Does using an employer of record protect my company from tax abroad?
It protects the employee, not the company. The provider becomes the legal employer for local purposes, runs payroll correctly and pays the social security contributions that country requires, which is genuinely useful and removes a real exposure. What it does not touch is whether your business now has a taxable presence in that country. That question is asked about your company and your people, and it is answered by what the person spends their days doing. The provider has no visibility into that and its contract does not purport to decide it.
Do the provider's filings cover my company in that country?
No. The provider files as the employer: payroll returns, contribution returns and employment records, all in its own name and on its own registrations. Nothing in that set says anything about your company, because your company is not the employer in the arrangement. If your business turns out to have a taxable presence there, the filing that follows is yours to make, and there is no registration in place to make it under. Read the provider's compliance reporting for what it is, which is evidence that the employee's position is being handled, not evidence about yours.
My provider says it is the legal employer, so is that settled?
That statement is accurate for the purpose it was written for. The provider is the employer for local employment law, payroll and contributions, and that is what its contract allocates between you. It is not a statement about your company's corporate tax position in that country, because the provider is not a party to that question. Read the contract for what it actually assigns. In most arrangements the indemnities run to payroll and employment matters, and corporate tax exposure arising from what your people do sits with you, unstated rather than excluded.
What does my employee abroad actually do that creates tax exposure?
Start with their week rather than their job title. Who do they meet, and are those people customers or colleagues. Do they quote prices, negotiate terms, or agree anything the business then honours. Do they sign, or do they do everything up to signature and send it home for a formality. Is there an office, a desk in a client's building, or a room at home the company pays for. Those answers decide whether the person habitually plays the principal role leading to the conclusion of contracts, which is the test that matters, and they are usually recorded nowhere, which is why the first step in this work is finding out.
Do I still need to register the company in the other country?
Possibly, and the employer-of-record arrangement does not answer it. Registration obligations follow from your company having a presence or an activity in that country, which is the same question as the taxable presence one, approached from an administrative direction. The provider's registrations cover the provider as an employer. They do not register your company, because your company is not the employer in that structure. Establishing the activity position first is what tells you whether a registration is required, so taking the two questions in that order avoids registering without need or discovering the need late.
Who is liable if the tax authority finds we have a taxable presence?
Your company. The finding is about your business carrying on activity in that country, and the provider is not the taxpayer in that analysis. The practical consequence is a corporate filing obligation in the other country, an attribution of profit to what the person did there, and the question of relief for that tax against what you pay at home. None of that is inside the scope of the employer-of-record contract, which is why reviewing the activity before the arrangement starts costs far less than answering an enquiry afterwards.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
What is double taxation in a corporation?
That is the economic form: the company pays tax on its profit, then the shareholder pays tax again on the dividend distributed out of that same after-tax profit. Domestic systems soften it with dividend credits or reduced rates on distributions; across borders it is compounded by withholding tax in the paying country. Which relief applies turns on the entity type and the treaty article covering dividends. See repatriating profits.
