Can American Freelancers and Entrepreneurs Run a Business Abroad?

Working abroad can be an exciting opportunity, whether you’re looking to explore new cultures, enjoy a lower cost of living, or grow your career independently. But while your surroundings may change, running a business or freelancing comes with practical considerations. For example, you might need to register as a freelancer in Portugal to invoice clients, open a local bank account in Germany, or understand how VAT works if you provide services in the EU.

Taxes, banking, and client management often look different from what you’re used to at home. You may find yourself juggling invoices in multiple currencies, coordinating meetings across time zones, or figuring out the best way to get paid as a foreign entrepreneur.

The good news is that these challenges are usually manageable. With some preparation and knowledge of local rules, you can set up your business smoothly, connect with clients both locally and globally, and enjoy the freedom of working from a new country.

In this guide, we will answer the following questions:

How Can Freelancers Market to Both Local and Global Clients While Working Abroad?

Freelancers can expand globally—without ever leaving their laptop.

If you are already freelancing, you probably have some systems in place for finding clients online, and maybe a few you picked up through your personal or professional network. When you move abroad, it often makes sense to strengthen those existing channels while also exploring new ones.

Likewise, if you’re planning to start freelancing while abroad, most of the same ideas still apply. You’ll want to build your online presence, look for ways to connect with people locally, and stay flexible as you figure out which kinds of clients respond best. Starting fresh can feel daunting, but being in a new country can also open doors you might not have thought of at home.

Living in another country can bring surprises, including unexpected costs, so having a mix of local and global clients gives you more stability. Building relationships both online and in person helps keep your work steady no matter where life takes you.

How Do I Find Clients in My New Country?

If you want to tap into the market where you live, language is usually the first hurdle. Even a small effort goes a long way. Translating your website into Spanish in Mexico or Portuguese in Brazil signals respect and makes it easier for local clients to trust you. If full translation feels overwhelming, you might start by learning and using a few professional terms in the local language when sending proposals.

Face-to-face connections are also powerful. Coworking spaces like Impact Hub in Lisbon or WeWork in Berlin can give you a chance to meet entrepreneurs and small business owners who may be able to connect you with new opportunities. Meetup groups or even casual social connections, like chatting with someone at a coffee shop, can also lead to unexpected opportunities. Many freelancers find that one strong in-person relationship often opens the door to several more.

Online visibility matters as well even though you’re hoping to gain business locally. Joining country-specific LinkedIn or Facebook groups focused on your industry makes it easier to stay visible. For example, a graphic designer in Germany might join a LinkedIn group like ‘Berlin Freelancers‘ or a broader reddit group such as ‘r/digitalnomad’ to share work, find local leads, and stay updated on opportunities no matter where you are in the world.

Finally, credibility often grows when you appear officially recognized in the local market. For example, in Spain, registering as self-employed allows you to issue invoices with your tax ID number, which local clients will expect and trust. Another good example is Portugal, where using the recibos verdes system lets you send official electronic invoices through the government platform, showing clients that everything is legitimate.

If registration isn’t possible for your visa type, platforms like Fiverr or Upwork can serve as neutral ground so you can still work with people in your area. Using these platforms can also help you legitimize your work and stay compliant with taxes. Even if you cannot formally register locally, you can still provide professional invoices, track income, and show clients that you operate in a transparent and responsible way.

How Do I Market Myself to Global Clients While Living Abroad?

Join international talent networks to connect with top-tier clients from anywhere.

For many freelancers, the global market feels like familiar ground. After all, most online platforms are designed to connect you with people anywhere in the world. Sites like Upwork, Fiverr, and Toptal make it easy to meet new clients, while LinkedIn is still one of the strongest tools for building professional relationships.

If you’re a designer, places like Behance or Adobe Portfolio act like digital shop windows where people can view your work. If you’re a writer, publishing on Medium or Substack not only builds credibility but can also help clients find you through your ideas and expertise.

Beyond using platforms to connect with clients, your portfolio is equally important. A professional website that explains your services clearly, accepts multiple currencies, and includes testimonials from past clients shows that you’re set up for international work. For example, a wellness coach in Costa Rica might highlight reviews from clients in Canada or the United States to give new clients confidence that distance will not affect the quality of service. Similarly, a software developer might showcase completed projects for clients in the U.S. and U.K., demonstrating that they can manage time zones and deliver results across borders.

