Depends. For example, let’s assume you have a contractor which is 100% working for you in a European country. After a while you realize, that you want to hire

Depends. For example, let’s assume you have a contractor which is 100% working for you in a European country. After a while you realize, that you want to hire sales people to go after local markets. Local companies like contracts with local entities. So you now create a local entity to hire your sales people, and do your contracts. Your contractor also will be employed by the new entity. Boom: Suddenly the government wants to have social contributions for the past X years, because they argue that the contractor was faux-contracting and should have been employed. This is the risk these employer of record services cover for you.