Btw, you might not even need to open a company in Taiwan. There is a freelance status. Not sure what it cover exactly, hard to find the detail. In that case just get a CPA to do your income tax once a year (or just go to tax office, see if they are able fill the tax form for you for this case).
Is that right? I remember reading in some thread that the limit for freelance income before you should (must?) register is fairly low (ca. 30k a month, although I also don’t remember exactly).
Not my experience, but I’ve never seen an actual text that describes exactly how it works.
I have a foreign employer and they give me a letter stating my annual income that I bring to the tax office and we pay taxes off of that (very low and employer reimburses us). I know of others who just don’t declare this at all.
How exactly would a „freelance registration“ work? Does that mean establishing a sole proprietorship (which seems to be kinda complicated in Taiwan?)? Or is it much simpler?
Good question. I’m not sure either (which is why I haven’t done it yet…) - it’s just what I was told by more experienced forum members in other posts, such as here. (I also see that you’ve also been looking into this situation.)
I imagine that it means telling the tax office that you’re doing freelance work somehow (not so unusual I think - I remember having to do that in Germany ages ago). I got the impression from earlier reading that it wasn’t quite as complex as opening a company, just registering yourself as having self-employment income…but again, I don’t really know.
I’ve been intending to go to the tax office for their free consultation thing to ask them what one needs to do in this situation, but haven’t gotten around to it yet. Worst case scenario is that I would just report the income next year, see what happens, and hope I’m not in too much trouble. I’m also thinking about starting a company at some point, just didn’t get the chance to look into the best approach yet.
Let us know how this goes.
If you don’t intend to be in Taiwan long term, don’t bother with taxes. You’ll need a paper trail if you want to apply for an ARC, but if this is a six-month stint nobody is going to care.
Many people on this forum get rock hard about fulfilling their personal tax obligations, but defend their land lord not claiming taxes on the income from their property so they can get a 5-10% discount on the rent. I call this Sanchong Syndrome.
Nice. What other symptoms does this syndrome have?
In my case, I might actually want to stay a bit longer. Or at least not be forced to leave because I was too cheap to pay taxes. In addition, if I don’t pay taxes in Taiwan, my home country might start taxing me because I can’t prove that my income has been taxed in another country. Which would mean paying twice the amount of taxes because of higher rates (not including potential penalties)…
So call my crazy for actually wanting to follow the law, but in this case I think it’s in my own best interest. And I guess for others there might be similar motivations just beyond pure morale reasons.
So really hope someone knows how to do it “right” without having to incorporate…
I get all my income overseas as well, you need to provide the following
A) bank statement showing the income
B) invoice for said income
C) contract if the income is new source(my contracts are in English, my wife had to translate it)
I have to do the following every 2 months, I send them to my cpa who declares it
Note, the income is actually coming to my Taiwan company(not me personally) so it might not be exactly as above for you.
But, you might want to incorporate as you can deduct a lot of expenses(travel, computers, dinners, etc)
I‘ve heard that a couple of times now - but don’t want to incorporate unless I am really sure that I will be staying in Taiwan 5 years+. But definitely want to keep that option open!
How much effort was incorporating for you? Would it be very difficult to close down the company again?
And how much do you pay for the accountant each month to take care about these things?
I’ve asked the MOL about freelancing:
Dear Sir or Madam, I hope this message finds you well. I am planning to move to Taiwan on an Employment Gold Card which includes an open work permit to my knowledge. From Taiwan, I would like to remotely work for an overseas company in Germany as a freelancer (or independent contractor). Do I need any special permission to start freelancing in Taiwan? Do I need to register as a freelancer first before I can start working? Do I need to have an official office address as a freelancer? Or can I just start freelancing once in Taiwan and declare all income at the end to the tax authorities? Looking forward to your response! Thank you!
This is the response I have received:
Translation (using DeepL):
Hi qwert_zuiop, how are you?
