Buffer is a fully distributed team, which means that our teammates work from anywhere!

Our official headquarters is in California, but we don’t have an office anywhere anymore.

Although this is rare, it seems to be a growing trend. As we grow, it has been great to see how larger remote companies such as Automattic and Toptal set up their distributed teams of over several hundred team members!

Today, about half of the company is based outside of the US. But as an officially American company, we issue payments in U.S. dollars to team members—even those working internationally.

It’s a unique setup for many of our teammates, and recently we’ve been digging in to understand their experiences.

For instance, an international team member spends an average of $852 a year on accounting services.

It’s fascinating to see how each country handles pay and taxes a bit differently.

Similar to how we share our salaries openly, we’re now happy to share the financial setup of a 6 Buffer teammates around the world, including how they’re set up as remote workers, how much they pay in taxes and where that money goes.

colin

Meet Colin, in the UK!

Colin is an happiness engineer who joined Buffer in February 2013. He lives near Cambridge, in the UK with his wife, Caity, and their cat, Mr. Perkins.

In 2013-2014, Colin received an income of $90,000 from Buffer, which translated into a taxable income of £58,398.

In the UK, Colin is registered as self-employed—you can find more information about this status on the UK’s Business Tax governmental website. Colin has been kind enough to share everything he has been paying:

Income$ (USD)£ (GBP)
Yearly Income Before Tax90,00058,398
Yearly Income Tax25,84416,701
Yearly Income After Tax64,15641,458
Monthly Income Before Tax7,5004,846
Monthly Income After Tax5,3463,454

Here is the full breakdown of where Colin’s £16,701,11—the 28.79% of his income going towards contributing to various governments services—were allocated:

British taxes go toward

-0W5zaV2

Meet Mary, in San Francisco!

Mary is a Happiness Hero, who works at Buffer from San Francisco with an annual salary of $92,108.

She kindly shared her last pay stub of the year to help us understand a little bit more about where the money goes when you are employed full-time at a San Francisco-registered startup.

Screen Shot 2016-01-05 at 3.07.48 PM-1

Out of a total pay of $90,017.95 for 2015, Mary paid out a total of $29,251 in taxes:

  • $15,731 in federal taxes
  • $5,581 in Social Security
  • $1,305.26 for Medicare
  • $5,822.68 in state income tax
  • $810.16 in disability insurance

That’s a 32.5% overall tax rate for Mary. What does that money go toward? Here’s a breakdown from whitehouse.gov.

American tax dollars

tom

Meet Tom, in Canada!

Tom is an Android engineer who joined Buffer in June 2014. He lives in Guelph, Ontario with his girlfriend, Krista, and their dog, Jessie.

In 2014, Tom received an income of $52,872.33 (since he joined mid-year). On this he paid $13,513.66 in taxes and into the mandatory Canadian Pension Plan.

Being self-employed, Tom does not pay into Canada’s Employment Insurance, but he pays “double” what an employee of a corporation would pay into the Canada Pension Plan (employers in Canada match CPP contributions to the yearly maximum).

Tom is set up as self-employed, and keeps up with everything by subtracting any expenses, then plugging in the numbers in this calculator to get his deductions. He keeps track of each item in a spreadsheet that looks like this:

Tom's spreadsheet

He puts the total deduction amount in an basic checking account he uses just for deductions. This is good to have when the Canada Revenue Agency asks for their share!

Speaking of their share: With a taxable income of $52,872.33, Tom estimates his effective income tax rate this year to be ~33.1%. Here’s what Canada will focus on:

 

Canadian taxes go toward
This year, he has paid the CRA in installments, once per quarter via online banking.

Last year, as it was his first year being self-employed, he just paid it all at once at the end of the year.

OizaDFC9

Meet Ivana, in Croatia!

Ivana works at Buffer as a software engineer and receives a salary of $92,000 annually. She lives with her husband and her daughter in Zadar, Croatia.

Approximately 55% of her salary goes toward taxes.

In Croatia, it is the responsibility of the employer (not the employee) to pay state taxes and all other obligations.

