Select the right hiring model for your company taking account of the key compliance risks and costs associated with hiring globally or implementing a Work From Anywhere policy.
Confused how you compliantly hire remote workers overseas?
Should you set up a legal entity? Hire your employee via an Employer of Record? Or as an independent contractor?
We help you figure this out,
weighing up the risks and costs of each option.
The remote work
Manage your global mobility risks of implementing a remote work compliance policy.
We help you tick off each of these compliance hurdles.
Remote Work FAQ
There are multiple ways of hiring internationally. These include:
- Setting up a legal entity and employing directly
- Hiring as an independent contractor
- Hiring via an Employer of Record
To figure out which method suits your company best, you need to weigh up many competing factors including the individual tax risks, social security risks, corporation tax risks and employment law risks. Not to mention the costs of delivering each method…as well as weighing up the cost of getting it wrong.
These risks may fluctuate considerably depending on the country you’re hiring in, the legislation they have in place and how strict they are at enforcing these laws. The risks are impacted by the type of roles you’re hiring and the number of positions you’re hiring.
We help you untangle this remote tax risk matrix using our proprietary algorithm to complete a cost benefit analysis and select the hire from anywhere model that’s suits your business.
You can read more into this topic below.
If you’re hiring internationally or rolling out a Work From Anywhere policy you need to take account of multiple competing risks to ensure you do so compliantly.
The key risks include:
- Personal income tax and social security
- Corporation tax and permanent establishment
- Immigration and employment law
- Insurance & duty of care
- Talent management & benefits
- Data, privacy & security
You can read into greater detail on each of these subjects below.
At Work From Anywhere, we help you cover off your key corporation tax, income tax and social security risks so that you can sleep easy at night knowing that you have a compliant hire and work from anywhere policy.
Permanent establishment is quite possibly the single greatest risk of remote work.
Permanent establishment is a situation when your company triggers a taxable presence in a country.
Triggering such a presence can mean that the country in question can charge corporation tax on your company’s corporation tax profits in that country, amongst other issues, so the consequences of this can be wide-ranging and extremely expensive if not carefully assessed.
What becomes tricky is that not every country has the same definition of permanent establishment, likewise enforcement of permanent establishment can vary in terms of how strict different jurisdictions police it.
Some of the common triggers of permanent establishment include the presence of senior management in country, sales generating roles, fixed place of business, agents acting on behalf of the company and the length of time in-country.
You can read more on this topic in the article below.
Contractor misclassification is a common stumbling block of remote work, whereby an individual who is in substance an employee of a company is hired legally as an independent contractor, so is in effect misclassified.
This misclassification can lead to significant back-dated employer tax and social security liabilities as well as fines. Even if your agreed contractor charge rate details that it already includes loading for pension and leave allowances, authorities may deem your company liable to pay these again.
The UK’s IR35 legislation is a great benchmark illustrating how authorities are clamping down on the misuse of hiring as an independent contractor. Test whether you have properly classified your employees and independent contractors here.
A company which offers Work From Anywhere is one which has a policy that allows employees to temporarily work remotely abroad in specific countries for more than 7 days but less than 365 days.
An Employer of Record (EOR) is a global employment services provider that helps companies employ staff legally in other countries. An EOR will take care of payroll, income and payroll taxes, benefits, stock options, and local employment compliance.
Businesses use Employers of Record to help them hire employees across multiple countries. With an EOR, a company can grow its operations in another country without having to set up a local entity, which can be expensive and take months to achieve. Working with an EOR allows businesses big and small to employ and pay workers in other countries quickly and affordably.
Employer of Record services allow companies without local legal entities to employ workers legally in countries where they don’t have a legal entity presence. These services mostly assist to decrease the in-company workload that falls under the functions of human resources, finance and legal teams.
Employer of record services typically are not considered to involve “co-employment,” an arrangement in which two companies employ the same person at the same time. In the country where the employee works, the EOR is the only employer legally. In practice, however, the EOR is not involved in the day-to-day life of the employee beyond HR functions like administering payroll and benefits.
An employer of record employs workers in another country on your company’s behalf. E.g. if your company is headquartered in the United States and you want to hire an employee in France, you may do so using an EOR.
An employer of record can perform a number of HR, finance and legal tasks, including:
- Allow businesses to hire full-time workers legally in another country
- Run payroll for employees in other countries
- Handle benefits administration for global workers
- Manage international contractors
- Distribute employee stock options across national borders
An employer of record can also help businesses employ workers in other states or regions within the same country. For instance, a company in California can use an Employer of Record to employ staff in Oregon.
Since the onset of the pandemic, many companies have been announcing their Work From Anywhere policies with great fanfare. Companies like Airbnb, Twitter, Atlassian, Netflix, Facebook, Google and Salesforce.
But there is a wide spectrum in what these policies look like, how much flexibility employees are given and a common theme emerging that employees need to seek approval beforehand due to the many tax and legal challenges of allowing longer trips.
In the below article, we take a closer look at these remote work policies and examine how many days these top companies allow their employees to work overseas, provide links to those policies where they are publicly shared and examine how attractive they are from a talent retention and attraction perspective.
The single most important thing to understand when remote working is your tax residency. When you become tax resident in a country, this usually means you need to pay taxes in that country.
You can find more resources below.