Ginger01

Hello

I am planning on moving to Ottawa in February and my work have asked that I work remotely for them instead of quitting. I am considering this option as it's always so difficult finding a job so think this would take a lot of pressure off the move. My company have an office in London (where I currently work and am a UK Citizen) and New York. I have permanent resident status in Canada via the Spousal Sponsorship programme.

My question is: does anyone know if it would be better to work from the US office or the UK office (regardless of time difference etc.)? I'm thinking financially for me (i.e. taxes/costs, exchange rate volatility if applicable), visa limitations, entitlement to benefits and annual leave (of course SO much more in the UK than the US).

My company will consult with a lawyer etc to ensure whatever they offer me complies with laws but I was just wondering if anyone had any advice for me as the employee and in which situation I would be better off.

Thanks!

christmasoompa

If you're working remotely for them, then you'll pay tax in Canada, and things like visa limitations etc won't apply?

Ginger01

I know visa limitation won't apply for the UK/Canada arrangement as I'm eligible to work in both but that was mainly refering to the USA option.

Do you need to set yourself up as contractor/incorporated company or is it acceptable to just be an employee of a foreign company and just pay the correct tax in Canada? I've seen that I would likely pay tax in the UK and any additional in Canada but would like some confirmation that it's correct.

And obviously wondering whether there is any benefit working for the USA entity instead.

Additionally, what would the UK's obligations be regarding penstion and any medical insurance/benefits? Benefits aren't really much of a deal in the UK but I know in Canada they definitely are!

Thanks

christmasoompa

I must be misunderstanding, I thought you were planning on working for them in Canada? You only need work authorisation for where you'll actually be working, so visas aren't relevant if you're working in Canada. If you'll actually be in the US, then yes, you'll need a visa to work there, so head to our US immigration section for advice on that.

If you will be working in Canada and working for a UK (or US) based company, you'll pay tax in Canada, not the UK. There are quite a lot of threads on the same subject, the general advice is to set up as self employed and then bill them I believe, but have a hunt and you'll find some good advice.

Best of luck.

Siouxie

If working from Canada remotely, you become a self employed freelance contractor - invoicing them monthly and receiving the funds to your Canada bank account (or Wise account). UK may be easier / more advantageous from a simplicity point of view, but as an overseas freelance contractor there are no taxes to be paid in the UK. (nor national insurance contribution). While you will likely need to register for an HST/GST account, when you invoice you invoice them at - 0 rate - no HST/GST payable on overseas clients that you offer a service to. You will pay taxes on your income in Canada, however, as a self employed freelance contractor you can offset use of home office expenses etc., against taxes due.

There are many threads on the subject
Canadian Resident / UK company - Tax, etc.
Working in a UK IT job remotely from Canada
Canada/UK double taxation query
Working remotely for UK company from Canada
and others..

You won't be employed by the company as an employee per se - so leave / vacation / sickness pay / benefits etc., won't apply regardless of which company HQ 'hires you'.- you won't be resident in either country!

Gozit

This.

I work remotely for a US employer in Canada and this is how I am set up.

Ginger01

Thanks all, really helpful. I did read through those other posts but wanted to see if there would be any benefit being employed through the US branch, but looks like not! (as I won't be an employee).

I can't seem to find anything on benefits/CPP/EI (is that even a thing with self-employment?) when self employed.

Can I ask when you moved to Canada, I assume you had to negotiate a higher day rate (or however you chose to invoice) to cover the costs of health insurance, CPP (including employers contribution) and EI? I am prepping for a conversation with my CEO so don't want to agree to be paid the same rate of pay then realise I'm worse off in Canada when they're trying hard to keep me and I currently have negotiation power.

Thanks

Siouxie

As a self employed freelancer you theoretically decide on what payment you require - or hope to negotiate a rate that will cover your costs.

CPP - you have to pay both your contribution and the 'employer' contribution, but you get a 'tax credit' for the employer portion.
EI is not compulsory, but you can opt in to pay it - once you opt in, you have to keep paying for x amount of months/years.
'Health insurance' / 'Benefits' I presume you mean private health insurance (i.e. to cover the cost of medications/Optician/dental etc.,) - there are options for self employed, should you choose to pay for it - or you could put a set amount into a savings account (a 'pot') to cover things like that - which may be cheaper if it's just you. Private Health Insurance Premiums (such as Blue Cross or Manulife/Sunlife/Greenlife/Great West Life etc., may be able to be offset against taxes, if you are self employed.

You most likely won't be paid in Canadian $, most UK companies want to pay in UK £ Sterling - You have to decide whether you want them to pay you direct to your Canadian bank account by wire transfer once a month or use a service such as 'Wise' (formerly known as Transferwise).

Keep in mind that the interbank exchange rate changes daily (hourly). - so one month you may earn the equivalent of $30 an hour - another month it could work out at $25 - but with a Wise account you can decide when is the optimum time to 'exchange' it. If you are paid directly from the UK company to your Canadian bank account (in Sterling) you will pay a transfer fee of around $17 and be stuck with whatever the exchange rate is on the day. Alternatively you can give them your Wise 'UK account' details and exchange the money at will into Canadian $ and transfer it to your Canadian bank account.

This is the time to negotiate, but don't be surprised if they are not conducive to it - you could perhaps start with the amount they would normally pay as employer for National Insurance contribution / pension etc., and try and push it up from there. Good luck!

Official - CPP for self employed details: https://www.canada.ca/en/revenue-age...-employed.html
Official - EI for self employed details: https://www.canada.ca/en/services/be...d-workers.html
Medical: https://britishexpats.com/wiki/Medical_Insurance-Canada
Wise multi currency account: https://wise.com/ca/multi-currency-account/#features

eversmannx

US rates are higher than UK... you can't get a reference rate from your employment pay even if you add up estimates of benefits. As you're in demand, do some research and try to start with a good rate as it would be difficult to negotiate increases later.
I would look to charge the client in US, even if it involves a bit more work upfront. All the best.

dbd33

FWIW, I was a contractor (working through a numbered company) until the end of August. CPP was 527.74/month. I don't think that varies with amount billed. The only other regular bill was for HST which, of course, is a percentage of gross billings.

Ginger01

Thanks. They are also looking at setting up a Canadian entity to work from (but unsure if this will go ahead). Do you know if salaries are higher in the US than the UK? I've always thought that UK salaries are typically low in general compared to the cost of living and Canadian wages are quite a bit better.

Siouxie

That would depend on the industry and what it is you do.

You will also need to factor in the exchange rates and any transfer fees you may incur receiving the money. Canadian exchange rates change hourly; Wire transfers are around $17 to receive; (Paypal take a percentage plus a fee), a TransferWise multi currency account is generally one of the cheapest routes for payments.

Siouxie

As I understand it from the official website, CPP is based on the amount of income and will vary depending on how much you earn.
A self employed person pays 10.2% of income; they then get a tax credit of 5.1%.

Invoicing for services to overseas clients, HST is billed at 0%.

dbd33

I don't imagine the OP will want to be self-employed, I'd expect a numbered company arrangement with a T4 from that entity but that's a matter for their accountant.

Ginger01

Sorry for my lack of understanding but are you referring to myself as "original poster"? What do you mean when you refer to a numbered company? As in my current work opening up a new company or myself? Sorry slightly confused!