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Home / Tolley's Global Mobility: Employment Taxes (Worldwide excluding Europe) / Employer of Record / 1. Tax and social security implications for the business engaging an EOR / 1.1 Permanent establishment
Commentary

1.1 Permanent establishment


Employer of Record

There are number of potential tax implications that could arise through engaging the services of an EOR. These include:

  1. Ìý

    •ÌýÌýÌýÌý the creation of a permanent establishment (PE) in the country in which the employee is locally contracted (1.1)

  2. Ìý

    •ÌýÌýÌýÌý exposure to diverted profits tax (1.2)

  3. Ìý

    •ÌýÌýÌýÌý increased social security costs that can't be mitigated via a bilateral agreement (1.3)

  4. Ìý

    •ÌýÌýÌýÌý exposure to general anti-avoidance rules (1.4)

1.1ÌýÌýÌýÌý Permanent establishment

It is a common selling point from EORs that permanent establishment (PE) risk ceases to be a consideration for the business engaging an EOR (the 'company'). However, as always, things are rarely so simple.

Most countries have domestic rules that determine if a PE exists in their

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