“JLM” is an independent company, providing a range of services to clients operating within the recruitment sector, assisting with compliance needs for international contingent workforces.
In contract terms (End) clients have always correctly required that contractors supplied to them are compliant. Today, with far more stringent enforcement of existing legislation, clients are now asking for greater evidence beyond the contracts that their contractors are compliant in regard to the right to work/immigration, tax registration and confirmation that tax and social security payments are being made in the right place at the right time.
It is therefore prudent to be fully aware how your contractors are managed and structured and also of the consequences and penalties for all parties (client, agency and contractor) for getting this wrong. On a separate note, where an agency is looking to sell, the compliance of their contractors will be a key consideration when the prospective buyer's due diligence is carried out.
In most countries contractors should be paying tax, and where applicable social security, from commencement of contract. We have seen many examples where a contractor has provided his services using a home country Personal Service Company (Limited Company) in the false belief that this is compliant. In most countries the contractor needs to be registered for and to be paying tax and social security from commencement of work. Should the contract ultimately be for less than 6 months (this has different interpretations and varies country to country) a tax rebate or credit will usually be given. The contractor will, however, still have an obligation to declare his worldwide income and have a liability for tax on that income in the country where he is tax resident.
A common misconception is that a contractor is able to work in a foreign country on short term contracts for up to 183 days and does not incur a tax liability in that country. This is not true in most countries although ultimately he should only be paying tax in either the host or home country.
A contractor wishing to work through his home country Limited Company would need to have that company registered in the host country in order to utilize this option.
This example illustrates the growing reason why companies and agencies are enlisting the services of a cross-border contingent workforce expert to make sure they get the multitude of legislation and country-specific nuances right the first time. JLM Compliance Ltd offer various services including: