Don’t take the risk
One of the most common mistakes made by companies hiring and employing freelance or self-employed workers internationally, is assuming that they can just be paid without any checks into either their identity, employment status, company or bank accounts, if they are registered for tax in the country in which they are working, or even the currency used to pay them.
With the rules surrounding the placement of freelancers tightening across the world, companies who fail to complete the necessary due diligence processes are at extreme risk of being complicit in a raft of potential non-compliant scenarios which could result in significant financial penalties, retrospective tax liabilities and significant legal and reputational damage to their company.
What is misclassification?
Central to the guidelines that govern the Employee of Record (EOR) sector is the concept of Misclassification, which is the term widely used to describe the act of incorrectly paying an employee as an independent contractor when they should be classified and paid as an employee. Historically, hiring freelancers and putting them in positions abroad often escaped the attention of the respective tax authorities in various countries, but those days are now consigned to history.
Advances in technology, the purge on all forms of money laundering and the relentless pursuit of taxes due, have combined to shine a light on the considerable revenues available to countries by implementing their tax regimes as rigorously for foreign nationals as UK-based workers.
Companies are Ultimately Responsible and Liable
Stepping back, one can understand and appreciate the rationale for targeting ‘misclassified’ workers as they tend to be higher earners and therefore liable for relatively high tax contributions. The fear of money laundering always looms large in the background, and the advent of crypto currencies, plus a myriad of digital and mobile wallets, have combined to add another layer of complexity upon clients who are ultimately and categorically responsible for paying their international workforce correctly and compliantly.
EOR International Solves the Problem
EOR International has been formed specifically to help companies meet the challenges of employing staff overseas and to ensure that they are protected from any form of risk. Our comprehensive EOR service and supporting International Contractor Payments solution provides a comprehensive model for clients to take advantage of the untapped opportunities offered by a worldwide, highly skilled and efficient workforce.
Despite its growing popularity and importance to the growth of many companies, the nuances of EOR remain misunderstood by many organisations, which is why EOR International plays such a vital role in assisting clients in demystifying the whole process, irrespective of territory, sector or currency. Avoiding any notions of misclassifying workers is central to our outsourced offering and one of the most fundamental aspects of our work; we urge you not to take any risks and to get in touch with our team should you have any doubts about your ability to place, manage and pay an international workforce legally and in full accord within the laws of any country.
