5 ms·

But wouldn't employing them as _contractors_ would sidestep all these difficulties?

pja 3y ago
Most European countries have laws that punch through a contractor relationship if it looks indistinguishable from an employee/employer one. So you need a legal judgement that your contract is written appropriately to avoid that It's not hard necessarily, but you do need to get it right for each individual country. I can understand a company exec just not wanting the hassle. You can employ through contracting agencies in the target country that handle all this stuff, but you'll still have a certain amount of pain when you run into different countries' Ideas of what is appropriate behaviour when firing someone.
- mejutoco 3y ago
  You can operate as a company. Those apply if you are an individual freelancer only.
  - pja 3y ago
    In the UK you can operate as a ltd company all you like, but it won’t make a jot of difference if HMRC decides that IR35 applies to your role. An “employer” can structure the contract to avoid IR35, but that’s precisely my point - now the “employer” needs local legal knowledge to maintain an arms length contractual relationship. (HMRC has also made the “employer” liable for IR35 problems: you can’t just punt the legal liability onto the “employee” and forget about it anymore.)
    - mejutoco 3y ago
      I am not so familiar with the uk. It seems you are right. From what I read it is possible, but you have a less beneficial arrangement, since you pay more tax. > You’ll need to ensure you pay the correct PAYE tax and National Insurance (NI) for any contract which is inside IR35 because you are, in the eyes of HMRC, an employee. You can, however, manage this through your limited company. https://www.crunch.co.uk/knowledge-tax/can-ir35-contractors-still-work-through-a-limited-company https://www.crunch.co.uk/knowledge-tax/can-ir35-contractors-... I wonder if 2 companies is enough to bypass this.
  - isbvhodnvemrwvn 3y ago
    If you have one client that you work 9-5 for, in most countries that would be just false employment, both the employer and the "contractor" would see consequences of that.
    - mejutoco 3y ago
      In most countries operating as a limited company would solve that. The "consequences" as a personal freelancer would involve paying some more tax, which is not desirable, but is an option.
- KptMarchewa 3y ago
  0 problem with that in Poland. There are even special lower taxes for that here.
  - isbvhodnvemrwvn 3y ago
    Not quite, it's illegal but not enforced. If you get inspected within 5 years of a relationship like that you might be legally liable to repay all of your ZUS, health contribution and taxes. And a change like that will likely come, there is a reason why all invoices are now digitalized and reported, most of fake employment relationships are one SQL query away from being found out. Just find people who submit one invoice a month to one client.
  - SideburnsOfDoom 3y ago
    And I thought that Polish IT contractors were hired into the UK because they're good (they generally are).
    - isbvhodnvemrwvn 3y ago
      You in general don't work for UK companies directly because of the laws around contractors, you have to have proxy companies to skirt the UK law.
kevinak 3y ago
If someone is working as a contractor under employment like terms then that person is, in many countries, considered an employee and what you’re doing is illegal.
hactually 3y ago
Well then they're not employees, they're contractors. The difference is that in the former, they're a representative of my business, in the latter, they're providing a service to further their own business.
- throwawayadvsec 3y ago
  It's more complex than that. For example even if you have a "contractor contract", but you only work for one client, you could be considered an employee.
  - mejutoco 3y ago
    At least in Germany, this means you will pay more taxes that you wouldn't otherwise, not that you would go to prison. I think it happens if more than 80% of your yearly revenue comes from a single client. You can always start a company and this is not a problem anymore.
SideburnsOfDoom 3y ago
Some sure. I see UK startups that hire EU "contractors" to ramp up, and it works well. Even in the relatively free-wheeling UK there are limits though. There's usually 2-year limit to the contract, for reasons perceived or real.

pja 3y ago

Most European countries have laws that punch through a contractor relationship if it looks indistinguishable from an employee/employer one. So you need a legal judgement that your contract is written appropriately to avoid that It's not hard necessarily, but you do need to get it right for each individual country. I can understand a company exec just not wanting the hassle. You can employ through contracting agencies in the target country that handle all this stuff, but you'll still have a certain amount of pain when you run into different countries' Ideas of what is appropriate behaviour when firing someone.

mejutoco 3y ago
You can operate as a company. Those apply if you are an individual freelancer only.
- pja 3y ago
  In the UK you can operate as a ltd company all you like, but it won’t make a jot of difference if HMRC decides that IR35 applies to your role. An “employer” can structure the contract to avoid IR35, but that’s precisely my point - now the “employer” needs local legal knowledge to maintain an arms length contractual relationship. (HMRC has also made the “employer” liable for IR35 problems: you can’t just punt the legal liability onto the “employee” and forget about it anymore.)
  - mejutoco 3y ago
    I am not so familiar with the uk. It seems you are right. From what I read it is possible, but you have a less beneficial arrangement, since you pay more tax. > You’ll need to ensure you pay the correct PAYE tax and National Insurance (NI) for any contract which is inside IR35 because you are, in the eyes of HMRC, an employee. You can, however, manage this through your limited company. https://www.crunch.co.uk/knowledge-tax/can-ir35-contractors-still-work-through-a-limited-company https://www.crunch.co.uk/knowledge-tax/can-ir35-contractors-... I wonder if 2 companies is enough to bypass this.
- isbvhodnvemrwvn 3y ago
  If you have one client that you work 9-5 for, in most countries that would be just false employment, both the employer and the "contractor" would see consequences of that.
  - mejutoco 3y ago
    In most countries operating as a limited company would solve that. The "consequences" as a personal freelancer would involve paying some more tax, which is not desirable, but is an option.
KptMarchewa 3y ago
0 problem with that in Poland. There are even special lower taxes for that here.
- isbvhodnvemrwvn 3y ago
  Not quite, it's illegal but not enforced. If you get inspected within 5 years of a relationship like that you might be legally liable to repay all of your ZUS, health contribution and taxes. And a change like that will likely come, there is a reason why all invoices are now digitalized and reported, most of fake employment relationships are one SQL query away from being found out. Just find people who submit one invoice a month to one client.
- SideburnsOfDoom 3y ago
  And I thought that Polish IT contractors were hired into the UK because they're good (they generally are).
  - isbvhodnvemrwvn 3y ago
    You in general don't work for UK companies directly because of the laws around contractors, you have to have proxy companies to skirt the UK law.

kevinak 3y ago

If someone is working as a contractor under employment like terms then that person is, in many countries, considered an employee and what you’re doing is illegal.

hactually 3y ago

Well then they're not employees, they're contractors. The difference is that in the former, they're a representative of my business, in the latter, they're providing a service to further their own business.

throwawayadvsec 3y ago
It's more complex than that. For example even if you have a "contractor contract", but you only work for one client, you could be considered an employee.
- mejutoco 3y ago
  At least in Germany, this means you will pay more taxes that you wouldn't otherwise, not that you would go to prison. I think it happens if more than 80% of your yearly revenue comes from a single client. You can always start a company and this is not a problem anymore.

SideburnsOfDoom 3y ago

Some sure. I see UK startups that hire EU "contractors" to ramp up, and it works well. Even in the relatively free-wheeling UK there are limits though. There's usually 2-year limit to the contract, for reasons perceived or real.