The life of an expat contractor is not all about tax-free salaries and a jet-set lifestyle – working overseas can present some major challenges for the uninitiated who can easily break employment laws that can have tough penalties.
To help negotiate a minefield of red tape and save red faces, contractor specialists CXC Global have put together a list of some of the pitfalls and advantages of working in specific countries.
- Don’t admit to being religious – German workers who declare they belong to Roman Catholic or Protestant churches pay around 9% of their annual income to their church
- Keep to the rules – If you think IR35 is tough in the UK, give Sweden a wide berth as the government is notoriously rigorous in making sure contractors are tax compliant. Tax officials have more powers than the police and have been known to lock down buildings suspected of housing unregistered workers
- Unwelcome comrades – Russia has a mixed approach to contractors. Bosses love top talent as they save 30% in social security payments as they do not have to hand over the cash for highly qualified experts from abroad. Russian colleagues are not so happy because they have to pay social security
- Take the partner – Contractors earning more £114,869 pay income tax at a rate of 58.95% in the Caribbean paradise island of Aruba, but can save 3% if they are married and their spouse is with them
- The 14 month year – Spanish employers traditionally pay a bonus in July and December equivalent to pone month’s pay, which means staying for a year means collecting pay for 14 months
- Proving yourself – Contracting offers good pay in Belgium, but to get the cash, contractors have to have a university degree or a relative who has and is willing to support their job application. Those without degrees may need to pass a test or become a full-time employee rather than a freelance
- Saving grace – Brazil offers contractors a six-month period of grace for the first 183 days out of their first year in the country, even if the days are not consecutive. For this period, contractors are considered non-resident and pay no tax
The point of these stories is not to frighten contractors, but to show that life in another country can be complicated and it’s easy to break the rules even if you do not mean to do so,“said Michelle, Reilly, UK and Europe managing director for CXC Global.
