Hiring abroad — compliance checklist
What has to be settled before the first payment to someone working in another country.
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What has to be settled before the first payment to someone working in another country.
The document pack
- Where the work will physically be performed, and for how many days
- Whether the person is an employee or a contractor under both countries' tests
- The employer of record, and who bears the cost of the remuneration
- Payroll registration in the country of work, where required
- Social security position, and whether a certificate of coverage is available
- Any treaty exemption, and the conditions it depends on
- Whether the role could create a taxable presence for the company
- Equity or bonus arrangements that will vest across the period
Why each of these is asked for
The permanent-establishment question is the expensive one and the one an employer-of-record contract does not answer. Social security follows a different agreement from the tax treaty, so the certificate is applied for separately and ideally before the assignment starts.
Your next step
Send what you have and we will tell you what is missing. A complete pack is usually the difference between a filing that takes a fortnight and one that takes a season. One call now is worth more than a filing season of guessing.
Reviewed for the 2025 and 2026 filing seasons by Udit Gupta, Cross-Border Tax Expert, Legal Quotient Consultants. Published as general information. For a position on your own file, call the 24-hour helpline.
International tax compliance — what this page covers
Readers arrive here searching for international tax compliance, and hiring abroad is what the page is about. Below: who it catches, what has to be filed, and what it costs — quoted in writing, before anything is done.
Why choose Legal Quotient for hiring abroad — compliance checklist
Residence is tested, not assumed
Where you are resident for treaty purposes is a question with a method. We work through it and write down the answer, with the facts it rests on.
Both sides prepared together
Two returns built against each other by one team, so relief is claimed exactly once and nothing falls between the two systems.
The reporting penalties get named early
The heaviest exposure on a cross-border file is usually a disclosure form, not the tax. We identify which ones apply before a deadline turns into a penalty.
We say early if it is not our work
If a file needs something this practice does not do, you hear that at the start rather than after a bill.
What these engagements turn on
Reviewing an employer of record contract for taxable presence exposure
A company had engaged a provider to employ a salesperson abroad and believed the arrangement closed every question. We read the contract against what the role would actually involve. The provider carried the employment and payroll obligations, but the person would negotiate terms that the company then signed without change, which is a presence question the contract never touched. The work produced a written analysis of that exposure, a set of changes to the role's authority that the client could implement, and a note recording what the provider was and was not responsible for.
A contractor whose role failed the employee test in both countries
A growing company had engaged someone abroad on a contractor agreement for years. She worked set hours, used company equipment and had no other clients. We ran the tests each country applies rather than relying on the agreement, and both pointed the same way. The engagement produced a written classification analysis, a corrected position for the periods concerned, and a payroll registration in the country of work so that future payments run through the right channel. The client also received a short set of criteria to apply before the next engagement abroad.
Counting workdays before a treaty exemption was relied on
An engineer was sent abroad on a project and the company assumed a treaty article would keep him out of the local system. The article had conditions, and one of them concerned who ultimately bore the cost of his remuneration. It was being recharged to the host entity, which undid the exemption. We established the day count from travel records and the recharge position from the intercompany agreements. The work produced a documented conclusion that the exemption did not apply, and a local filing position settled before the assignment ended.
Applying for social security coverage before an assignment began
A company planned to post a manager abroad for a fixed term and had budgeted only for the tax position. We checked whether a social security agreement covered the two countries, confirmed it did, and made the certificate application through the home authority while the start date was still weeks away. The engagement produced the certificate in hand before the first payroll run, contributions continuing in one system rather than two, and a written note of the expiry date so the position is reviewed if the posting is extended.
Payroll registration in the country of work for a first hire
A small company hired its first person outside the home country and intended to pay her by bank transfer as an invoice. We established where the work would be physically performed, which entity would be the employer of record, and what registration that country required before a first payment. The work produced a registered payroll, withholding and reporting running from the first pay period rather than being corrected later, and a written note of the filing calendar so the obligations sit in the company's own diary.
Options vesting across a move and who reports what
An employee transferred mid-way through a vesting period and nobody had recorded where she worked during it. At vesting, two countries each had a claim on part of the value and neither had the data to support a split. We rebuilt the working pattern from payroll and travel records, apportioned the award over the period on that basis, and documented the method. The engagement produced a defensible apportionment, reporting in both countries drawn from one set of figures, and a tracking process for the awards still unvested.
A Country-by-Country Report and Who Files It
The obligation sits with the group and the filing can fall on a surrogate where the parent's jurisdiction does not exchange. Establishing who files where comes before preparing anything.
Read how this one runsA Retirement Plan That Grows Tax-Deferred in Only One Country
Cross-border retirement accounts are recognised by treaty, but the deferral usually has to be elected rather than assumed. The engagement checks whether the election was made, makes it where it was missed, and reports the account on whichever side requires it.
Read how this one runsAll case studies — every published engagement in one place.
Core International & Cross-Border Tax Services
International Tax Planning & Advisory
Strategy and compliance for income, assets and families spread across borders.
U.S. & Cross-Border Tax Returns
Expat & Emigration Tax
Non-Resident Canadian Tax
Transfer Pricing & BEPS
Tax Treaties & Withholding
Cross-Border Estates & Trusts
Global Investments & Reporting
Cross-Border Corporate Tax
India Tax for NRIs & Returning Residents
Canadian Tax with a Foreign Element
UAE Tax for Expats & Their Home Country
Industries & Client Types We Serve Worldwide
Global E-commerce & Marketplaces
- Foreign VAT / GST / sales tax registrations
- Marketplace withholding reviews
- Inventory nexus & PE analysis
- Multi-currency books reconciled
Technology & SaaS
- Cross-border revenue sourcing & withholding
- IP structuring with real substance
- Equity for cross-border teams
- U.S. expansion: entity & PE setup
Professional Services Firms
Firms and partners working across borders meet Regulation 105 withholding, PE risk on long engagements and per-country payroll for travelling staff.
A partnership is taxed in the hands of its partners, so one engagement abroad can reach every partner's personal return. The order matters: the waiver is applied for before the invoice, the presence is tracked before it becomes an establishment, and the payroll is registered before the first day worked in the other country.
- Reg 105 / 102 waivers
- Permanent establishment risk
- Partner mobility planning
- Cross-border withholding recovery
Cross-Border Real Estate
- Section 216 rental returns
- FIRPTA withholding recovery
- Section 116 clearance
- Treaty credit optimization
Importers, Exporters & Manufacturers
- Transfer pricing documentation (s.247)
- Customs value vs transfer price
- Foreign affiliate reporting (T1134)
- Country-by-country reporting
Athletes, Artists & Entertainers
- Reg 105 & U.S. CWA agreements
- Multi-state & country calendars
- Touring income allocation
- Royalty & image-rights withholding
Remote Workers & Digital Nomads
- Residency analysis before moving
- Employer payroll exposure
- Totalization & social security
- Foreign tax credits
Investment Funds & Holding Companies
- Treaty access & PPT reviews
- FAPI & surplus computations
- Withholding-efficient routing
- Governance & substance