Croatia has three possible tax rates, depending on one’s salary: 12%, 25% or 40%. The bigger the salary, the bigger the percentage—in Ivana’s case, it’s 40%. In addition, she pays 12% city tax.

Ivana has registered a company of which she is the sole owner and director. The advantage of this is that Ivana could lower her salary and thus fall under the lowest tax rate (25%).

However, she would then pay a company tax of 30% of her total yearly income (which in the end comes close to the 55% she would pay if Ivana didn’t lower her salary). You will find here a breakdown of where tax money goes in Croatia! 

This is what the calculation looks like when Ivana pays herself the entire salary ($7,666 per month). She ends up with $3,142, which equals 22,000 Croatian kuna (the first number on the picture. The total amount $7,666 is displayed on the bottom of the image = 51.652,07 kuna)

jose

Meet José, in Spain!

José is a back-end developer living in Madrid, Spain, who joined the Buffer team December 2014.

He’s currently working with a freelancer status in Spain (is it called “autónomo”).

For his status, it’s mandatory to pay for public health insurance. This is also tied to retirement expenses (since you cannot only pay for health insurance).

Jose's spreadsheet

Since José only began working with Buffer at the end of 2014, 2015 will be his first year receiving a full, taxable income—for that year, he’ll pay 32% of taxes, plus another 4.23% on top of this for health insurance – that’s a total of 36.23% of mandatory contributions.

When the Agencia Estatal de Administración Tributaria (the bureau responsible for collecting national taxes in Spain) uses José’s contribution, it will go toward things like pensions, assistance programs, debt and more.

Spanish taxes go toward

niel

Meet Niel, in South Africa!

Niel is a front-end developer at Buffer in Cape Town, South Africa, who’s been with Buffer since August 2013.

Niel’s current annual salary is $101,141.

In South Africa, Niel is categorized as a freelancer/contractor. He pays a provisional tax every six months, which is a prediction of how much potential income he’ll earn throughout the year.

When he starts a new financial year, Niel heads to the South African online tax filing site and requests a preliminary report for his first provisional tax payment.

Then, Niel predicts how much he might earn from Buffer for the year. This allows him to see how much money he needs to put aside every month (in a separate account) so that he can pay twice a year.

Niel shared that he usually overestimates in case his calculations are off. If he does overestimate in the end, he gets a bit of money back.

Inspired by Tom’s setup, Niel uses a similar system to track each payment and how much is taxable income:

89022bb211b52b495c53d0c6a9966a91f0d3dc8f_1_690x103

At the end of the next financial year, he will file a full tax return. He does this with the help of a tax consultant, and usually sends over the exact spreadsheet he has been keeping tabs on for that year.

Niel’s effective tax rate is about 33%, and here’s a look at South Africa’s budget to see what this contributes toward:

3e0220885c6143adffe9a93cea6925981487f472-1

Making it easier to understand finances around the world

Our incredible accounting firm, Foresight, assists us with all these payments around the world; they have been great in helping us grow our distributed team. They even issue payments in Bitcoin for some team members!

We’re currently trying to make it as easy as possible for all team members—especially international ones—to understand what they can expect financially when it comes to working with Buffer.

When we think about non-US based team members, topics such as taxes, accounting and health insurance come to mind. With 50% of the team being international, we’re eager to dive into all of those topics.

We’re surveying team members to understand their setups, and we’ve initiated a change in how we wire money internationally, helping us save over $100,000 per year.

Do you work with an international team or have a unique setup to make sense of your tax obligations? Do you have any tips for our team? We would love to hear your thoughts!

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Written by Rodolphe Dutel

As a Buffer Product Specialist, Rodolphe spreads the good word about Buffer to current and future users! He is also the founder at Remotive.

  • felicia.cristofaro

    I love the transparency that Buffer exhibits! I wish more companies would act in this way. I think that distributed teams are the way of the future, especially because this concept really seems to jive with Millennials.
    Thanks for sharing!

