expat.
The work permit is usually tied specifically to a client/employer. But some countries allow work permits to be sponsored by an umbrella company. An umbrella company gives you the option to change end-clients on the same permit, or for multiple clients.
A few countries, like Japan, do offer self-employment visas where you can work with multiple clients. But they are more difficult to apply for than sponsored work permits.
Charlotte had a few options when it came to her Japanese work permit:
- She could become an employee of her client, and they would sponsor her work permit. She wasn’t really interested in becoming a full time employee, so this was not her top choice.
(In Japan, the work culture is centred around formal employment, but that is changing as more local workers freelance part-time. As a foreigner, Charlotte was not bound by the cultural norms, and wanted more flexibility.)
- If Charlotte accepted a part-time role with the client along with sponsorship, it would be possible to apply for and obtain a Sole Proprietor visa. This would enable her to freelance with other companies. She could eventually leave her original client/employer and continue to work as a valid self-employed using that visa.
- If she didn’t want to go through that process but still preserve some freedom there is another choice. Charlotte could use an umbrella company who would sponsor her work permit. She could work for one or more clients, as often as she liked, without the restriction of full employment.
This example illustrates how there can be different paths to work permits for contractors depending on the country and the preferences of the contractor.
What is the Duration and Limitations of a Work Permit?
All work permits have a time duration, but most are renewable or extendable.
- In Japan, Charlotte would first need to have a Certificate of Eligibility from a Japanese consulate.
- After she received her contract, then the work permit sponsor would apply for her. It takes about three months for approval, so advance planning is necessary.
- Her work permit would be valid for the length of the contract, up to five years.
- Three months before expiration, it can be renewed with evidence of a new contract, and payment of the work permit renewal fee.
This can all get complicated with changing or adding clients. Which is why in the end Charlotte decided to work with a Japanese umbrella company for sponsorship. The umbrella company would also assist with her client payments and tax withholding. This service is a huge benefit for a new expat in Japan.
At any time, she could apply for a Sole Proprietor visa on her own. But the umbrella company was a great way to get started until she was ready for the next step.
How to Obtain a Work Permit for Contractors: Sponsorship and Criteria
As you can see from Charlotte’s example, each country will have its own criteria for a work permit. The general requirements are:
- A confirmed job offer or contract from a local company.
- Any pre-assessment of qualifications, such as education or experience
- A local sponsor, either the employer, client or umbrella company
- Documentation such as resume, school transcripts, income history, passport
Other criteria could include quotas or maximum number of permits issued each year, such as in the US. Also, it is very common for permits to be limited to skills/positions that can be filled by a local. This prevents foreigners from taking jobs from residents.
Some countries do require that work permit applications be filed when you are not in the country. So you might not be able to show up on a tourist visa and apply inside the country. Mexico is one good example of this rule, and the local consulate has the discretion on approval.
How Can Contractor Taxation Help You Obtain a Work Permit?
Globally, there is enormous demand for specialist skilled labour of all types. Increasingly companies and workers are drawn to the flexibility and benefits of contract positions, especially when it involves working internationally.
However there is a lack of information and support – especially for individuals considering a move. Additionally with new and attractive markets developing all the time its hard to stay on top of the immigration and taxation implications.
We seek to meet this need by acting as a contractor management service for individuals, employment agencies and end clients. Primarily, as the name suggests, we are focussed on contractors who need work permits and taxation solutions.
But we do also deal with related issues like expatriate resources, market conditions, relocation assistance and local information sources.
For more specific information on how to get work permits for contractors you can check the individual country pages.
We have a fully vetted network of umbrella companies that can sponsor work permits and act as an intermediary between you and your client.
Other benefits of securing an umbrella company include but not limited to:
· Issuing a monthly payslip, and transacting to a local or foreign account
· Sponsoring work permits
· Managing all client payments, tax withholding and any social contributions
· Setting up the contracts with the clients
· Moderating any disputes with your clients
· Advising on access to totalization and double taxation treaties
Please contact us with your questions about international contracting and work permits. We’re here for you!
FAQs about Work Permits
Although you must have a work permit for contracting abroad, you are not always the one responsible for the application. Your client or umbrella company as sponsor would apply on your behalf, using the documents you supply. If you are applying for a self-employment visa or digital nomad visa, those are entirely your responsibility.
On an open work permit in Canada you can work for any company as it’s not tied to a single employer/client. You don’t have to use an agency/umbrella company, but it can be helpful if you want assistance with payment from the US client. They will also calculate and withhold your monthly taxes for you, so it’s a complete service.
First, it’s illegal in most countries to earn local revenue without a work permit. If found out, it would likely lead to deportation and possible fines. Some contractors do work online remotely in foreign countries while on a tourist or spousal visa.
This practice is not technically legal, but it is fairly common. For this reason countries have developed digital nomad visas, to give a compliant option to remote workers. Most digital nomad visas are exempt from local income tax, so that’s another benefit.
Probably the most common is where the position is one that could easily be performed by a local resident. That might include unskilled labour, teaching or non-professional roles. A country might have an annual limit on the number of work permits as well. Generally, if you have unique skills needed by local companies, the work permit should be approved.
The term ‘freelancer’ can be used to describe self-employed, independent contractors, digital nomads or those with a limited company. All work permit criteria and regulations will still apply depending on the business model of the freelancer. Basically, it means you are not an employee, and work for yourself.