OK, here's how it works. Your fiancee can form the company and be it's managing director. You can be the major shareholder. However, if you perform any other activities for the company, all the advice I am about to give you changes because you then become a non-resident director (see more on that subject below).
Therefore, be clear that questions that you asked such as, "Would it be okay for me to pay myself a salary..." are completely incorrect because you are nothing more than an employee to the company... you are paying yourself nothing, the company is paying you a wage.
Similarly, the question, "How can I legally hire myself as an employee of the company?" is another meaningless question unless you have standing in the company other than an employee, ie, a director, and that changes the whole game.
You have asked questions about three scenarios. Let us begin with the first.
Working for a Singapore Company
a) Your fiancee registers a private limited in Singapore and becomes its managing director.
b) You become a shareholder of the company by injecting some amount of capital into the company. Note that this is not a requirement, however. Your fiancee can simply open a two dollar company and be the sole shareholder and everything I am about to say is equally applicable.
c) The company hires you to perform work offshore from Singapore. You never work in Singapore.
d) You hold no management position in the company. Your fiancee runs it all... at least technically and on paper.
Then the following items are applicable to you and the company.
a) Because all your income is foreign sourced, ie, not earned in Singapore, it is not subject to Singapore personal income tax. Be aware though that Singapore participates in many tax treaties and it is incumbent upon you to ensure that you are properly paying personal income tax to the appropriate jurisdiction or the authorities of that jurisdiction can come down on you and the Singapore pte ltd for non payment of taxes.
b) You can receive your income into a Singapore bank account. It doesn't make any difference in terms of Singapore personal income tax. Nor does it make any difference that you are being paid by a Singapore company. What matters is that the money you are earning is foreign sourced as I stated above. Be aware that since you have no legal status in Singapore it is harder to open a bank account. Citi will probably open one and they are expensive, and I know UOB will open a bank account for you with only a passport if an existing account holder will provide a letter of referral.
c) The company does not have to file an IR8A for you and you do not need to file an income tax return in Singapore. This is true even if you come and work in Singapore for less than 60 days in any calendar year. If you were to work more than 60 days in Singapore and less than 183, then you are subject to non-resident tax policies, the company must file an IR8A, you must file an income tax return, and the company must withhold income tax when you leave the country. If you were to work in Singapore you would need a work permit.
d) For the purposes of company accounting, the following applies:
- The company must be the holder of the foreign contract and receive the revenues from that foreign contract into its own bank account. Therefore, you don't sign the contract, your managing director does, aka, your fiancee.
- The company invoices for whomever your are working, and the resulting payments are paid into the company bank account.
- You are an employee and therefore a wage expense. Other expenses such as insurance, travel, etc may also be taken against you as an employee expense. Your wages are paid out of the company bank account.
- Because your fiancee is actively managing the company (on paper anyway), handling invoicing, payroll, etc, it is the expectation of IRAS that she will receive compensation for her activities, another company expense.
- Since you have only a single director you must engage a company secretary, another company expense.
- The company's profit is revenues minus expenses, and in Singapore you will have little to no corporate income taxes on profits for the first three years and often well beyond that.
- You can choose to retain the profits or distribute them as dividends. Dividends must be distributed in proportion to shareholdings and are not taxable in Singapore. You need to verify the tax status of your dividends with appropriate authorities.
Actively Managing the Company
If your name ends up on the contracts, or your name is listed as a director, or your name ends up on a corporate filing or tax return... really... anything, then you will be considered a non-resident director for tax purposes. Even if you are not considered a non-resident director, it is likely that you will be considered a company resource and be subject to the same taxes as a non-resident director.
If you are a non-resident director, then you will be required to pay yourself a non-resident director salary and/or fees. I don't know the guidelines for sure, and like any other civilized country, Singapore has guidelines as to what is "reasonable" pay for work performed. So, for example, you try to pay yourself nothing, IRAS may well audit your company and force it to pay you a reasonable salary for the activities you are performing.
Non-resident director salary and fees are taxed at 20 percent (22 percent in 2017), and the tax must be withheld by the company prior to making payment to you. Thus, if you earn $1000, you get $800 in your pocket and the company pays $200 to IRAS. The company must file an IR8A and you must file a personal income tax return.
Do you get the feeling that Singapore doesn't much like the idea of non-resident directors fees and salary?
Employment Pass
If the company were to apply for and receive an employment pass for you, it would make the following changes to your situation.
- You could legally reside in Singapore.
- At least some of your foreign earned income would have to be characterized as earned in Singapore in order for you to meet the EP salary qualifications.
- You might wish to characterize all of your income as being earned in Singapore (ie, you are normally resident and travel incidentally in the performance of your work) in order to pay Singapore personal income tax rates. However, you must make sure that you are not running afoul of tax and residence laws in the country in which you are actually working.
- You could be a normally resident director and actually run your company paying local tax rates for directors salary and fees.
Dependents Pass
I don't see how this makes any difference at all, except that you can legally reside in Singapore. Nothing else that I have written above changes, since a DP does not permit you to work. You could get a LTVP with work privileges and then a LOC with the company but this is equivalent to the EP.
Would the Singaporean authorities be against anything of what I plan to do here?
Look at it this way. If a Singaporean citizen wishes to start a company and that company happens to hire offshore personnel as a way to make money, then it's just one more business model. I am sure that there are lots of Singapore companies paying for offshore labor in Indonesia for everything from sand to timber.
However, people usually engage in these kinds of activities to make a profit. How much profit, of course, is dependent upon your capabilities as a manager, your business plan, and the economy. Thus, you need to think through what your fiancee will be earning from this company, and you need to consider what an decent profit margin might be on your labor... maybe it's real small because of a tight labor market... I don't know.
The point is that if it looks like your fiancee is running a viable startup, you won't have any issues. If it looks like it's setup to avoid Singapore tax, and the authorities find out you're not paying income tax elsewhere, then things might get heavy... Singapore would want to ensure its tax treaties are enforced.
