1. Getting a bank account isn’t always quick and easy!
Typically, a business will need to have its own bank account in order to pay tax and social security contributions to the regulatory bodies in the country in which they want to employ people.
In many countries, it is necessary to be present in person to open a bank account so allow time and money for your flight. The process can take many months.
2. Some countries have 13th and/or 14th month salary payments
Several European countries have a payroll system whereby employees get more than 12 payments over the year as a statutory requirement. At best, this means you need to be crystal clear on what the total annual amount you’re offering an employee is and what that means in terms of their monthly gross pay.
3. In May 2018, personal data in the EU became subject to the General Data Protection Regulations (GDPR)
Whether your business is headquartered in the EU or not, if you have even one employee there, these regulations affect you. The fines for non-compliance are potentially crippling. You need to make sure the way that you handle your employee’s personal data complies with these standards.
4. Different countries have different rules around severance…
…when an employer and employee part company.
Depending on the country, you may be able to part company with your employee with no notice whatsoever or it may be legally impossible to stop employing them. And everywhere in between.
Take time to understand the severance rules in your target country.
5. It might not work out and there could be a lot to unwind!
Nobody thinks that their overseas expansion isn’t going to succeed; nobody plans to fail. But the statistics show us that it doesn’t always go to plan.
Should your business not be a success in a given country:
- How easy will it be to walk away from what you have set up?
- Have you got a legal entity to de-register?
- Are you tied into multiple supplier contracts?
6. Some expenses could be deemed taxable benefits
The way that reimbursements are treated varies from country to country.
If you pay for your employee’s mobile phone for them, should that be recorded on an annual return?
Is there a tax implication for the company or the individual?
To answer this question, know the tax rules of each country and how they apply to every type of reimbursement.
7. Everyone’s rules are different, even in neighbouring countries
It would be easy and not unreasonable to think that employment law will be much the same if two countries are next door to each other. But it isn’t always the case. So, businesses should make sure that, wherever their expertise is coming from, it is country-specific.