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I am working for an friend in India and do spare time freelancing software development. I had worked for less then 10 clients and got the payment transferred to my personal account.

So my question is do I need to register as a freelancer under any authorities to work as a freelancer or not? Also, me and my friends are doing it by a group if it's a little bit bigger job. So if it is required to register under an authority, can we combine and register as one group or do we need to register individually?

Also, being an Indian citizen and if I move to some other country, can I continue freelancing there in some other countries where I live? Is there any restrictions there?

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    This is a legal question. Are you sure you want to ask the community about this? Acting on the wrong advise may impose legal penalties to yourself in your country. Regarding the reply, I think that India, as well as any country, has such legislation that every penny earned by its citizens requires to be reported for the tax reasons. – Peter MV Jan 6 '14 at 7:33
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In India:

If you are in India - then no, there is no legal requirement for you to register yourself as a freelancer. However, if you are directly involved with Govt. contracting then you must hold a valid Govt. issued license. As of your income, you must pay your income taxes regardless. If you are getting paid directly to your bank account then it would be good to find out if it is TDS i.e. Tax Deducted at Source. This means that appropriate taxes were deducted (and paid on your behalf to the Govt.) before the monies were paid to you. If it is not, then it is your responsibility to pay your taxes at the end of the financial year (i.e. March for India).

In Other Countries:

For freelancing in other countries, you will face numerous restrictions (almost 95% countries in the world) due to immigration reasons. The reason is that freelancing is considered to be self employment and those countries allow self employment for citizens or naturalized citizens only.

For example, if you move to America in a work/non-immigrant visa (H1/L1 etc.) you will and must be employed by an employer at all times and get monthly paychecks. Also, based on the kind of non-immigrant visa you hold, you may or may not be legally allowed to change employers (example L1 visa holders cannot change their L1 visa holding employer whereas an H1 visa holder can). You will not be allowed to do any kind of work that can be considered as self employment until you obtain naturalization through an immigrant visa application which could take 5 to 10 years (for Indians and Chinese citizens specifically, since they are exempt from visa lottery) depending upon various situations. There are various ways an immigrant visa can be filed and in your case the most probable method would be employer based, where your employer would need to file your non immigrant work permit or naturalization.

European countries also impose several such limitations to non-immigrant applicants. That is, until you obtain a legal immigrant status you would be limited in terms of self employment. European visas are points based and there are numerous criteria to fulfill to gather appropriate points for filing a visa (just an FYI)

As of your question, once you immigrate to a different country (i.e. become a naturalized citizen) your records will be tracked by their Labor Departments automatically since your application for immigration will most likely need labor department's approval (better known as "DOL" or "Department or Labor/Labour"), so there may not be a legal need for you to register yourself as a freelancer/self employed thereafter. However, some countries may indeed require you to register yourself with an additional public or private licensing body for you to be able to legally perform freelancing or start a business.

Although, a small subset of countries such as Bhutan, Nepal etc. may allow you to work there as freelancer without any necessary documentation but for a limited period of time (This applies to Indian Citizens only).

Bottom Line:

While it is not legally required for you to be registered as a Freelancer in India, it may not be a bad idea for you to be associated with a more larger professional group of freelancers. If you intend to move to another country and continue freelancing, and since freelancing is treated as self employment, you might need to acquire appropriate work authorization or even naturalization or citizenship of that country through an immigrant visa process or other legal procedures authorized by local laws.


NOTE: I am not an attorney or their representative. These are legal topics and you should consult an immigration attorney or paralegal for all your immigration and non-immigration questions and concerns. The content of this answer is just for your information purposes.

References-

  • Immihelp Comparison of H1B to L1 US Visas- (URL)
  • Immihelp article on immigrant visa - (URL)
  • UK's points based immigration system- (URL)
  • An Economic Times article on Freelancing in India - (URL)
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    Short answer: Definitely!

    Long Answer (2 examples I know of):

    It is definitely required in e.g. Germany, Austria.Both even have (lacking a better translation)Restricted Businesses.

    In Germany it is not usually possible without a proper formal education to freelance in IT, you have to create a company which has implications on taxes.

    In Austria it is possible there are at least 3 options:

    • Freelance -- as in take a job, charge for it, deliver, .....
    • "free employee" -- a special contract which practically gives you most of the pros (and cons) of being an employee but usually at higher rates...
    • Creating a "proper business"[1]. Quite a bit more paperwork but more freedom in terms of what you are allowed to do, how you can employ people and how much of your private property will be lost in case you go bankrupt -- also within that option there are about a gazillion options hidden...

    [1]: This is very subjective to my culture and not meant negative in any way. It is simply how you are tought to think about businesses...

    Some of the information contained in this post requires additional references. Please edit to add citations to reliable sources that support the assertions made here. Unsourced material may be disputed or deleted.

    • Hello, would you be able to include references to back this up? Right now, there's no way we can really know if it is or isn't illegal for the country in question. Please see the back it up rule for details. – jmort253 Feb 24 '14 at 0:46
    • I could but I won't. This may get outdated and dead links may appear. If people really want to know they should get a lawyer not some random person on the internet (that would be me) to answer their law questions -- IOW: Feel free to delete my post if that is the appropropriate action. – serverhorror Mar 8 '14 at 22:59
    • Thanks for your reply. I'm not planning on making any call on this post right this instant. I'm hoping someone else who is more knowledgeable on this topic than me may take it upon themselves to edit in some resources. However, when we do our cleanup of the legal tag posts without references may be removed. For now, I'll leave this as is. Hope this helps. – jmort253 Mar 8 '14 at 23:06
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    In India, you are not required to register as a freelancer to start working. What you do need to do is to report each and every penny earned using freelance in Tax Returns and also mention your PAN Number for every financial transactions. Also you need to create your profit loss statement while filing tax returns.

    If your net earning from Freelance increases more than INR 1,000,000 then you need to start charging client for Service Tax and usually advised to register your company.

    While registering make sure you either register as a LLC or Pvt Ltd company, they do involve an upfront cost but come with a piece of mind.

    I am not aware of rules in other countries.

    Source: Based on discussion with my Charter Accountant.

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