It’s a very common question/misunderstanding coming up in /r/Germany (English subreddit about Germany), people thinking they can just move to Germany while working for a company in the US. Technically, not an issue. But you now need to be employed according to German law, including all the taxes and similar payments that includes for employees, but also for the employer.
Same in Austria, if I want to work here remotely for any foreign company, then that foreign company would have to have a legal entity opened in Austria and hire me according to Austrian laws and pay employer taxes in Austria, for it to be legal and by the book, which of course, unless they already have an office there or you're John Carmack, Linus Torvalds or Fabrice Bellard, no foreign company would go through all this hassle just to hire you remotely.
Everyone says this insane amount of legal red tape and gatekeeping is the government's way to prevent remote talent brain drain to places like the US and prevent local remote work turning to outsourcing which, if true, is complete BS reasoning as every company who wanted to outsource did that already, before remote work became popular.
I feels it's just German and Austria having a cultural and national obsession with red tape and regulations for the sake of preserving the status quo, and not for improving things for the ambitious workers who wish for better opportunities than the local market can provide.
ATM, the only way to legally work remotely is either as a freelancer or opening your own company and contracting which come with their own set of pros and cons.
I honestly don’t understand why you’re singling out germany and Austria. The same holds true for Italy, Sweden, Canada, the UK, … - you cannot employ anyone without registering as an employer and following local labor laws. You sometimes can skirt it by setting up a contractor relationship, with all attached baggage. But there are companies that offer remote employment as a service- they have a local entity that serves as employer of record for you and take a fixed fee for that.
>I honestly don’t understand why you’re singling out germany and Austria
Because in those two countries, freelancing is the only way to skirt around the fact that no company will set up shop locally just for you, and if you freelance, you pay higher taxes than being a FTE, while also loosing almost all benefits that come with being a FTE like sick leave, paid vacation, and pension contributions VS for example in Denmark, if you're a freelancer, you also get pension.
Yes, in most other countries you have to freelance for remote work, but at least in other countries (Portugal, Romani, Bulgaria, Spain, etc.) , if you freelance and say goodbye to social and workers' benefits, you at least pay less taxes since you get no safety net from the government, not pay more taxes like in Austria and Germany while getting no safety net and no benefits.
Freelancers in Germany don’t pay higher taxes. They pay income tax like every employee. They loose the employers share of social security and pension, but the remedy for that is to adjust rates - you also loose paid holidays, sick leave and all of the other employment benefits, but same - reflect that in your rates. You can opt into pension if you choose to, some freelancers are even required to (see 1). If you don’t opt into pension, you don’t need to pay into the pension fund. Unemployment insurance is similar: you can opt into it when you start freelancing, but if you don’t, you don’t need to pay for it.
(Source: I am for social security and tax purposes a freelancer)
In Poland you pay 12.5% flat revenue tax as a contractor vs 17/%32% income tax as an employee, it's a no-brainer especially since you need to pay for health insurance anyway and you are never going to see the money taken from FTEs by the government for retirement. Unlike in Germany there is also no enforcement of false employment.
There is another way. Some companies offer this as a service. They have offices everywhere around Europe. A first-party can hire you through one of these services, and you would have all the benefits of the destination country.
Pretty sure you can add the US to this list. Try being a resident (or even a non-resident citizen! The US is pretty unique in that regard) working for a non-US company without declaring the income for tax purposes and see how it goes...
It is actually possible for a U.S. company to employ you directly as an employee (according to ASVG) in Austria without forming a legal entity. They of course have to pay Employer contribution to social insurance and other things (DB zum Familienlastenausgleichsfond etc.), and you as employee have to also pay the employee contribution to social insurance and income taxes. You probably want to hire a tax accountant to handle your monthly payslips etc.
(Disclaimer: This is not legal advice, I’m not a tax accountant/lawyer.)
I beg to differ. Currently living in Austria and working remotely for a UK company, they set up the contract through an Employer of Record service so it's all legit and above board. I didn't think it was possible either, then one day I decided to tell every recruiter who cold-called that I was happy in Vienna and not planning to leave; it turned out that a fair proportion of their clients were actually willing to consider this kind of arrangement and jump through the necessary hoops.
This is usually worked around by intermediary companies that hire you and then send you as contractors to the original company - taking a cut in the process.
> ATM, the only way to legally work remotely is either as a freelancer or opening your own company and contracting which come with their own set of pros and cons.
For immigrants from most countries, this only works if they are really wealthy or very lucky. We basically just let people buy themselves into immigration via Cyprus nationality, but hard work or education are minor points in a kafkaesque process to get in.
In the US it's the same: if your company is in California and you hire a remote employee in Utah you need to register your company as a "foreign corporation" in Utah, do Utah payroll and follow Utah labor laws.
Actually it's more exciting because not only can you get in trouble for violating the Utah labor laws, as a California company the employee can complain if they are not treated in accordance with certain California rules (that bind to the company rather than the employee) -- and win.
In practice though this is all pretty easy to mange; all the rules above devolve down to simply: 1 - file a couple of forms and 2 - tell your payroll company. Health insurance isn't uniform across the country so in practice it's the most complicated part to deal with.
The same in The Netherlands. However from what I understand in the EU it’s a lot easier. For example between France and The Netherlands the company doesn’t need a full office. You just need to register with the countries tax office and pay taxes.
In a lot of cases the taxes are mostly the same just paid to the employees country instead of the companies one.
It’s mostly knowns in administration what companies seems scared of
AFAIK this is a solved problem. There are plenty of global PEO that take care of the local laws to hire people in different countries. I currently use Globalization Partners, know about a YC one called via.work and have worked with other called AIMS.
I think, there are many people who work remote in their home country and then travel across the world, and in many countries that can be illegal if you stay too long.
I accidentally did that once. Moved somewhere for half a year on a tourist visa, kept working remote for my employer in Germany. I simply did not realize there was a legal issue there.
The vast majority of tourist visas don’t allow you to work at all, so it’s not only "stay too long"
