Freelancer/Sole Trader declaring foreign income

Hi there, I'm currently exploring the option of becoming a sole trader.

My situation right now is I have no clients here in Ireland, however I could have a potential client who is based in North America. I would be consulting for them remotely from here in Ireland with the likelihood of working between 30-40 hours per week, and judging by preliminary talks this could be ongoing for the next 6-12 months.

So my question and concern is; What requirements do I need to fulfill to be able to legally bill them for my services, which would be paid in dollars & most likely via bank transfer, and subsequently declare that foreign income for tax purposes.

I hope I made that as clear as possible, any and all answers is appreciated

Underpaid Mike

I am in a very similar situation except clients will be in the UK.
Anyone have any info on this it would be great, thanks

ironclaw

I'm the opposite, Irish outside of Ireland but most of my salary is from Ireland.

To the best of my knowledge, it's simply income so you would convert to Euro's and declare it as such. Where you may need an accountant is if you are charging VAT or hit that threshold, again dependent on your company set up. Services fall under different VAT rules depending on where they are being delivered etc.

Alternatively, you could look at setting up an American LLC in Delaware but this is only a possibility if you think you'll be turning over 6 figures or more. There is good info here: https://stripe.com/atlas

On a practical level, as I did a lot of work in Ireland for clients in the US:

- Watch your hours. Most people in the US have no idea of timezones so will be asking where you are at 5 pm when it's 10 pm in Ireland. It's worse if they are West Coast. So be sure to set a good SLA and availability in your contract.

- You mention being paid by bank transfer. Keep an eye on this. Legally you'll find it very difficult to get your money if things go sideways so be sure it's a legit company and the credit terms are favourable. Keep on top of it.

fankity flank

I think this would still be considered an Irish based trade, and it should be declared for tax purposes as standard sole trader income.

As the services are being provided to an entity outside of the EU then there would be no need to register for VAT, at least not on the basis of this income alone.

From the US side you'll likely need to complete a W8-BEN form, which will absolve you from any US tax liability, or US withholding taxes.

In practical terms, you just send them an invoice, and no need to mention VAT anywhere on that invoice. For transfers and FX charges...etc maybe worth looking into setting up a Revolut bank account. There is a free business account package, not sure what level of funds will be transferring across, but using something like Revolut could save you a lot on fees.

@Underpaid

Thanks for all the advise and comments everyone.

@Underpaid Mike - I discovered the best option for me is to create a contract with an agreed upon fee in Euro and an agreed upon timeline (as my services will be ongoing this can be reviewed or renegotiated at the end of contact).

I will then invoice my client in Euro monthly (with no VAT due to being outside Europe so may be different for you)

The client will then use TransferWise (or a similar service, but TW do offer a business account) to pay me in the agreed upon amount. I can then file the taxes as necessary once a year along with any other necessary credits or claims.

Worth mentioning ironclaw's advise below. For me the above scenario works because I trust my client from previous experiences so I'm assured I will have no issues with payment.

ironclaw wrote: »

- You mention being paid by bank transfer. Keep an eye on this. Legally you'll find it very difficult to get your money if things go sideways so be sure it's a legit company and the credit terms are favourable. Keep on top of it.

Gloomtastic!

If your client is going to be your only client, then you should have a read through this to determine whether Revenue would consider you an employee as opposed to a self-employed contractor

https://www.revenue.ie/en/employing-people/becoming-an-employer-and-ongoing-obligations/guide-to-pay-as-you-earn-paye/determining-the-employment-status-of-an-individual.aspx