How Do Payment Options Affect Client Confidence and Freelance Success?

When you work with clients across borders, sending and receiving money is not always as simple as it seems. Some payment platforms are not fully available in certain countries, while others have limits on sending or receiving funds internationally. Currency conversion rates and bank fees can also differ depending on where your account is registered. In some cases, platforms may require local identity verification or a local bank account to process payments, which can create extra hurdles.

Because of these challenges, it is important to think carefully about how clients will pay you. Clearly stating your location and the payment methods you accept on your website or in proposals helps clients understand how transactions will work.

In the end, using trusted systems like PayPal, Stripe, or Wise allows clients to send money across borders securely and reliably. Listing these familiar payment options upfront demonstrates professionalism and reassures clients that working with you will be transparent and straightforward.

Should Freelancers and Entrepreneurs Focus on Local or Global Clients?

Deciding whether to grow your freelance career locally or tap into global demand.

It really comes down to what makes the most sense for your work and your life in your new country. If you want steady, recurring projects, local clients can be easier to retain. For example, a language tutor living in Barcelona might build a schedule with several students who want in-person or online lessons in English. Meeting these clients through local coworking spaces, Meetup groups, or even just conversations in coffee shops can lead to regular work and word-of-mouth referrals.

On the other hand, some skills are easier to sell globally. A web designer or social media consultant might find more opportunities working with companies in the U.S. or Germany, where rates are higher and demand is strong. Continuing to use platforms like Upwork, Fiverr, or LinkedIn allows you to maintain those global connections even while living abroad.

In reality, many freelancers end up blending both approaches. A language tutor could take on local students for steady income while also teaching private clients in other countries online. The balance may shift over time, so it’s useful to check in with yourself every few months and see if your focus should tilt more local, more global, or stay mixed.

What Legal Structures and Regulations Do Freelancers Abroad Need to Know?

Understanding foreign contracts, taxes, and business registration as a freelancer.

Even if you’re working online for U.S. clients, local laws can still matter once you spend extended time abroad. The way your business is set up at home, and how the country you’re in treats foreign freelancers, will shape what’s required of you.

What Are the Most Common Business Structures for Freelancers Abroad?

When it comes to freelancing or running an online business abroad, most Americans stick with familiar setups from back home. These structures are recognized by the IRS, easy to manage remotely, and flexible enough to work while you’re traveling.

For many freelancers and entrepreneurs, a sole proprietorship is the simplest option. This usually just means reporting your income under your own name and Social Security number without setting up a separate business entity. It’s easy and inexpensive, which makes it appealing if you’re just testing the waters or working on small projects. The tradeoff is that there’s no legal separation between you and your business, so if a client refuses to pay or there’s a dispute, your personal assets could technically be on the line.

An LLC, or limited liability company, is a common next step for freelancers who want more protection. Unlike a sole proprietorship, it creates a legal boundary between your business and personal finances, so if a contract issue or debt arises, your personal assets are generally safe. Many online business owners favor LLCs because they’re flexible in how profits are taxed and don’t demand the same amount of upkeep as a full corporation. On the downside, they cost more to form than a sole proprietorship, and the exact rules for maintaining them can vary depending on the state where you register.

An S-corp is less common for digital nomads and freelancers but can be useful for higher earners. The main advantage is tax efficiency, since you can split your income between a salary and distributions, which may reduce self-employment taxes. The tradeoff is more complexity: you’ll need to run payroll for yourself, keep up with extra paperwork, and make sure you meet the rules for reasonable compensation. While some freelancers use them successfully, they generally make the most sense once your earnings are high enough to offset the added administrative work.

Finally, what’s less common is setting up a company in your host country. This could mean registering as a local partnership with another person there or creating a branch of your U.S. business. These setups usually make sense only if you plan to build something larger on the ground, such as opening a café with a local partner or hiring employees in your host country, rather than freelancing online.

Do I Have to Pay Taxes as a Digital Nomad in Another Country?

