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No, it is necessary to use a local entity abroad to comply with each country labor law.
Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.
The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.
In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.
Any employee can be transferred between existing local entities within 1-month.What are the limits of using a PEO as the employer of record for my expansion?
PEO are services companies. Consequently, they cannot help invoicing local clients for trading activities. Local partners or agents must handle those responsibilities.
Subsidiaries are usually restricted regarding employment capacity and staff management efficiency. The headquarters are entirely liable for any wrongdoing or illegal activities.
Yes. Local subsidiaries are often set up in cities requiring a large number of staff on-site, while an unlimited number of staff can be employed in different locations through the PEO model.
Yes. Taxation only depends on the country of employment of your staff. Using a local subsidiary, you will be also charged with local corporate costs and company administration staff or services fee. On the other hand, using a PEO will not cost you any additional corporate charges, as it is already included in the employment and payroll services fee.