Working as a sub-contractor in the US, living in Fi

Mikie · Post by **Mikie** » Thu Oct 16, 2008 3:29 pm

Ok, here's a question. I'm sure it's been covered a thousand times on here, and those who know me know I don't abuse this site for information. I apologize for not properly searching for the answers, but I'm looking for a specific answer for this question.

I am now a permanent resident of Finland. Have my id # and everything. In my job search, I have been offered a job working for a US corporation as a 1099 (sub-contractor). He would transfer funds to either my US or Finland based accounts. The work is global, but not sure if that matters.

How does the taxation work? I have heard that the first $85,000 made overseas is tax-exempt for a US citizen. But if I'm working for a US corporation, does that still apply? What happens after that 85,000? Am I taxed heavily?

Would I better off getting it paid to my US account or to my Finland account? Then transfering the $ as I need?

Or is it a lot easier to say screw it and work for a Finland based company that will offer me the same deal? (and yes, I have been offered the same deal locally based)

**Sponsor:**

Pursuivant · Post by **Pursuivant** » Thu Oct 16, 2008 3:47 pm

well, of course its by far easier to say "screw it" but lets look at the things.... from the Finnish governments P.O.V. you're going to be taxed here for your income in any case. it would give you some interesting options but then again you'd need to be versed with the tax laws of both countries to claim the overlapping bit back. however the US company won't be paying your pension, your social insurance and such which means as far as helthcare or KELA benefits goes you're on your own with those... no company clinic but guessing centre... so if theres a Finnish company offering the same money you're with a lot less headache with them... and the dollar rate isn't that grand either... so you just need to make a list of the good points and bad points and see which outweigh the other...

Mikie · Post by **Mikie** » Thu Oct 16, 2008 3:54 pm

Thanks for the quick reply. You bring up a point I didn't think about.

As far as the social insurance and pension go...are these things I"m required to pay into, or would I just be losing out on their services if I were to ever require them? The Finnish company would be a freelancing/sub contracting position as well, so I don't think they would be paying into it either.

Mikie · Post by **Mikie** » Thu Oct 16, 2008 4:02 pm

Well it looks as is I pay into those no matter what, based on my income in this country.

Anybody know a good international tax accountant? Preferably a Finnish American that works pro-bono?

raamv · Post by **raamv** » Thu Oct 16, 2008 5:27 pm

Mikie wrote:Thanks for the quick reply. You bring up a point I didn't think about.

As far as the social insurance and pension go...are these things I"m required to pay into, or would I just be losing out on their services if I were to ever require them? The Finnish company would be a freelancing/sub contracting position as well, so I don't think they would be paying into it either.

If you work for a Finnish company, and they are hiring you permanently, then yes they are required to pay into. If they are hiring you as contractor, then they dopnt. => you need to pay into it. generally, it happens so that Finnish company hires a person from company owned and operated by that person ( Tmi or Oy).
If you are US subcontractor, and if you dont pay taxes here, you will be followed upon by Vero ( like IRS), and No KELA ( as in work, employment etc as you are officially not working in Finland), and No social benefits as in KELA for healthcare etc.
so in essence you are probably on your own for both cases, but in Case of Working for Finnish as contractor, you have a chance to setup a Tmi or Oy where you can deduct a lot of benefits that you pay yourself...
your best bet is an international accountant : One well known is KPMG.
At least check this out ( Its the other way around of setting up US based operations for a Finnish Company).
http://www.kotu.oulu.fi/globalsoftware/ ... e_2004.ppt

More info on taxation but very geenral:
http://www.easyexpat.com/helsinki_en/work_taxes.htm
http://www.expat-finland.com/entreprene ... firms.html

Rosamunda · Post by **Rosamunda** » Thu Oct 16, 2008 5:45 pm

raamv wrote: If you are US subcontractor, and if you dont pay taxes herel

As Hank said above this is not really an option if you are a permanent resident here.
ALL (all) permanent residents must declare their global income. The tax you pay depends on the bilateral agreement between the two nations (usually this means you don't get hit twice).

Yes, a tax advisor is probably a good idea. And one of the "Final Four" is probably the best bet, albeit the most expensive. I have no idea how they charge.

The other route (the one I would probably choose in your situation) is that you set yourself up a limited company (not much capital required: 2,500 e is the minimum) then you bill the USA company for all the work you do. If you contact your local TE-Keskus you will be able to get all the start-up help you need (they like foreigners who set up businesses, especially if they are "exporting"). Then the accounting is up to you.... you either pay yourself a wage or dividends or both or neither.... You could hire your wife, girlfriend, children etc etc the possibilities are endless. Yes, you will still need a bookkeeper, but you might be able to give the KPMG expert a miss.

IIRC, if you are a US citizen you have to declare your worldwide earnings, even if they are below the 85K threshold.

http://www.te-keskus.fi (make an appointment and discuss your plans face to face with an advisor)

also

http://www.finpro.fi (the Finnish Foreign Trade association)

If you find some "local" work then you can bill that too from the same company, so it is flexible for the future.

Pursuivant · Post by **Pursuivant** » Thu Oct 16, 2008 7:41 pm

which the company also takes care of the pension, insurances, Kela etc. etc. and you can deduct your business expenses more directly. I'd know of a guy who could explain you the "how stuff works". Of course he's not free but he knows the ins and outs and speaks your lingo.

raamv · Post by **raamv** » Fri Oct 17, 2008 8:00 am

penelope wrote:
raamv wrote: If you are US subcontractor, and if you dont pay taxes herel

If you are US subcontractor, and if you dont pay taxes here, you will be followed upon by Vero ( like IRS), and No KELA ( as in work, employment etc as you are officially not working in Finland), and No social benefits as in KELA for healthcare etc.

Please read the whole sentence in context... I didnt say anything different.

DMC · Post by **DMC** » Fri Oct 17, 2008 9:14 am

The fact that both opportunities involve you working as an independant contractor means you could consider a different approach: take both. With the "employers" being in very different time zones this might be possible. That way you could work a lot of hours initially to do both jobs. It probably wouldn't take too long for you to see which job you prefer. At that stage you could either just drop the other job, or look to sub-contract it out, taking a percentage as middle-man. If you are genuinely operating as a contractor rather than an employee this should be possible. You might even be able to employ someone to do the grunt work on both jobs whilst you concentrated on the interesting bits.

Pursuivant · Post by **Pursuivant** » Fri Oct 17, 2008 11:22 am

not a bad idea, with Skype you can also hold teleconferences etc... works havoc on your daily routines schedule though...

Travmies · Post by **Travmies** » Fri Oct 17, 2008 12:14 pm

Pursuivant wrote:with Skypequote

I use skype, my international phone bills have been reduced by about a 1000€ a years, it fooking brill

Travmies · Post by **Travmies** » Fri Oct 17, 2008 12:16 pm

Pursuivant wrote:with Skypequote

I use skype, my international phone bills have been reduced by about a 1000€ a years, it fooking brill

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