    • http://courtneyseiter.com/ Courtney Seiter

      Thanks so much for the kind words, Felicia!

  • ares0926

    I have seen everyone’s salary posted before but seeing their actual pay stubs and breakdowns made me feel almost uneasy as if I am doing something wrong. My parents were very old school, you don’t talk about peoples salary. I like the idea of transparency and its a new way of thinking for me.

    • http://courtneyseiter.com/ Courtney Seiter

      Oh wow, that’s so interesting! Thanks for taking a look!

  • Liza Tait-Bailey

    This is so interesting! I’m a British citizen and had been wondering how it worked for us, so I was particularly fascinated to read Colin’s. But I learnt a lot about other countries’ tax systems – thanks for sharing. I wonder what someone would do as a nomad? Would they be tied to their country of citizenship? It’s something I would love to do when I graduate, but the tax part scares me! Thank you for inspiring me to think about it more.

    • http://courtneyseiter.com/ Courtney Seiter

      Good one, our nomads might need a post of their own! Generally I think you’re absolutely right that it’s tied to your country of citizenship. Maybe I can get some of our world travelers to come by and explain more. :)

      • half_brick

        I would really love to see a post on the situation of the nomads! I’ve always wondered how it works for them. Especially if there’s any who have dual citizenship. I’m in that situation and I’ve always been confused as to how it would work for me if I started living the nomad life.

    • Gareth Cotten

      While I can’t speak for absolutely every country in the world, Liza, it would boil down to the taxation regime that applies in your country, which would generally either be 1) source-based taxation, or 2) residence-based taxation.

      In the case of 1) you are taxed where you do the work. So, say for example the UK worked on a source system of taxation , if you were British, but worked in the US, you’d pay tax in the US. At the same stroke, if you were American working in the UK, you’d pay tax in the UK (as that’s where the _source_ of the income was stemming from).

      In the case of 2), though, you are taxed where you are resident (and this is ‘resident’ for tax purposes, which could be different from citizenship), no matter where the work was done. Say the UK worked on this basis, even if you worked in the US, you’d still have to pay tax in the UK.

      The tricky part comes in where you’re working in jurisdictions that have opposing or non-complementary tax approaches. It is theoretically possible to actually be liable for tax twice (imagine working somewhere where they work on the source basis, but you’re resident somewhere which works on the residence basis), but the vast majority of countries have double tax treaties (DTTs) to avoid this situation…

      • Liza Tait-Bailey

        Thank you so much for your detailed reply Gareth (and sorry that it has taken me so long to see it – I haven’t quite got the hang of disqus yet!). Your information has been really helpful to me and I will definitely take it on board as I approach the possibility of becoming a digital nomad :)

  • Patrick Sawler

    What a great article. Loved how you look at income and cost of living or your employee’s around the world. Keep up the grab work Buffer.

    • http://courtneyseiter.com/ Courtney Seiter

      Thanks so much, Patrick!

  • Claire Knight

    How does this work with employment contracts and notice periods? I see a lot of these guys are contractors, I presume because of US employment law?

    • http://courtneyseiter.com/ Courtney Seiter

      Oh, good one, Claire! I’m not quite sure on that; will check around!

      • Claire Knight

        It would be great to know, as I see it used as an excuse to avoid remote workings for both employers and employees (depending on their views!). Yet I think it can work with agreement on both sides.

  • http://sten.tamkivi.com Sten Tamkivi

    Thanks (as always) for your transparency around this topic! International tax is a mess, further complicated when someone on the team changes their location during a tax year (or more). And this trend continues, as free people like to move around. :)

    Here’s a little tool you might find useful for quick & dirty analysis of comparing payroll differences between locations: https://my.teleport.org/runway
    (basically a team-centric view into the salaries and tax data we’ve gathered while building Teleport Cities, https://my.teleport.org)

    • http://courtneyseiter.com/ Courtney Seiter

      Wow, awesome tools! Thanks so much, Sten!

