Is it legal for US companies to hire remote non-US contractors?

The short answer is generally yes. The longer answer is you may need to establish a legal entity in the country in which you're hiring [ADDED: probably just for employees] as well as conform to employment rules etc. See this comment:

https://news.ycombinator.com/item?id=17022563

The bottom line is that it can certainly be done but the legalities may be more than a small company would want to deal with for a one-off hire. Note that there is some paperwork even associated with hiring someone in a state where you don't already have employees in the US--though those tend to be less and can be somewhat outsourced.

If there are a lot of timezones involved, companies may also not want employees who are, say, more than a few timezones away long-term.

It's perfectly legal to hire non-US contractors that work remotely. That's the easiest part.

Getting the visa and relocating the person from overseas is the hard part.

Yes, but make sure you know what your country's tax laws are. US companies can even hire foreign workers as employees, so long as the contract meets to requirements of each country's working laws (e.g. paid time off and minimum wage in the EU). In that case it's best to get an accountant that has done it before.

Yes. But the companies need to keep in mind that they’ll have to review the IP laws of not only US but also the country of the candidate. Just because they sign a contract with the candidate that’s valid in US doesn’t mean that the candidate doesn’t have full IP ownership of the code in her own country. And the company needs to do this review of IP laws for each country from where they get such candidates.

Yes, but there are a couple issues.

1. International wire transfers over 10k could get flagged by your bank as suspicious. Then you would need to work out with your bank how to prove that this isn't money laundering.

2. Intellectual Property laws can be hard to enforce across borders. If a contractor takes your source code you may never get any money from them as damages

I didn't know this would blow up. Thank you for answering! :D

I know that all of this shouldn't be interpreted as legal advice [1], strictly speaking, but it is hugely helpful that I now have a much more targeted vision on what to think about and to look for.

The reason I'm asking this question is because it's Saturday and I'm in a daydreaming mood. But upon reflection, I realized I'd love to work for a US company as I want to see the difference between US software development and Dutch software development. This is especially the case for silicon valley. Reading HN almost daily since 2015 definitely contributed to that. Based on the upvotes, I don't think I'm the only one.

So I hope I'm planting the seed for some US companies to think about this option more often.

[1] I almost accidentally did interpret this thread as legal advice, which is why I am making this explicit for if others tend to do the same.

It should be as legal as buying any other service or product from foreign businesses.

there's a startup to help companies hire and pay people around the world

https://pilot.co/

(not affiliated, just heard about them)

Recently I hired a graphic artist on https://dribbble.com/ and paid him $150 for a page design. It was only when it came time to pay that I realized he is located in Bangladesh. Are there any legal issues here?

Word of caution, the activities of the employee can trigger a PE for your company and expose you to corp income tax, and depending on possible "technical service" clauses in domestic law or tax treaty between the two countries, you can be liable to more taxation in the host country even without a PE.

Plenty of tax treaty case law showing audits do happen to all of MNCs, small companies, and individuals in these matters, with financial and even criminal penalties for your directors in some jurisdictions.

BEPS is also now cracking down on PE avoidance and types of arrangements/facilitators out there.

Sometimes better, and easier, to just declare and manage a PE. Employment services firms don't offer actual legal protection here since doesn't matter if direct or indirect employed.

I am Sahin founder&CEO RemoteTeam.com.

In RemoteTeam.com we can help you to pay and manage contractors very easily. We have a solid payments platform (fastest, cheapest and dollar transfers for most popular countries). Also we help you to do in a more compliant way. (W8ben forms and contractor aggrements with specific sections for each countries). Our in house lawyer works with 40+ lawyers globally.

We have hundreds of companies with team sizes of 20-40 and they are mostly remote and non-US contractors.

I work from Canada for a US contracting firm with little issues. Through them I work for Cisco which does have a Canadian office, however

Yes, just be sure to open a legal entity and file a form W-8BEN-E, or IRS will want a 30% cut from US company at the end of the year.

Looks like this startup school company is trying to work on this problem: https://heyportal.io/ https://www.startupschool.org/posts/36040

What about the other way around - non-US corp hiring a US contractor?

As you develop as a human, you start to understand that legal/illegal is often not a black-and-white thing.

There is the obviously legal, and widely practiced.

There is the obviously illegal, and clearly enforced.

And there is a huge gray area, where people and states just make things up as they go along. Law that crosses national boundaries is particularly exciting in this regard.