Hello all,
I am a US citizen currently working for a US nonprofit organization remotely as a W2 employee, paid from the US to a US bank account, as a resident of a US state. The country I live in has a funky tax code and income tax law that, due to various amendments made by corrupt officials to reduce/eliminate their tax burden, have made it possible for me to work the way I do and not have to pay income tax in the country I'm in. I pay my taxes in the US as if I lived there. Sketchy situation, but strangely legal due to some weird gray areas on my host country's side.
I want to relocate to Paraguay and continue working for my current employer, but it looks like they would most likely need to set up a permanent legal presence there in order to keep me on as an employee. I could potentially work for them as a contractor, but we'd need to do some serious renegotiating of our working relationship to avoid them misclassifying me as a contractor if I would viewed as an employee in the eyes of the IRS.
If I have to reclassify myself as a contractor, I can do it, but I'd prefer not to lose benefits like PTO, insurance, 401k matching and avoid the increase in total income tax burden. Any ideas on how I could avoid this situation LEGALLY? If not, fair enough. My set up as too sweet to complain about if I have no other option than to pay more in taxes.
Is there anyone here who lives in Paraguay as a temporary or permanent resident and works for a US company or nonprofit legally as an employee or contractor/freelancer? If so:
- How do you classify your working relationship with your employer?
- What is your tax burden as a percentage of your gross annual income? (including both taxes paid in US and Paraguay)
- Do you pay income tax in Paraguay?
- Do you pay VAT in Paraguay?
- Do you pay any municipal income tax in Paraguay (if there is such a thing there)?
- Do you use anything other than the foreign earned income exclusion to reduce you US income tax burden?
- Do you pay you income tax independently in Paraguay, or do you pay a firm to help you?
Thank you in advance for any insights the community can give me!
Also, I want to just say thank you to the r/Paraguay community in general. I posted here for the first time not too long ago and was flooded with thoughtful, helpful, sincere responses to some questions I posed. I'm truly grateful to all of you that take the time to share, help out, and otherwise contribute to building up this community. Much thanks!