Independent Contractor Agreement International

In addition to withholding tax, the Company must submit Form 1042, Annual Holding Tax Return for US Source Income of Foreign Persons, by March 15 of the following year. To learn more about the form and requirements, click here. If there is a tax agreement between the United States and the contractor`s country, the contractor should submit Form 8233, an exemption from withholding compensation for the independent (and certain dependent) personal services of a foreign resident. Working with independent foreign entrepreneurs offers many advantages to growing businesses. By focusing on the problems mentioned above before hiring, a company will be able to prevent costly legal problems in the future. It is always a good idea to have the payment and other work-related files in writing. When a company expects an extended relationship with a contractor, it must take further steps to consult with local lawyers regarding labour laws or hire the employee as an employee. Be particularly careful not to ensure that an independent contractor is also not an employee under local law. Some countries need a supplier license that can help you avoid the risk of misclassification. We have written about various requirements to establish ourselves as independent contractors in many countries, including France, Belgium and the Philippines. For other countries, take a look at the compliance area on our blog. As we have already explained, the recruitment of an independent contractor may entail certain risks that do not exist in labour relations.

The greatest risk is state control. The IRS and the Ministry of Labour are acutely aware that companies hire contractors to save taxes, and have been aggressive in pursuing companies that deliver a lot of 1099. In fiscal 2015, the U.S. Department of Labor recovered the misclassification of workers as independent contractors of more than $246 million in wage cuts for more than 240,000 workers. If the Ministry of Labour or IRS finds violations, they will investigate all employees and contractors of a company for a period of three years. For any violation during the period, the company may be threatened with sanctions, for example.B.: a contract written in the language of the country of origin and a specific language to document the relationship between the worker and the employer may be necessary, but contracts that document a contractual relationship do not determine employment status. Ensure that all independent contractor expenses billed directly to a Federally sponsored project and document retention procedures are consistent with fund conditions, institutional guidelines and the Office of Management and Budget (OMB) Circular A-21 ( There are three things to choose from if you want to hire international employees: if contract workers perform the same tasks that employees in the U.S. do for the company, a foreign local government might realize that it is an employer-employee relationship to protect their workers.

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