Contractors’ Questions: Is a US green card required to supply American companies?

Contractor’s Question: I’m a dual citizen in the UK/New Zealand, currently living in New Zealand but on the cusp of working remotely for American/Canadian clients.

Would I need a ‘green card’ to do this work for these clients on a remote basis? In other words, if a person does not live in the US or Canada, do they still need a green card, or any other arrangement to be put in place, to provide services to businesses in those territories on a remote basis? Incidentally, I have no desire to live in the US but do have a US bank account.

Expert’s Answer: While there are many rules governing contracting overseas, and they vary by location, most countries do not require you to have a work visa as long as you work remotely from your own country.

Beware clients bearing invitations

However, if the client was to invite you to the US for training, or an extended stay, you would need to apply for a business visa. Given you have emailed your question to ContractorUK, my presumption is that you will be working as an independent contractor and are self-employed.

So be aware, if the US company wants you to be an employee, you would need to be engaged either directly by the US company or via an ‘Employer of Record’ service provider to ensure that all your taxes are deducted and passed across to the federal government. Under this arrangement, you would be entitled to the same employee benefits as other US employees.

Tax residency?

In your question, you state that you have dual citizenship in the UK and New Zealand, but you do not specify where you are registered as tax resident. If you are tax resident in the UK, you will follow the UK tax rules and declare your US income on your self-assessment form to HMRC. They will then assess that income as part of your wider income for tax purposes. Keep in mind, it is always advisable to speak to either HMRC or the equivalent tax authority in the country where you are tax resident. If that does not sound palatable, consider consulting a tax adviser about your personal circumstances, and I would say this reaching out for bespoke guidance is particularly advisable in your circumstances.

Positively on the tax front with American contracts, when remote working, foreign independent contractors do not have to pay US taxes, even where they are being paid by a US company -- as long as all the work is conducted outside of the US. This is because you are working remotely and are tax resident in your own country; you are subject to the local laws, and US taxes do not apply.

Lastly, explore restrictions with an expert

Finally, please note there are a few restrictions as an independent contractor in terms of the work you can carry out, so you would need to ensure you are not in a sales role or promoting the sales of the company to US clients in your tax jurisdiction -- or you could be creating a permanent establishment for the US engager, in the UK or New Zealand. As previously advised, tailored advice from a professional adviser should give you ‘the skinny’ here – a term you’re likely to become increasingly familiar with!

The expert was Janet De-Havilland, chief executive of compliance and contingent employment consulting firm Pendragon Consultancy.