  • http://www.bygabriella.co Gabi Valladares

    How positively fascinating. Even your team was able to make tax rate breakdowns interesting! I love the idea of becoming an expat, so this was not only intriguing, but also helpful. Thanks for sharing, Rodolphe!

    • http://courtneyseiter.com/ Courtney Seiter

      So glad it was handy for you, Gabi!

  • tomschouteden

    Working with freelancers to solve international employment issues is a great way to deal with this problem. Employee contracts usually need to be in the local language and abide to local laws which makes running a company like Buffer considerably more complex. Thanks for sharing.

    • http://courtneyseiter.com/ Courtney Seiter

      Hiya Tom! Thanks for suggesting this article, I am so appreciative! Really glad it helped out. :)

  • alex

    Thanks for this. Very educational and of help to anyone that’s thinking of working remotely. :) I have a very similar setup to Tom (from Canada) so it’s good to hear we must have gotten the same good advice :)

    I’d be particularly interested in how you handle cross-border equity though. Most of the advice on equity seems to be country-specific, and a lot of the usual provisions don’t appear to work cross-border. (For example, the CCPC exemption on gains, as a Canadian example)

    • http://courtneyseiter.com/ Courtney Seiter

      Hey Alex, these sounds like great additions for a future post! Would love to find out the answers to the equity questions!

  • https://buildpath.co Ian Mason

    Do you have any posts sharing how you work together as a mostly remote team?

  • http://www.dadyougeek.co.uk John @ Dadyougeek

    Absolutely fascinating insight into how it differs around the globe!

  • http://www.realworldretouching.com/ Krunoslav Stifter

    Hey, someone from Croatia. Kudos to Ivana. :)

    • http://ivanazuber.com Ivana Zuber

      Hey hey Krunoslav! Aw, thanks so much for the kind words :)!

      • http://www.realworldretouching.com/ Krunoslav Stifter

        Happy to see someone from our small country on a global scale not just complaining about the state of the country we live it. There is always a way. Best of luck Ivana. Greetings from Slavonija. :)

        • Radan Skoric

          You might be also pleased to know that there are several of us from Croatia working for one the other two remote companies mentioned in the post (Toptal). :)

          • http://www.realworldretouching.com/ Krunoslav Stifter

            Kudos. Čestitam. :)

          • Ofca

            We are small, but our taxes are the highest :) “She had to lower her sallary…”

          • http://www.realworldretouching.com/ Krunoslav Stifter

            Yeah, I know. The government is not enabling entrepreneurs or even freelancer to make money with the same ease as in most western countries, but they want their nearly 50% of tax at the end of each month, whether you made the money or not that month. I know that its not easy and what does not kill you…. hehehe that is why I say Kudos to all from Croatia that made it. :)

      • Ancronymous

        But Ivana, calculation for you is a bit wrong, you can’t have Osobni odbitak 0. Minimum is 1 (for you), or if you have kids on your pay, one kid 1,5 for two kids is 2.2 and for every kid more is +1 (if you have 3 kids it is in total 3.2). So your real taxes should be a bit lower if you add this.

  • http://www.geekandchin.com/ Xavier Rosée

    I love the transparency you guys are showing!

    I would have loved to the see breakdown for one of the France-based guys…
    Since I’m about to join a remote team myself, I’m still pondering how to set up my activity there…

    Keep up the good work.

    • http://courtneyseiter.com/ Courtney Seiter

      Good one, maybe Rodolphe can pop in here and share his setup!

    • http://thatcuriousguy.com Rodolphe Dutel

      Hey Xavier! Many set-ups are available in France, up to €32k/yr, Auto-entrepreneur is advisable, taxed at 25%. Beyond, you can be SASU, EURL or Profession Libérale (what most of us chose). Profession Libérale has you liable both for company taxes (IS) and personal taxes (IR), as a rule of thumb, it’s expected that 50% of your income will go towards taxes :)

      • http://www.geekandchin.com/ Xavier Rosée

        Thanks Rodolphe!
        Indeed I’ve opted for Autoentrepreneur for the first 32kEUR/year. Then I’ll prolly look into a SASU (with a slightly different activity name, to avoid getting flagged too fast) for anything beyond 32k.

