As a UK-based freelancer, you are actually allowed to work for clients in another country. In fact, the freedom to expand your geographic network is one of the most appealing things about working as a freelancer for many.
However, what you need to consider is your tax residence.
What is a tax residence status?
A person’s tax residence status is essentially used to determine which country to pay income tax to. For example, a British person who works in the UK will most likely pay tax on their income to HM Revenue & Customs (HMRC).
While it can be confusing at times, it is important to do some research on your tax residence. It will help you avoid difficult situations such as B. failure to pay the tax you owe or, conversely, paying taxes on the same money, but in both countries.
In order to find out your tax residence, you have to take a legal residence test.
The results are determined by factors, e.g. B. How much time you spend where and what connection you have with the respective countries.
How can I work as a freelancer for foreign clients?
Whether you’re planning to take your skills on a trip around the world or already have overseas clients on your books, there are some processes worth honing! We’ve rounded up some of our time-tested freelance tips when clients are in another country.
Remember that you have to avoid time differences
That may sound obvious, but it is easy to be seduced by an exciting briefing with a substantial budget into forgetting about logistics.
Get excited, but don’t forget to consider how to manage a collaboration if your time zone doesn’t match your time zone. Will it work for your other customers? Does it fit your personal schedule? Is this realistic if you need unusual working hours to be available for meetings?
As a freelancer, you’ll likely go through this process at the very beginning of any project, but adding the time difference doesn’t hurt!
Sign a contract and think about the laws that apply
Contracts between freelancers and customers are already widespread and are definitely best practice, no matter where in the world both parties are. This is even more important when you need to protect yourself from the potential pitfalls of international freelance professionals.
Language barriers and cultural differences can lead to confusion and mismatched expectations. Signing a contract for both parties will help you manage them and make sure everyone is on the same page. It’s also a great way to make sure there aren’t any legal issues that could later lead you astray. For example, any licenses or permissions you might need to collaborate.
Don’t forget about exchange rates when you are talking about cost
Again, this might sound like another obvious statement, but when it comes to costs and deals, remember to consider the exchange rates between currencies. Calculate this beforehand and then price accordingly. Enter the exchange rate in your offer and make it clear that the invoice amount may vary depending on exchange rate fluctuations.
Failure to do so can mean that you end up not getting what you hoped for and opening the door to some awkward conversations between you and your client.
Invoice in your local currency
While it is important to consider exchange rates in the calculation and quotation process, it is advisable to invoice in your local currency. This also makes your tax return a lot easier! Consider using accounting software like Pandle, which has a built-in real-time exchange rate tool to make multi-currency invoicing easy!
Set up a transfer account
Using a money transfer account is not strictly necessary, but it can make your life a lot easier.
International money transfers – without the help of a transfer service – can incur high transfer fees and take longer to process.
When you incorporate something like this into your process, you can reduce the headache of expensive transfer fees and have cash in your bank much faster.
Popular money transfer services are:
- Wise (formerly TransferWise)
- Western Union
Consider introducing a deposit system (if you haven’t already)
Working with overseas clients doesn’t have to be complicated, but it does add an extra layer of thought. To cover your own back, you could consider asking the customer for a deposit – this could be 50% of the total bill before and 50% after, for example.
You may already be doing this, but if not, now may be the ideal time to start! You can find further help and advice in our Freelancer Information Hub.