# British Citizen, US company, living in the UK



## mboo

I have been granted an H1B visa sponsored by a company based in the US. Since it took some time to arrange it, I have now no intention of moving to the US in the near future. I have never had a green card or been a resident in the US and all my life I have paid tax in the UK. 

I believe that once I get my H1B, I will become a permanent employee of the US company, working remotely. I can work remotely from the UK. 

Now the question: am I correct to understand that I will continue to pay taxes only in the UK? What do I need to file with the IRS to be on the safe side?


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## Bevdeforges

If you're not planning on living in the US, then obtaining the visa was a complete waste of time and money.

Normally, where you are physically located while performing the work is where you are deemed to be "working" - so you should either be under a UK work contract (with the employer paying in on your UK income taxes and social insurances) or working for the US company as a contractor of some sort.

The issue is that, if you remain on the US payroll, you will need a US social security number so that the employer can properly report your earnings (to the IRS, not to the UK government) and pay their share of payroll taxes on your behalf. Because you're in the UK, you get no benefit from any of those payroll taxes (i.e. unemployment coverage, worker's compensation in case of accident, etc.) and you're not paying into the UK system as you should be doing.

You need to talk to your employer to figure out how to handle this. First issue is going to be that you can't get a US social security number until you are physically present in the US to take up residence. Then, you would probably have to file every year with the IRS to get your income taxes withheld returned to you - and there will be other complications due to your somewhat irregular status.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> Because you're in the UK, you get no benefit from any of those payroll taxes (i.e. unemployment coverage, worker's compensation in case of accident, etc.) and you're not paying into the UK system as you should be doing.


I disagree with the words "no benefit." That's just not correct.

Disability, survivors, and retirement benefits are all continued and/or boosted through continued contributions to the U.S. Social Security system. Even for people residing outside the United States. Future U.S. Medicare eligibility is also determined (if you don't have the minimum 10 years of contributions). And, if a choice is possible, the U.S. system is often more affordable and more beneficial (in net terms) than a "typical" analogous program in Europe, in particular (but not exclusively) because the U.S. payroll tax rate is often so much lower.


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## Bevdeforges

Yeah, except that the UK may not (does not?) give you a "choice" between the systems if you are living and working in the UK - unless your employer certifies that you are on a "temporary" assignment and thus are maintaining your rights in the system "back home." Given that the OP appears to be a UK national, this may be something of a stretch.

Medicare is basically worthless outside the US, to boot.

The issue here is more whether an unused H1B visa has any effect on the OPs circumstances, and I suspect it doesn't.
Cheers,
Bev


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## BBCWatcher

I was only disagreeing with the statement as written.

Medicare is quite useful inside the United States, even for non-citizen seniors who might, for example, visit DisneyWorld on vacation and break a leg. That's "some benefit," not "no benefit," which is why I mentioned it.


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## goreilly16

As an aside to the original question, can the OP or any of the Repliers answer this question for me? 

With the OP working for a US company in the UK does the US company have any Corporate tax liability in the UK? I understand there are many personal income tax issues but are there any Corporate Tax obligations?

I ask this as I am looking at a similar situation where I would like to telework from Europe for my Canadian company (I am a dual Canadian/EU citizen). But my Corporate Tax dept claims they would have liability in Portugal if I stay beyond 183 days.

Can anyone shed any light?

Thanks


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## Nononymous

I don't really know anything specific here, but what I imagine is that your Canadian employer may worry that having a permanent employee in another country constitutes some sort of official presence that would make them potentially subject to paying corporate taxes or contributing to social insurance schemes. That's just my guess. 

The way around their concern would be to resign as an employee, set up as a contractor, bill them for your time, and arrange whatever you need to arrange with the Portuguese authorities. If you live in Portugal, that's where you pay tax and contribute to health insurance.


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## Bevdeforges

Further to what Nononymous has already said, I think it's the social insurance taxes (sometimes known as "payroll taxes" in North America) that are the main concern. In order to properly do the European payroll, the company would indeed need to establish a foreign branch of some sort - and that could involve some form of tax reporting, if not business taxes.
Cheers,
Bev


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## BBCWatcher

None of this may matter (really) if your employer simply doesn't want to take the risk, current facts notwithstanding. Their concern may be enough to quash the whole idea.


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## goreilly16

Thanks all for the feedback. BBCWatcher you are right. They're not 100% sure if there will any Corporate tax implications but the mere possibility is enough to put them off. 

So much for the free movement of goods/services/finances in the Global economy......unless you're a human or drug trafficker....


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## Nononymous

Well, you still have the option to "quit" and work as a contractor, rather than salaried employee. That should allay their fears.


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## BBCWatcher

....Or not.


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## Nononymous

Indeed. Could also be the case that administrative issues are a convenient excuse for unease with the idea of transatlantic telecommuting.


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## goreilly16

Seems very plausible, Nonymous. They have indicated they suspect a risk. They don't seem to be concrete.

With regard to working as a contractor; I would then lose employee benefits such as profit-sharing and Share Purchase programme matching contribution. So would rather try find a solution.

