I’m always astounded at how little South African companies pay for the same roles and experience as European companies do. The reality is that EU companies can generally afford to pay more than most SA companies, and the demand for talent is so high that developers are writing their own cheques. And often the EU companies have better processes in place to look after their devs than some of the horrendous treatment I’ve seen at local startups and scaleups.
Most SA devs are scared of working remotely as they don’t know what’s involved in terms of getting paid, tax, and all the rest. This is quite sad, as it means SA companies artificially lower salaries because they don’t have to compete internationally. As someone that’s worked remotely for EU companies for more than 8 years, I hope to demystify this and help you earn what you’re worth.
Disclaimer: this is based on my personal experience working remotely and hiring remotely. I am not a professional tax consultant, lawyer, etc. 🙂
- Easily bump your income by 30-100% (I doubled my salary as a senior dev back in 2011, and the market is even hotter now)
- International exposure and networking with a huge talent pool
- Work on more interesting tech with smart people from many countries
- Have a more solid route to emigration if you need it
- Find a job on a remote board with an HQ in the EU. The tech hubs are generally UK, Netherlands, Germany, and France:
- Keep in mind that you’re not protected by any labour laws or basic conditions of employment, so make sure you negotiate your rate high enough so you can afford to take holiday and sick leave if that’s not provided. Also look at disability insurance and other ways of covering yourself in case of illness preventing you from working for months. Most companies are happy with a calendar month notice period for either party terminating the contract.
- Run as a sole proprietor. Since you’re not employing anyone and not incurring debt, you don’t really need the legal protection, complexity, and expense of a registered company. Your invoices will just say First name Last name t/a (trading as) Whatever Name You Like. Your tax is just normal income tax.
- If you’re just doing one transaction a month you can likely just use your personal account, but setting up a separate business account isn’t expensive.
- Get a tax consultant. You can do this yourself, but it’s tedious, and consultants aren’t expensive. Plus they’re tax deductible.
- Register for provisional tax. This just means you pay your own tax twice a year instead of PAYE each month.
- Figure out all your possible tax deductibles: home office expenses, medical aid credits, equipment, services, internet, retirement annuity, tax-free savings account, etc.
- Keep a spreadsheet of your income and expenses, figure out what tax bracket you’re in, then take your tax liability out of your income and put it in an interest-bearing account. You can keep this even simpler by just popping your monthly earning in one of the many personal income tax calculators to figure out your liability, and putting that aside. That just means you’ll be putting more aside than you need to if you have many deductibles.
- Don’t worry about VAT. Services rendered to the EU are zero-rated VAT, so even if your income goes above N, you don’t need to be VAT-registered.
- Invoice the company you work for each month using a free service like https://www.waveapps.com/ or Zoho. Put your bank details including the SWIFT code on the invoice so they can pay you via EFT.
- When you get the transfer in, it’ll be as a forex transaction. You can try to play the exchange rate game if you can afford it and wait to do the exchange when it’s more profitable, but there’s usually a 30 day limit to deal with. The forex fee is about 0.5% depending on your bank.
That’s pretty much it. A lot less complex and scary than most people expect. Yes, you’re not protected by SA’s extreme labour laws, but you’re in such high demand that job security isn’t an issue. And since you’ll be earning a lot more you can afford to put away plenty of money in your FU fund.
Please let me know in the comments if you have any other advice or things to add.