        Thanks again!

      • japf

        AFAIK auto-entrepreneur or others options are risky when you have a single client (in that case Buffer) because Ursaff can go after both the employer and the employee for unpaid taxes. Have you heard about that ?

        • http://thatcuriousguy.com Rodolphe Dutel

          Hey! I’m very new to all those legal dealings, here’s my understanding, as of today: If a company has a legal entity in France and decides to grant full time employment to an Auto-Entrepeneur, it may be at risk of hidden employment. If a company does not have a legal entity in France, and acts as a foreign entity to contract an individual on a project that has no clear legal commit in terms of length/tenure, then it’s fine to self-register yourself as a single client since you have no guarantee, nor legal means, to articulate your current situation as CDI. Since there are no guarantees of employment, it couldn’t possibly be a CDI – it is a consulting agreement, and that fits the SASU/EURL/AE profile.

          • japf

            Thanks Rodolphe for the great feedback :-)

  • http://hfauq.com Hugo Fauquenoi

    Top ton article ! Merci Rodolphe :)

    • http://thatcuriousguy.com Rodolphe Dutel

      Merci Hugo :)

  • https://www.testlauncher.com Jason Hamilton-Mascioli

    Our team is 100% distributed in 10+ countries and have struggled with different payment mechanisms (check, paypal, xoom, payoneer etc)… biggest win for me with this article is that you are working with Foresight! Will check them out as I haven’t found anyone this flexible for our operations – haven’t been seriously looking since this was not a priority at the moment but I think I can cross it off the list now. Thanks so much for this article!

  • Wataru Watanabe

    So for someone who is considered self-employed like in Canada, do they send you an invoice? Or do you guys simply send a payment and they report it? I’m starting to work remotely so I was just wondering how that works…

    • http://thatcuriousguy.com Rodolphe Dutel

      Great one! Yes, local accounting rules almost always require contractors to issue invoices to their clients :)

  • http://www.tomvanrheeden.com/ Tom van Rheeden

    Rodolphe, do you by any chance have any Dutch employees? I’d love to see how they’ve set that up, since it’s not allowed to work for only 1 client (3 minimum). Yes, weird rule.

    • http://thatcuriousguy.com Rodolphe Dutel

      Hey Tom! Pieter Leves (@levelsio) tweets about this sometimes – I think he stands around 50% :)

  • Kyrie

    Thanks for the continuous transparency and Tom’s handy payroll calculator. It’ll be a great asset for this ol’ Canadian nomad :)

    Keep being awesome!

    P.S – Courtney “our nomads might need a post of their own!” – please do one day, I’d love to hear more.

  • Tanya Jones

    Fantastic article, thank you for sharing!! For your Canadian team members operating as self-employed, I urge them to take the time to research allowable expenses. Many smaller self-employed Canadians (especially freelance or in the arts) don’t take advantage of the many expense deductions available to them to reduce taxes. I’m in Alberta, so some things may be different in the East, but most commonly overlooked is the business use of home (eg: if your house is 1000sq.ft and you setup a home office area of 100sq.ft., then you can claim 10% of all house related expenses – rent/mtge; all utilities; insurance; property taxes etc. Even certain food costs that would be acceptable for an “office” like a coffee allowance, snacks, bottled water etc plus toilet paper, certain amount of cleaning costs etc – these things may seem small but they can sure help). Another thing often over looked is medical expenses, any money spent on health care premiums (like AB Blue Cross) or prescriptions can be included as a deduction and will likely lower taxes. I use CuteTax.ca to do all my own tax returns and it is very good for seeing all the possible areas that you may have expenses that are claimable. If you have kids there are tons of deduction benefits too. Most Albertans, that I know, are paying more in taxes than is necessary. Might be worth looking into closer. :-)

    • http://thatcuriousguy.com Rodolphe Dutel

      Thanks for sharing there Tanya :)

  • Bryan Milne

    One of the most interesting Open Buffer posts I have read, many thanks Rodolphe & Courtney. (And those that openly shared their info)

  • Florian Schild

    What a cool article and as always so open and transparent. This is just great! Do you use certain tools like transferwise.com to issue payments? And how do you handle exchange courses? Really interesting stuff! Thanks for sharing!