Every country has its own rules for when a foreign freelancer or digital nomad becomes a tax resident. In most places, staying for roughly 180 to 183 days or establishing a habitual residence triggers full tax residency. Once you cross that threshold, you may need to report worldwide income, register with the local tax authority, and follow any specific invoicing or reporting programs. If your stay is shorter, your obligations are usually limited to any income sourced from that country, and you might not have to register as a resident at all.

For digital nomads, this means you can often work online for U.S. clients without creating a local business, as long as you are mindful of how long you stay and whether your income might be considered taxable locally. Some countries also have special programs or visas that require registration or reporting even for shorter stays, so it’s important to check the rules before you go.

Let’s take a look at some of the most popular destinations for digital nomads and how taxes and remote work visas work in each.

Spain

Working remotely from Spain? Don’t forget: residency rules may trigger local tax obligations.

In Spain, you are generally considered a tax resident if you spend more than 183 days in the country during a calendar year. Residents must report all income earned worldwide to the Spanish Tax Agency, known in Spanish as the Agencia Tributaria. Freelancers are required to register as self-employed under the local system, called Autónomo, and they must issue invoices following Spanish regulations.

Spain offers a residence visa for remote work, sometimes called the digital nomad visa. It allows foreigners to work for companies outside Spain using only digital means. Self-employed workers may also serve Spanish clients as long as local work is no more than 20 percent of total activity. Applicants must show financial means equal to at least 200 percent of the Spanish minimum wage, which in 2025 is €2,368 per month. The visa is applied for at a Spanish consulate, and applicants must obtain a Spanish foreigner identification number (NIE). It is valid for one year and confirms legal residence in Spain.

Portugal

Working remotely from Portugal? Don’t forget: residency rules may trigger local tax obligations.

If you stay in Portugal more than 183 days in a year or maintain a habitual residence, you are considered a tax resident. Residents must report worldwide income to Autoridade Tributária e Aduaneira, which is the Portuguese Tax and Customs Authority. Freelancers should register as self-employed and use the official recibos verdes system to issue invoices and report income.

Portugal also offers a special non-habitual resident program, known as NHR, for newcomers, which provides certain tax benefits.

Applicants for Portugal’s Remote Work / Digital Nomad visa must show proof of professional activity and income. Employees can show an employment contract or a letter from their employer, while freelancers can show a contract for the work they do. Portugal’s official visa website doesn’t list a specific amount for freelancers. However, it does state that applicants must show an average monthly income equal to at least four times the Portuguese minimum wage and provide proof of tax residency to demonstrate they can support themselves. Because of this uncertainty, it’s best to confirm the exact threshold with Portuguese authorities before applying.

Mexico

Working remotely from Mexico? Don’t forget: residency rules may trigger local tax obligations.

You are considered a tax resident in Mexico if you spend more than 183 days in a year or maintain significant economic ties, such as owning property, running a business, or having family in the country.

Residents must report worldwide income to the Servicio de Administración Tributaria, the Mexican tax authority. Freelancers register with the SAT using the RFC system and issue electronic invoices called CFDI for income earned in Mexico.

Mexico offers a Temporary Resident Visa for stays longer than 180 days, which isn’t officially a digital nomad visa but functions similarly. It allows foreigners to live in Mexico and work remotely for companies abroad, with local employment requiring separate authorization. Visa holders must obtain a resident card within 30 days of arrival to formalize their stay.

Applicants must also meet financial requirements, either by showing original and copies of proof of investments or bank accounts with a balance of approximately $62,232.50 USD over the previous 12 months, or by providing documents showing a monthly after-tax income of at least $3,737.95 USD over the previous 6 months.

Germany

Working remotely from Germany? Don’t forget: residency rules may trigger local tax obligations.

Germany considers you a tax resident if you maintain a permanent home or stay in the country for more than 183 days in a year. Freelancers who register under the Freiberufler system, or businesses under the Gewerbe system, can issue invoices according to local Value Added Tax rules and stay compliant with German tax law. Gewerbe registration is generally only required for commercial businesses operating locally, but it’s worth noting for those considering self-employment in Germany.

Germany doesn’t have a designated digital nomad visa, but self-employed foreigners can apply for a freelance visa to live and work in the country. Applicants must show proof of work in their profession and demonstrate sufficient financial means. The official government website does not list a specific income requirement, so it’s best to confirm the details directly with German authorities. Freelancers typically also need a professional license, diploma, or other qualifications for their field.