I would like to explain the following information regarding your email to us on August 22, 2009, inquiring about the regulation of work in Taiwan:
According to the provisions of Article 4 and 8 of the Law on the Recruitment and Employment of Foreign Professionals, specific foreign professionals who wish to work in Taiwan in the professions prescribed by this law, including professional or technical jobs, overseas business directors, school teachers, tutorial teachers, athletic trainers and athletes, and artistic and performing arts jobs, may apply to the Ministry of the Interior directly through their employers for permission to work in the professions prescribed by this law without having to apply for permission to work in the professions prescribed by this law.The Employment Gold Card is a card that combines 4 certificates: permission, resident visa, alien resident permit and re-entry permit.If you have any questions regarding the application, please consult with the Ministry of the Interior or the National Development Commission.
2、Basically, if you meet the above-mentioned regulations for specific professionals, you will be allowed to work in Taiwan after applying for an employment golden card from the Ministry of the Interior and obtaining permission, but the contents of your work should still be consistent with the scope of the original permission.However, the content of the work should still be in accordance with the scope of the original permission. As to the question of whether or not a freelancer is required to file a case against an overseas company and declare the related income, it is recommended to contact the above-mentioned unit for inquiries since the case involves the authority and responsibility of the Ministry of Economic Affairs and the Ministry of Finance.
If you still have doubts about the above explanation, please contact us again.We welcome you to use it!
Thank you for your letter and we wish you all the best!
Ministry of Labour To Kai
Not sure what to make of this answer though
I think they‘re telling me that I should ask the Ministry of Economic Affairs and the Ministry of Finance?
If your work is consistent with the type of work you can legally do according to the gold card, you can legally do it.
However, whether you have to do something with a company (MOEA) or how you declare taxes (MOF) is not within our remit to answer.
Okay, so I‘ll be contacting the MOEA next. Let‘s see what they will reply
Also check with NHI.
Received a reply:
Dear Mr. Zuiop
Referring to your letter dated August 31, 2020, in which you inquired some information about being a freelancer in Taiwan. In answer to your inquiry for the article, we reply you as follows:
First of all, because you’ve already got the Employment Gold Card, we suggest you to contact the Ministry of Interior (the authority issued the Employment Gold Card) to make sure all of your questions will get the suitable answers. Please contact with Ms. Wengto discuss about the regulatory issues.
Besides, there are two kinds of organization in Taiwan: COMPANY and BUSINESS. If you want to be an independent contractor by yourself which not partnership, you can choose a limited company or a sole proprietorship depending on the scale and the business scope.
Following is the procedure for a foreign company/business setting-up in Taiwan (https://www.moeaic.gov.tw/businessPub.view?type=flow&lang=en&op_id_one=1):
- Apply for searching and reservation of company name and business scope.
- Apply for the foreign investment approval to the Investment Commission, MOEA, in accordance with The Statute for Investment by Foreign Nationals.
- Apply for the company/business registration.
In addition, there are many different ways to count the tax in the different situations, please contact with central competent authority (Ministry of Finance) to ask the details about the tax.
If you need any further company registration information, please call the phone number: 886-2-4121166. Thank you!
Dept. of Commerce, Ministry of Economic Affairs
That somehow sounds like I need to start a limited company or sole proprietorship first?!?
Hi! How did you end up doing this?
I’m currently in a similar position. I just got my ARC (spouse) and I just moved to Taiwan from Europe. I have been self employed 6+ years and I have clients in different places in the world which I provide services (programming & design related).
Currently looking at my options in terms of registering as self-employed because I would like to file invoices to my clients (companies and other self-employed people often abroad) and to receive the money directly on a Taiwanese bank for me to use here. With all the legal implications that would cause, which include paying taxes here.
From what I’m reading and what Taiwanese friends are telling me, the concept of a self-employed person does not legally exists in the same way it exists in other places. It seems that for me to work and invoice for such work, you have to register a company or sole-proprietorship. But also, they say it can take up to 6 months
Did you end up incorporating a company @qwert_zuiop ? Was it a fast procedure?
