Freelance Work Outside of Teaching and Tax

Hi All,

Great forum here! I’ve been browsing quite a bit and got a lot of useful info. Just registered now to discuss my own situation. I’m an American who came to Taiwan early this year and has been teaching in a language school for about 3 months. Got the work permit and ARC etc. from the school. I do contract freelance work outside of teaching (let’s say I do graphics for game companies). In fact, I do hope to slowly transition from teaching to doing my freelance work full-time. I do have friends that have been doing similar work for a couple years doing visa runs every 2 months and they say that it’s fine because it’s difficult to determine exactly “where” you created the product (it could be during your time outside of Taiwan). But is my situation different since I have an ARC with a school?

For a current project, my client is asking how I would like the tax to be filed. If they file the tax with my name and passport number, would that get me in trouble? Would the government be like “hey this guy has an ARC teaching full time, and has this additional income from somewhere else”. Honestly, I don’t mind paying the 20% tax. I just don’t want to get in trouble with the government thinking that I am doing illegal freelance work.

Honestly, the whole situation is a little confusing for me. I have freelanced for a Taiwanese company in the past while I was still in the States. Everything was fine as they were simply hiring a foreign individual for a project. But does the fact that I now live in Taiwan change the situation? So now that I’m in Taiwan, am I not legally allowed to freelance for a Taiwanese company and can only freelance legally outside of Taiwan? That just seems a little odd to me.

All the freelance work is done at my apartment.

Your second company needs to get you a work permit. It’s not legal for you to work there. You could get in trouble doing this.

You probably don’t have one, but if you had a company set up in the US, it might – MIGHT – be a case where you could be an employee of the company somehow, instead of an individual doing that work in Taiwan. But I don’t know the specifics. Might be worth checking into. Or not. I don’t know. Just a thought.

I doubt the companies would get a work permit for freelance graphics work, and I think it would be very hard to justify that a foreigner was required to do that work (even though in practical terms it probably is).

It’s all about the people or entities to whom/which your checks are made out. If you have an American company name (even your own name, if you’re a sole proprietor), and bill them for work via that name, and they pay you into an American bank account, you’re free and clear here. If you accepted any taxable income from a Taiwanese company, they must help you launder it somehow. (Hint: PayPal payments offer one easy way in which to do so.)

You need to make yourself seem like an outsourced contractor who happens to be in Taiwan, not an employee at a Taiwanese company. If they didn’t apply for your ARC, didn’t give you any employee benefits, and only signed the checks “incorrectly,” then it goes down as a filing error in their books, and both sides get their money. You don’t pay taxes on it, and they don’t claim to have hired you.

But it sounds like you’ve already cashed some checks that they’ve handed you in person, so you may be SOL.

I haven’t cashed any checks yet. Thanks a lot for the great advice!

I would seek more competent advice than you’re getting on this board. Both freelancing and contact work for an overseas entity are not very common situations, but in the view of the Taiwanese government, as far as I am aware, if your body is in Taiwan and you are performing work for a Taiwanese entity, you are working in Taiwan, even if you are not their employee. That is why they require proof of financial support for a tourist visa – because you are not supposed to be working. If you’re living in Taiwan as an employee of an overseas entity and saying that is your work, they would like you to have an appropriate visa unless you have open work rights, and they’d like you to pay some sort of tax on those earnings since you’re a resident of Taiwan and using Taiwan government services.

You can be reported by anyone – anyone – and have an investigation begin, and it will cost you time and money to get out from under what happens even if you aren’t doing any work of any kind. I have been called alarmist, but I have had this experience personally and I’ve known it to happen to others. If you choose to try to “slide by” it is at your own risk. Maybe nothing will ever happen – but you need to balance that risk against how badly you want to remain in Taiwan (family ties, education, work, whatever).