Thailand

Working remotely from Thailand? Don’t forget: residency rules may trigger local tax obligations.

Thailand considers you a tax resident if you stay in the country for more than 180 days in a year. Residents are technically taxed on worldwide income, but this only applies if the money is transferred into Thailand in the same year it is earned, for example by depositing it into a Thai bank account. Most freelancers and digital nomads avoid this by keeping their earnings abroad and spending directly with international cards, so the rule rarely affects them.

Some visas, such as the Smart Visa or the Destination Thailand Visa, may encourage more formal registration if you plan to work with local clients or transfer larger sums into the country, but for most online freelancers this is not common.

The Destination Thailand Visa is designed for remote workers and “workcations,” allowing stays of up to 180 days per entry and is valid for up to five years. Applicants must show evidence of sufficient financial assets, at least 500,000 THB, which can be documented with a 6-month official bank statement. It may require additional documentation or registration if you work with local clients or transfer larger sums into the country, but for most online freelancers this is uncommon.

Colombia

Working remotely from Colombia? Don’t forget: residency rules may trigger local tax obligations.

Colombia considers you a tax resident if you spend more than 183 days in the country within a calendar year. Freelancers must register with the Dirección de Impuestos y Aduanas Nacionales (DIAN) if working with Colombian clients. Digital nomads serving only international clients may have more flexibility but should still confirm local requirements.

Colombia offers a Digital Nomad Visa for remote workers and freelancers serving foreign clients. It requires proof of income, health insurance, and remote work documentation. The visa lasts up to two years, allows family members, and does not permit paid work for Colombian companies. Nationals from visa-exempt countries can stay up to 90 days, extendable to 180 days per year.

To qualify, applicants must demonstrate a minimum monthly income equivalent to three times the current Colombian Legal Monthly Minimum Wage. As of 2025, this amounts to approximately COP 4,270,500, or about USD $1,068 per month.

Indonesia (Bali)

Working remotely from Indonesia? Don’t forget: residency rules may trigger local tax obligations.

Indonesia considers you a tax resident if you stay in the country for more than 183 days within a 12-month period. Freelancers earning income from Indonesian sources must register with the Indonesian Tax Office and obtain a tax identification number, known as Nomor Pokok Wajib Pajak (NPWP). Digital nomads earning solely from foreign clients may not be subject to Indonesian income tax but should confirm their status with local authorities.

Indonesia offers a Remote Worker Visa for freelancers and employees of foreign companies. Applicants must show an employment contract, proof of annual income of at least $60,000, and a recent bank statement with a balance of at least $2,000. The visa is valid for up to one year, with the possibility of extension, and must be activated within 90 days of issue. Holders may not sell goods or services in Indonesia or work for local companies, though family members can accompany them.

Croatia

Working remotely from Croatia? Don’t forget: residency rules may trigger local tax obligations.

Croatia considers you a tax resident if you stay more than 183 days in one or two calendar years or maintain a habitual residence. Freelancers using the Temporary Stay for Digital Nomads permit must follow local invoicing and tax reporting rules for any income earned in Croatia.

Croatia offers a Temporary Stay for Digital Nomads permit, available to non-EU/EEA/Swiss citizens working for foreign employers or their own foreign companies. It is valid for up to 18 months and may be extended once for 6 months, after which applicants must leave Croatia for six months before reapplying. Applicants must provide proof of income of at least €3,295 per month, or a one-time lump sum of approximately €39,500 to cover a 12-month stay. Health insurance and a Croatian address are also required.

Greece

Working remotely from Greece? Don’t forget: residency rules may trigger local tax obligations.

Greece considers you a tax resident if you stay more than 183 days in a 12-month period, or if your permanent/main residence or “center of vital interests” is in Greece.

For digital nomads, Greece allows remote workers and freelancers with foreign clients or foreign-registered businesses to apply for its Digital Nomad Visa. Applicants must typically show a monthly income of €3,500, have health insurance, and be employed outside Greece (or self-employed with foreign clients) rather than working for Greek companies.

Costa Rica

Working remotely from Costa Rica? Don’t forget: residency rules may trigger local tax obligations.