Do either of you know how the Non-Habitual Resident programme might come into play?


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## Nononymous

I know nothing of Portugal, I'm afraid.

As a contractor you would indeed lose all these things. But that might well be the price you have to pay for staying employed while living overseas. (Otherwise everyone would want to do it.) It demonstrates a commitment on your part to assume some risk in exchange for the freedom to live in a better climate. In the past I've "resigned" to work remotely, and been re-hired upon return, though without any guarantee that it would happen.

Also your medical and dental benefits are largely useless once you've left "permanently" so there's no sense in the company paying for them. Share purchase and all that is a different story, of course. Perhaps there's room for negotiation, but ultimately it's the company's call. I'm sympathetic (I've enjoyed my overseas stints) but also see it from the employer's perspective - if you want to leave the country for more than six months, that changes the relationship.


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## Bevdeforges

goreilly16 said:


> Seems very plausible, Nonymous. They have indicated they suspect a risk. They don't seem to be concrete.
> 
> With regard to working as a contractor; I would then lose employee benefits such as profit-sharing and Share Purchase programme matching contribution. So would rather try find a solution.
> 
> Do either of you know how the Non-Habitual Resident programme might come into play?


The other big thing here is that US work rules and benefits do NOT meet European labor law standards as to working hours, vacation time and registration in the local country's social insurance and tax systems. Profit sharing and stock purchase plans are subject to very different tax laws in Europe. (Went through it with an old employer that tried to extend their US profit sharing system to all their worldwide subsidiaries on an "equal" basis and the result was a royal mess.) The reason the employer has to be registered in the local business system is so that they are subject to the local labor laws, and thus so you can receive the benefits to which you are entitled based on your residence (and place of work).

What it often comes down to is that, in Europe the employer's share of most social insurances and benefits is much more expensive than what they have to pay out for someone on the same salary in the US.
Cheers,
Bev


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## BBCWatcher

Is there at least a colorable _business reason_ why your employer would _temporarily_ post you to Portugal?

Note those magic words highlighted above.


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## goreilly16

My Director did put some spin on a reason for the posting when requesting a 12 month duration. It was our Corpo tax dept. that put the 6 month limitation.


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## goreilly16

Bevdeforges said:


> The other big thing here is that US work rules and benefits do NOT meet European labor law standards as to working hours, vacation time and registration in the local country's social insurance and tax systems. Profit sharing and stock purchase plans are subject to very different tax laws in Europe. (Went through it with an old employer that tried to extend their US profit sharing system to all their worldwide subsidiaries on an "equal" basis and the result was a royal mess.) The reason the employer has to be registered in the local business system is so that they are subject to the local labor laws, and thus so you can receive the benefits to which you are entitled based on your residence (and place of work).
> 
> What it often comes down to is that, in Europe the employer's share of most social insurances and benefits is much more expensive than what they have to pay out for someone on the same salary in the US.
> Cheers,
> Bev


Bev,

I believe not all EU countries have the same payroll tax, vacation etc. laws. And I find it hard to believe there is not one single person living in one EU country and teleworking in another.

Also, what about Helpdesks? If a company has a Helpdesk in India and you call them from the US, are they not providing services and, effectively teleworking, in the US?


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## Bevdeforges

goreilly16 said:


> I believe not all EU countries have the same payroll tax, vacation etc. laws. And I find it hard to believe there is not one single person living in one EU country and teleworking in another.


No one ever said they did - although there are some commonalities, thanks to the EU (like maximum work hours in a week). Teleworking between countries in the EU is not all that common, and there are already quite a few rules/treaties relating to cross border workers that may apply. There actually have been some problems with budget airlines (like Ryan) paying workers living in one EU country under a work contract from another country (yeah, Ireland). The legality of that sort of arrangement is still under review.



> Also, what about Helpdesks? If a company has a Helpdesk in India and you call them from the US, are they not providing services and, effectively teleworking, in the US?


No, helpdesk employees are considered to be working in the country where they are physically present while doing the work, not in the country where their calls are coming from or going to. (The company I worked for had their help desk employees set up in Germany, fielding calls from all over Europe. Really dumb move on the part of the company because employee charges at the time were pretty high in Germany.)
Cheers,
Bev


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## goreilly16

Bevdeforges said:


> No one ever said they did - although there are some commonalities, thanks to the EU (like maximum work hours in a week). Teleworking between countries in the EU is not all that common, and there are already quite a few rules/treaties relating to cross border workers that may apply. There actually have been some problems with budget airlines (like Ryan) paying workers living in one EU country under a work contract from another country (yeah, Ireland). The legality of that sort of arrangement is still under review.
> 
> 
> No, helpdesk employees are considered to be working in the country where they are physically present while doing the work, not in the country where their calls are coming from or going to. (The company I worked for had their help desk employees set up in Germany, fielding calls from all over Europe. Really dumb move on the part of the company because employee charges at the time were pretty high in Germany.)
> Cheers,
> Bev


Thanks Bev. Now that you mention that Ryan Air case, I remember that situation. But I might look at that in greater detail to see how it compares.


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