  • frazras

    Are all your non-US employees hired as contractors? Do they sign up the W8-BEN form? If not, what is the arrangement?

    • Sylvain Gauchet

      Great question. I’d love to know as well.

  • Ron Harnik

    This is very interesting, thanks for sharing this. I’m working for a distributed tech company as well, and I’m also registered as self-employed in my country (Israel). I was wondering if that’s the situation for other distributed employees.

  • Amanda Kendzior

    Great article, it was so interesting to read about everyones’ inputs around the world.

    Like José, I’m autonoma in Spain though I find it a bit of a killer system – not only are self-employed people looked down upon (can’t get a mortgage, no social help if you lose your job, etc), but social security payments are the same no matter how much you work (as opposed to, I believe, countries like the UK which base it on your earnings) so whether you work a few hours a week or full time, you still have to pay 270 euros a month.

    In the end it ends up pushing people to work without declaring…here’s hoping they catch on soon that freelancers are hardworking, tax-paying people too! ;)

    • jose

      I Amanda, I am also in Barcelona and just got a job offer for a remote position but I don’t know how much taxes I have to pay, so no idea on how much money to ask for to allow me to have the same lifestyle I have now. I couldn’t really understand Jose’s math around it. Would be awesome if you could help me, thanks.

      • Amanda Kendzior

        Hi Jose – Congrats on the job offer and sure! I just saw your message on Linkedin, so I’ll respond there.

  • http://www.twenteasomething.com/ Laura M George

    This is really interesting because it’s something I’ve wondered about when I read about working for Buffer. This might be a whole separate blog post, if you’d be willing to share but how do the differences in workplace benefits works? I.e. American maternity leave differs to UK maternity leave.

    • http://courtneyseiter.com/ Courtney Seiter

      I love this idea, Laura! Just added it to our Trello board for a future post!

  • http://www.postlinearity.com gregorylent

    wow, where do you get so much money to pay all these people so much!?

  • Stefan Malic

    Poor Ivana :( Her salary is way bigger than the average salary in Croatia, but Jesus, those taxes are WAY too big. Same thing in Bosnia though :/

  • http://github.com/FezVrasta Fez Vrasta

    I use TransferWise and I’m happy with it.

  • Stan Schroeder

    Great article, though I think the 12% city tax calculation in Ivana’s case might be wrong.

    Still, the tax burden on employees in Croatia is outlandishly high. Ivana, I feel your pain (;

  • http://atravellingcook.com Cate

    Nicely written @rodolphedutel:disqus, i live in Germany and freelance for companies in Germany, Australia and the US and it’s great to see how other remote work systems operate.

  • http://www.androidsis.com/ Javier Monfort

    @courtneyseiter:disqus @rodolphedutel:disqus Thank you so much for articles like this. I have a doubt and I hope that you can help me with it.

    Imagine that my company needs the assistance of a worker residing in USA under contract with another company (i’m from Spain). Could it be that this employee perform their collaboration (as if it were a freelance) keeping his contract? What costs would entail?

    Thank you so much!

  • http://www.michellefondin.com Michelle

    @courtneyseiter:disqus @rodolphedutel:disqus I think one thing we need to keep in mind as that other countries have higher taxes but many have greater government benefits too. Like France has lower costs for medical and they give stipends to families with kids. So you actually get more out of your tax contribution than the U.S.

  • jacques

    My brother has an IT company in the UK. He is battling to find staff there
    and has the option to get people in SA to work remotely.

    Can you please give advice on the easiest and
    quickest solution to hire people in SA?

    How does he pay them ?

    What about PAYE ?

    Does it make a difference if they’re contractors or permanent

  • alex

    Super useful…. Thanks a ton for this article..