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What are US corporate requirements for paying foreign contractors without withholding tax in US?


Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

If they are working in the US for you, the US domestic company, they require a work VISA, otherwise you are in violation of numerous laws.

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |


Set it up correctly, and the answer is "none".
They cannot be US persons.
They cannot be working out of the US.
You can't pay them in the US.
You need to be paying their foreign tax correctly.

Allowing for the above, which is somewhat simplified, it is an arms-length transaction with a foreign entity and thus not subject to withholding.

If it is a US person, or if they are taxable in the US, or if they are doing work in the US, you might not necessarily be subject to withholding, but you'd need to deal with the individual circumstances. Paying into a US account is less of a trigger than it is a flag...there is no requirement against it, but they'll have to report on their US holdings, which does create an audit liability (a cost, not a tax per se) as they'll need to explain why they got paid in the US even though they weren't taxable in the US.

International Representative
Title: International Expert
Company: Nair & Co.
(International Expert , Nair & Co.) |

Just to clarify. Could you confirm whether the question is regarding withholding taxes in the US for contractors based outside US?

(Chief Financial Officer) |

A separate, but related question: What are the withholding or reporting requirements if you are paying a US citizen who is a contractor, but work is performed entirely outside of the US? I have been told that there is no requirement to file a 1099 or report payments in this circumstance. Would you all agree?

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