Can You Get a Job from a Hong Kong Company Overseas?

Original article link: https://www.globalfromasia.com/workingoverseas/

Do you have a job from a Hong Kong company full time? But living in America most of the time?

When did this insanity start?

Life used to be so simple. We would all stay in our own countries, have our address in the same town as the company we worked in, and pay taxes to that city / state / country.

Nowadays it seems so complex.

But it is awesome. And I get to hear great questions from readers like today’s post.

Let’s share the question here:

(Disclosure: we are not tax professionals, just making a conversation and thought process for your own situation and to ask your own tax professional before making decisions)

Today’s Question

The last two years or so I have been consulting for an American pump manufacturer. Helping them with supply chain and other issues in China, Hong Kong and even Vietnam and India (haven’t been to India physically though).

They are now talking about hiring me full-time. It seems that for budget bucket reasons, they want to hire me via their 100%-owned Hong Kong trading company. I would be the first employee there. I really just have one big question set:

How much time would I need to spend in Hong Kong physically to be counted as an employee? And, of course, pay Hong Kong’s beautifully lower income tax rates. My wife and kid are now in California and I would want to spend time with them but if I could do that AND spend time in HK (for the lower taxes) that would be ideal. I am going to be going much more often too — so might as well place me as an employee over there.

Mike – I would really appreciate your time and thoughts on this. Let me know
(Reader’s name removed upon request)

Factors To Consider

As almost all advice, please do you own due diligence. I’m not a lawyer, and am sharing as best to my knowledge and research can provide. Disclaimer, don’t blame me if I am wrong!

Are You American?

I think first question is, are you a US citizen? Believe this will make things more complicated.

Especially if you are living and residing in California, the most expensive state in the United States. They will want your tax income. I believe you are still seen as a California resident, and have to declare this income to the state and pay taxes on it.

Tricky one, as it’s not a US based company.

Where Do You Spend Your Time? Where Do You Deliver The Work / Value?

So, where are you going to be most of the time? Still in California? If you are in USA more than 330 days a year, you fail the exemption status for foreign earned income.

If you are to be outside of America, especially California, for more than 330 days, as an American, this foreign earned income could be exempt from taxes.

But I can’t imagine the US tax department liking you getting paid offshore and sitting at your home office in California most of the time. Make sense?

The Hong Kong Company is Giving Your Proper Employment Contract

They intend to hire you full time, right? So then I would assume you would get an employment contract from them, in Hong Kong.

As an employee in Hong Kong, you would need to then get a Hong Kong ID card. That isn’t a bad thing, it has a lot of perks and advantages. But HK immigration will want the company to see if the company can hire someone in Hong Kong locally first. That is just normal immigration things, Hong Kong is seriously overcrowded and they are getting strict on who they allow to come into the region.

In Hong Kong, to get a job from a Hong Kong company, you’d need to get a proper employment contract as well as a HKID card.

Then, of course as an employee, you and the Hong Kong company hiring you would need to pay the associated taxes in Hong Kong. Which, you mentioned are much lower than in USA and most other parts of the world.

Hong Kong employment tax rates. How Will The Hong Kong Company Pay You? HK Bank?

How will this company be paying your salary? I would assume you have to have, or setup, a personal bank account in Hong Kong. Then they would setup payroll and have the funds deposited to your bank account either every couple weeks or monthly.

Will you need to access these funds right away? Will you use these funds to pay for your cost of living in California, USA? If so, I would then imagine you’d have to wire transfer the money from Hong Kong into your American bank account.

That money would then be treated as income in America? You will put those transactions in your personal bank statement. At the end of the tax year you’d have to figure out how to classify that to your tax accountant.

But, to stress, you can’t hide your money in Hong Kong from the US tax authorities anyway. You were never supposed to, but nowadays it is impossible. So you’ll have to declare this income to the IRS and explain that it comes from Hong Kong and that you’re hired by a Hong Kong company.

If you are doing it this way, you’ll be paying monthly bank wiring fee, and then declaring taxes in America as, a sole proprietor? Not sure to be honest.

How Big Is This Company?

The next point to look at, how big is this company? And when I say company, I mean the entity registered in Hong Kong. Doesn’t matter if this company is a massive conglomerate registered in the UK. What matters is how big the company is in Hong Kong.

That means, how much revenue. How big is the “real office” (not a serviced address or virtual office). How many full time staff, located in Hong Kong, and a legal hiring with employment contracts are there. Also, there is a difference between how many local Hong Kong people have jobs as a percentage of how many foreigners have jobs.

Any company that has a lot of locals hired, and is doing a lot of payroll tax is contributing to the local economy. Governments love job creations – for their people.

So these kinds of figures will help in your case as a foreigner in a Hong Kong company.

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