Compliance in Hiring Employees Abroad

Arletti & Partners supports Italian and foreign companies in managing international hiring and payroll activation in extra-EU countries, helping HR teams correctly manage workers who operate in a country different from that of the employer or who carry out cross-border activities. 

Hiring abroad may take place through different legal and organisational structures, including direct local employment, secondment through an assignment letter, service agreements, procurement contracts, or other contractual arrangements. The most appropriate solution depends on the countries involved, the structure of the relationship, the parties participating in the project, and the way in which the work is actually performed. 

Approach and Operating Methodology 

Our service is based on a structured preliminary analysis that includes: 

• profiling of the employment relationship, taking into account the employer’s country and the employee’s country of work; 

• identification and analysis of the parties involved, including the employee, the formal employer, the entity benefiting from the work performance and any other relevant party; 

• assessment of the operational and organisational structure of the international project. 

This phase allows us to identify the most suitable and compliant contractual solution, reducing employment law, tax, social security and immigration risks. 

Applicable Employment Law Solutions 

Based on the specific features of the case, we can support the structuring of the employment relationship through: 

• assignment letter, including secondment or international assignment arrangements; 

• procurement or service supply agreements; 

• temporary agency or staff leasing arrangements, where permitted by local law; 

• direct hiring with activation of local payroll; 

• alternative local employment structures, where available and compliant. 

Social Security 

With regard to social security, the service includes an assessment of the applicable social security regime, taking into account the structure of the employment relationship, the worker’s country of activity and the applicable international framework. 

Where applicable, the analysis includes: 

• identification of the competent social security legislation; 

• verification of contribution obligations in the host country; 

• application of bilateral social security agreements between the employer’s country and the extra-EU country of activity; 

• assessment of available certificates of coverage or exemption procedures, where provided by the relevant agreement; 

• analysis of contribution obligations where no bilateral agreement applies. 

Taxation and Ongoing Compliance 

The establishment of an employment relationship abroad may trigger recurring tax, payroll and social security obligations in the host country. Depending on the case, our assistance may include: 

• preparation and management of local payroll or shadow payroll; 

• support with the payment of local taxes and social security contributions; 

• assistance during the hiring and termination phases of the employment relationship; 

• monitoring of reporting and withholding obligations in the host country; 

• coordination of compliance requirements across multiple jurisdictions; 

• assessment of permanent establishment and corporate tax risks. 

Immigration 

For immigration-related aspects, we assess the entry, stay and work authorisation requirements in the country where the activity will be carried out, taking into account the employee’s nationality, the type of assignment, its duration and the structure of the employment relationship. 

This analysis allows us to identify in advance the requirements needed to ensure full compliance of the international assignment. 

The assistance may include the verification and management of: 

• entry visas and residence permits; 

• work permits and related application procedures; 

• registrations with competent local authorities; 

• local sponsorship or employer registration requirements; 

• any further administrative authorisations required by the host country. 

Focus on the Employee Timesheet 

Our analysis and operational support are also based on the management of employee timesheets, which are essential to: 

• correctly qualify the employment relationship and the way in which the work is actually performed; 

• verify the worker’s physical presence in different countries; 

• monitor tax and social security obligations; 

• manage and mitigate permanent establishment risk; 

• support compliance with local working time, payroll and reporting requirements. 

Our Operating Process 

The service is based on a structured process that allows us to collect the relevant information, carry out a multidisciplinary analysis and identify the most suitable legal and operational solution. 

The activity begins with the collection of information relating to the worker, the employer, the host country and the international project through our dedicated channels. The data collected is then analysed by teams specialised in employment law, international taxation, social security, payroll and immigration. 

Based on the analysis carried out, we prepare a customised proposal for the applicable structure and related services.

The proposal is then presented during a dedicated follow-up call, aimed at discussing the possible operational solutions and the compliance requirements connected to the chosen structure. 

Objective of the Service 

The objective is to help companies manage international employment relationships in extra-EU countries in a structured, compliant and sustainable manner, ensuring: 

• correct identification of the most suitable contractual structure; 

• employment law, tax, payroll, social security and immigration compliance; 

• reduction of multi-jurisdictional risks; 

• effective management of ongoing obligations connected with international hiring and cross-border work.