Employer of record — the tax risk: where does doing it myself start to cost money?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the provider handles local payroll and social security correctly, which solves the employee's exposure.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Does an employer of record protect us from permanent establishment?
No. An employer-of-record arrangement moves the payroll administration; it does not move the question. The provider becomes the legal employer for local payroll and social security purposes, which deals with the employee's own position properly. Whether your company has a taxable presence in that country is decided by what the person does there: whether they negotiate, whether they habitually play the principal role leading to the conclusion of contracts, whether they work from a fixed place at your direction, and for how long. The provider's contract says nothing about any of that, because it cannot.
Our provider says we have no taxable presence, so can we rely on that?
Treat it as a statement about their service, not an opinion about your business. The provider knows what it is contracted to run: local payroll, local social security, local employment compliance. It generally does not know what your employee does day to day, who they report to, whether they carry a title that implies authority, or what they sign. Those are the facts the presence question turns on, and they sit with you. The workable answer is to write down what the role actually involves, test that against the treaty, and keep the description current as the role grows.
Who pays if a tax authority decides our company has a presence?
Your company does. The assessment is raised against the entity that has the presence, and an employer-of-record contract does not transfer it, because the provider has agreed to run payroll and not to underwrite your corporate tax position. What follows is a corporate filing obligation in that country, an exercise to work out how much profit belongs to the presence, and usually a question about earlier years as well. Because it is your exposure, it is worth testing before the arrangement scales, while one role can still be described and, if necessary, narrowed.
Can a salesperson hired through an employer of record create a presence?
A salesperson is the role that most often does. The question is not the job title but the function: whether they habitually play the principal role leading to the conclusion of contracts that the company then signs without material change. Someone who gathers leads and passes them to a head-office team that genuinely negotiates is in a different position from someone who agrees terms and sends paperwork home for signature. The distinction is factual, so it has to be evidenced in how the role is defined, how approvals actually work, and what the correspondence shows.
Why are we paying social security in two countries for one employee?
Usually because the home-country payroll kept running when the employee moved and a local obligation started as well. Where the two countries have an agreement between their social security systems, contributions normally belong to one of them for a defined period, and relief from the other is claimed with documentation obtained for that posting. The difficulty is timing. That documentation is straightforward to obtain before or at the start of a posting and awkward afterwards, and recovering contributions already paid to the wrong system is slower than simply stopping them.
Do we still need our own payroll if a provider runs it for us?
Not for that person in that country, which is the point of the arrangement. What you still need is a view of the group's own obligations: whether the home-country payroll should have stopped and when, whether the employee's residence changed and what that does to withholding, whether an equity award granted before the move is now partly attributable to work done elsewhere, and whether the role has created anything for the company itself. The provider does its part accurately. None of those questions sit inside its scope.
Does a foreign-owned US entity need an EIN?
Yes, for almost anything it must do: file its returns, operate payroll, open a bank account, and act as a withholding agent on payments abroad. It is applied for on Form SS-4, and the part that stalls foreign owners is the responsible party — a real person with a US identification number is expected, and where none exists the application route and the supporting explanation both change. It is worth starting early because downstream registrations queue behind it. See EIN applications.
Is GILTI computed at the CFC level or the shareholder level?
Both, in sequence. Tested income, tested loss and the qualifying asset base are measured company by company. They are then aggregated at the US shareholder, which is where the netting of losses across companies happens and where the inclusion, the deduction and the credit are determined. That order matters in practice: a loss in one foreign subsidiary can reduce the inclusion caused by another, but only for a shareholder who owns both. See the GILTI inclusion and Form 8992.