I still haven’t really figured out whether self-employment (in IT) really “exists” in Taiwan or not. In addition, since coming here, I have experienced the bureaucracy when dealing with banks in Taiwan which is difficult to navigate without having either fluency in written Chinese or someone who speaks the local language and whom you trust 100%.
I did not want to have this dependency on someone who would basically be managing the company for me because I wouldn’t understand any of the documents I signed. In addition, I did not want to burden my customers with receiving invoices in Chinese and possibly trying to get back VAT from Taiwan. In addition, consensus seems to be that - given you don’t have any clients in Taiwan - incorporating in Taiwan does not bring any benefits compared to incorporating abroad.
So I decided against incorporating here in Taiwan and instead started a company in Estonia via their e-residency program. Total cost about €300 setup fee + €100 / month - all documents I signed electronically also were available in Eglish. The service provider for the Estonian company asked for my tax ID in and address Taiwan and made me confirm that I will be responsible for paying all local taxes and declaring the income I receive to the tax authorities at my place of residence. Otherwise, Estonian taxes will be levied on the income I pay to myself. The Estonian company now has a European VAT id which makes invoicing (within Europe) really easy.
I am not sure yet how exactly I will file taxes next year (the tax office gave me some generic information which documents I will need next year) saying that they will require “Certificates of Overseas Income Earned” stating “Renumerations derived from abroad for services rendered within the R.O.C. need to be combined and filed together with domestic income.”. The document goes on saying that these certificates can be either “documents verified by foreign legal tax authorities” or “documents verified by a foreign local CPA with a copy of the professional license of the practitioner or notary public”. At the moment, I am still not sure how exactly I am going to file taxes next year - guess I will see when time comes.
I registered with the NHI last month and now have to pay the minimum amount for self-payer. However, I am putting some money to the side in case they expect the roughly 6% of income after I file for taxes next year. Also haven’t really found out how that one works - will just see if they will contact me with an invoice after I file next year.
The Taipei Tax Bureau had a session today about filing taxes when on a Gold Card (although most of the points should apply regardless of visa type).
Some of their key points regarding this topic (from my memory):
- Taiwan-sourced income includes all salary paid from overseas employers when a) the work was performed in Taiwan or b) the tax payer stays in Taiwan for over 90 days per tax year
- The location of the company or customer does not matter - only the location of the tax-payer matters
- The visa type does not matter
- The bank account / currency / … does not matter
- This includes any remote job and “work-from-home” arrangements
- Taxes are due on the gross salary - deductions - if any - (social security, contributions to pretax retirement funds, …) are usually not recognized in Taiwan
- One exception: If the taxpayer stays in Taiwan less than 300 days, they might request having the tax pro-rated, i.e. tax only needs to be paid based on the percentage of days in Taiwan vs. abroad
- Regarding documentation: Payslips etc. might be acceptable but it’s up to the tax bureau to request other types of documentation
- Income from self-employment is also considered Taiwan-sourced income. From a tax perspective, no company registration required. The tax office will decide on a case-by-case basis which documentation is required (bank statements, contracts, invoices or even email communication)
- If there is no tax treaty, taxes paid in the other country might not be factored in leading to double-taxation (Hong-Kong was mentioned as an example)
On the other hand, overseas income (for AMT calculation):
- Dividends received from non-Taiwanese companies (must be an incorporated, legal entities, e.g. limited liability company in some jurisdictions - otherwise: See self-employment —> Taiwan-sources income)
- Interest, rental income, … from outside Taiwan
- Profits from stock, real-estate, … transactions
- Does not apply to Non-Residents, i.e. people staying in Taiwan for less than 183 days per tax year
According to the person present at the event, paying oneself no salary but only dividends from abroad would not occur any tax liability beyond the AMT in Taiwan, i.e. this would be acceptable “overseas income”.
Regarding the exchange rate, see: Exchange Rate when receiving income in a foreign currency? - #2 by qwert_zuiop