The official responsibilities of employment are handled by a contractual third-party legal body. They are businesses that specialize in enrolling employees, processing payroll, and processing employee contributions and withholdings for the client firm. It would be the employer outsourcing for official purposes, to draw a straightforward analogy.
It would be the best choice for businesses that must relocate employees to other nations where they conduct no business and are unable to keep a Spanish payroll in place. In this case, the firm should build a work center in the destination nation (with all the obligations that this entails).
The designation of Employer of Record enables the true employer to differ from the official employer:
The official employer is the Employer of Record, who executes the contracts, makes the contributions, pays the salaries, and handles the withholdings. The EOR service doesn’t manage the employee or carry out any other supervision functions. He oversees administrative duties, to put it briefly.
The genuine employer, or original corporation, on the other hand, and as a separate person from the Employer of Record, is the one that arranges the employee’s labor and receives the benefits of the work the employee performs.
Really important to know that:
It’s crucial to note that the real employer is excused from the requirement to register in the destination country by the Employer of Record. As long as the economic activity of the company in that country does not require it, greatly simplifies international operations.
In the case that there is no economic activity, it mitigates the tax authorities’ perception that the real employer maintains a permanent establishment at the destination.
In the country where the client (actual employer) wishes to operate, the Employer of Record has a separate legal company. Due to its complete adaptation to local rules and regulations, this considerably aids compliance with them.
The enterprise’s progress determines the long-term establishment. There is no danger of EP if a direct economic activity is not conducted in the nation where a worker is sent to supply services to a foreign customer (either by registering in that country or through an Employer of Record).
What are the benefits of having an Employer of Record?
Among others, we highlight:
- By avoiding the recruiting procedure and the need to establish a new business in the target country, the real employer may save time and money.
- offers liability protection.
- making payroll processing easier.
- The administrative duties are handled by the Employer of Record, which relieves the real employer of this responsibility.
- Payroll services do not need to be outsourced or integrated into accounting by the real employer.
- When it comes to running and managing the firm, the real employer is completely free.
- It is an effective strategy for growing your business abroad.
Contrarily, this person is able to conduct business lawfully in nations including Australia, the United States, and Russia. Additionally, as we have already indicated, it is a means to avoid creating a business structure in the country of destination, with all the associated tax problems.
How does a legal employer who operates internationally operate?
You start by hiring specialists in any of the nations we work with. You then collaborate with a global Employer of Record, which employs its professionals in a legal capacity and takes on all associated obligations.
The specialists are hired and paid by your foreign Employer of Record partner. Manage all benefits on your behalf as well, leaving you free to concentrate on growing your business and handling day-to-day operations.
