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If the employee is working in Brazil, and is not working in the United States, then he/she would have no US tax liability
It would be correct to send them a wire of their payment with no withholding taxes.
This is true if they are NOT a US resident or citizne
so, if they are a green card holder they would still be subject to US taxes.
he is a Brazilian citizen
But, if they are a Brazilian national they have no tax liability to the US
even though he is employed by us, it is OK not to withhold any payroll taxes?
That is correct. It is not the employer that determines tax nexus - it is where the work is performed
He performs all duties abroad, he's not performing them in the US and has no US tax
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What if we transfer his salary to a US bank in Miami, instead of Brazil?
Same difference, because he is performing work abroad ... he's not performing work in the US
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No. that's all for now.. Thank you again for your help!
Megan, one follow-up question: If we pay this employee from the US, will the US entity create a permanent establishment in Brazil and thus subject the US entity for tax in Brazil?
Sorry.. I just googled "what creates permanent establishment" and I found this article: http://www.hsp.com/knowledge/resources/explanation-what-creates-permanent-establishment-pe
I think the US entity will create a PE in Brazil for having an employee there.
OK. Thanks for your help!