Costa Rica considers you a tax resident if you stay more than 183 days in a calendar year. The country offers a Stay for Remote Workers and Service Providers subcategory for digital nomads. Applicants must demonstrate a monthly income of at least $3,000, or $4,000 if applying with dependents, and the income must come from abroad.

The initial stay is granted for up to one year and may be extended once. After leaving Costa Rica, a new application for this category can be submitted six months after the previous stay expires. Proof of income, health insurance, and a Costa Rican address are required. The official tax authority for reporting any local income or obligations is the Dirección General de Tributación, part of the Ministerio de Hacienda.

Do U.S. Freelancers Still Owe U.S. Taxes While Living Abroad?

U.S. citizens must report global income—even while freelancing from abroad.

Even while living and working in another country, U.S. citizens and resident aliens usually need to report their worldwide income to the IRS.

That doesn’t automatically mean you will be taxed twice, though. U.S. tax law includes several tools designed to help prevent double taxation. These options can reduce or even eliminate your U.S. tax liability on income earned abroad, depending on your situation.

These rules can feel complex at first, but they give freelancers abroad a framework for avoiding unnecessary double taxation. The most common ones are:

• Foreign Earned Income Exclusion (FEIE): You may exclude up to a certain amount of foreign-earned income from U.S. taxation if you meet residency or physical presence tests.
• Foreign Tax Credit (FTC): Taxes paid to foreign governments may be claimed as a credit against U.S. income taxes owed, reducing your overall tax liability.
• Foreign Taxation Treaties: The U.S. has treaties with many countries to prevent the same income from being taxed twice. These can affect income tax, dividends, pensions, and social security contributions.

Reporting income is only part of the picture for freelancers abroad. Unlike traditional employees, independent contractors and 1099 workers are responsible for paying both the employer and employee portions of Social Security and Medicare through the self-employment tax. That is why it makes sense to look more closely at how these contributions work when you are living outside the United States.

Do U.S. Freelancers Still Pay Social Security and Other Mandatory Contributions While Living Abroad?

Even abroad, U.S. freelancers must often pay into Social Security and Medicare.

Even if you live and work in another country, U.S. citizens and resident aliens may still need to pay Social Security and Medicare taxes on self-employment income. Freelancers usually handle this by reporting their earnings through the self-employment tax when filing their annual U.S. tax return.

Exactly how these taxes apply can vary depending on a few factors. For example, who you work for, where you perform your work, and whether your host country has agreements with the United States can all affect your obligations. Some of the main considerations include:

• Employment type and employer: Taxes generally continue if you work for a U.S. employer, a U.S. government entity, or certain partnerships and trusts with predominantly U.S. ownership.
• Work location: Performing services on U.S.-linked vessels or aircraft may also trigger U.S. Social Security coverage.
• Totalization Agreements: The U.S. has signed Totalization Agreements with several countries to make sure workers are not taxed twice for Social Security on the same earnings. If your host country has one of these agreements, you generally only pay Social Security taxes to either the U.S. or the foreign country, not both.

To claim an exemption under a Totalization Agreement, U.S. workers typically secure a Certificate of Coverage from the foreign social security agency and provide it to their U.S. employer. These agreements also help fill gaps in benefit coverage for individuals who split their careers between the U.S. and an agreement country.

For self-employed freelancers, coverage and taxation rules can vary. You can check whether your host country has a Totalization Agreement and view full details on the Social Security Administration’s website. Consulting a tax professional familiar with international self-employment rules is recommended to ensure you comply with both U.S. and foreign requirements.

Thriving as a Freelancer in a New Country

Working as a freelancer or entrepreneur in another country may seem complicated at first, but with some research and planning, it becomes very manageable. Understanding local rules for registration, taxes, invoicing, and banking can make a big difference in running your business smoothly and maintaining good relationships with clients both locally and globally.

Every freelancer’s situation is unique, so taking the time to explore visa requirements, tax obligations, and payment options carefully can provide confidence and clarity. Being proactive about compliance and professional setup shows you are ready to work independently while living abroad and prepared to handle both routine operations and unexpected challenges.

Be sure to check out our next article, where we will explore how to return to the U.S. after working abroad. We’ll cover reverse culture shock, updating your résumé with overseas experience, and transferring foreign-earned retirement benefits or pensions back home.

Author: Aaron Randolph | LinkedIn