Table of contents
- How to Use Contractors for International Assignments
- What are International Assignments?
- The Umbrella Company Strategy
- Types of International Assignments
- Contractors Looking for International Work Experience
- FAQs about International Assignments
- How Can Contractor Taxation Help Your Business with International Assignments?
- Related topics about International Assignments
How to Use Contractors for International Assignments
When your business is expanding abroad you will face the issue of how to fill specialised positions in foreign countries.
You can try to hire local residents for some roles, but how do you fill positions that require deep experience in your industry or a high level of technical skill?
One solution is to assign your current workers internationally, either temporarily or for longer periods if necessary.
To do so, you will need a concrete strategy and method to assign those workers to comply with host country regulations and criteria.
While you might think the only way to accomplish a successful assignment is to set up foreign employment, there are also compliant methods to assign contractors overseas.
So what exactly does international assignment entail?
Global mobility has its own language related to the creation and maintenance of reliable, compliant, cost-effective and flexible solutions to support the unique requirements of fixed-term international assignments. This includes:
- management of remuneration and benefits including tax, payroll and relocation
- management of costs and forecasting budgets for cross border work
- organising suitable and timely visas and work permits
- compliance with tax, immigration and employment regulations (both within your organisation and in the country of work)
- integrating in-house and external providers to provide full-service solutions
If all this seems overwhelming, we have the experience and partners to assist you with the international assignment of independent contractors.
What are International Assignments?
An international assignment is simply placement of a worker in a foreign location, where they are not a resident of the country. The worker can be your current employee, contractor or consultant, with essential skills to aid offshore operations.
Traditionally, businesses would assign executives and key employees overseas for international expansion, but this removed valuable resources from domestic operations. It can also prove costly to your business, and unappealing to some employees who don’t want disruption in their personal life.
This is where international assignment of contractors can fill the void, where the worker may be available for short term projects, or willing to relocate for some period of time to gain foreign work experience.
When you assign contractors abroad that preserves key personnel at home and in many ways is simpler than setting up a foreign employment solution.
The contractor does not even have to be from your home country, and could be assigned from a third country where they reside.
Take the example of a UK company that was opening a new manufacturing facility in Mexico. They needed a manager that they trusted to oversee some aspects of the expansion onsite, ideally someone who spoke Spanish.
They had been working with a remote contractor in Chile for years, and offered to assign her to Mexico to get things started. She agreed to a six month assignment in Mexico and contracted with the UK company at an agreed rate.
But you can’t really just expect the contractor to set up everything on their own once they arrive, and this is where umbrella companies are invaluable for hiring contractors overseas.
The UK company used a Mexican umbrella company to handle everything from payments, work permits and tax withholding for the contractor, a solution that worked for all parties.
The Umbrella Company Strategy
An umbrella company can onboard a contractor in the destination country in full compliance with all regulations, and facilitate the entire international assignment process.
Your company is the client of the umbrella company, and you will pay the contractor through the umbrella company, either from your home office or foreign branch.
The umbrella company will assist with work permits, withhold taxes and make sure the contractor is paid to their designated account.
The umbrella company is effectively the local ‘employer’ for the contractor, saving your company the trouble and cost of direct foreign employment for the overseas assignment.
Types of International Assignments
There are a few alternative forms of international assignments for contractors, depending on your business needs and how your operation evolves in a specific country.
Short Term Business Assignments and Projects (1-3 months)
In some cases, business objectives can be achieved in a couple of months by using a short term business visa.
You don’t need any special immigration or tax assistance as long as you can verify the business purpose of the trip.
Temporary Assignments (3-6 months)
An expat assignment may be temporary for purposes of training, initiating operations or until a local worker can be found to fill the role.
Although the time frame is short, business visas will not be sufficient in most countries, so a better solution is needed. An umbrella company can step in for a six month assignment.
Make sure that the contractor gets paid, has the right visa and is in full compliance.
Long term, Fixed Assignments (longer than 6 months)
If a worker is invaluable to your foreign expansion and is willing to take a long term international assignment, that can be achieved either by an employee or contractor.
This is where immigration and tax compliance become more challenging, as the contractor is likely to become a tax resident after six months.
An umbrella company can help arrange for work permits and ensure that all tax regulations are met, and even assist with transition to a formal employment relationship if that is needed.
Contractors Looking for International Work Experience
You might wonder why a contractor would accept an international assignment, especially since many independent contractors now work remotely.
Like any professional, a contractor will be looking for experience that adds to their resume, and ability to charge higher rates. So, onsite international work experience may be an attractive option to contractors, more so than for a full time employee.
First, it may be a more secure gig than they are used to as a freelancer, so it has financial appeal. Also, many contractors are younger and open to international travel and living, so that is also a factor.
Eloise worked as a contractor for a company in her home country of France, but the work was sporadic and hard to predict. The company had a need for her skills in Dubai, but were unsure how long the assignment would last.
If they sent an employee they would lose a valuable in-house asset for an open-ended time period.
Eloise accepted the contracting position even with the uncertainty, as it would give her professional development in an exciting destination and some temporary financial security. She would also have the opportunity to make new contacts in the UAE for future client referrals.
FAQs about International Assignments
The benefits of international assignments are numerous including supporting expansion abroad, low financial commitment compared to employees, and preservation of key personnel at home. However there must be some way for the company to manage home country vs host country tax and compliance differences.
Assuming that a contractor with the right skill set has been recruited, the company will want to make sure that the assignment is fully supported in the host country. This includes travel, accommodation, and pre-engagement of an umbrella company to secure work permits and set up payment channels for the contractor.
Assigning a contractor abroad is not fail-safe, and sometimes it does not work out. This can be due to contractor-related personal reasons, culture shock and even low performance. It can also happen when the company does not prepare the contractor or support the move with a local partner like an umbrella company. Although the worker is a contractor, a company should try to make it similar to an employee experience for the same assignment.
One company assigned a contractor to an IT training role abroad, but left it up to the contractor to secure their own work permit and did not offer much pre-assignment briefing of what was expected. The contractor showed up in the country on a tourist visa, only to find out that a work permit had to be obtained before entering the country. They decided to stay and start working anyway, which immediately became an immigration compliance problem. He was also being paid by the client into his home account, and had no easy way to access those funds while abroad. So the assignment failed for multiple reasons that could have been avoided by more preparation.
How Can Contractor Taxation Help Your Business with International Assignments?
If you have challenges assigning your international workers or even if you just want to discuss best practices for international assignments, we’re only an email away.
We group many of our services under the international assignments banner including:
- Professional Employer Organizations – PEO or as our American friends like to spell Professional Employer OrganiZations!
- Contractor Management Companies or CMC
- Global Mobility
- Outsourced HR
- Relocation Professionals
- Managed Service Companies
- International Payroll
- Umbrella Companies
- Immigration Attorneys
Our background is dealing with and assigning contracted, freelance and interim workers around the globe. We have done this on an individual basis, through management companies, recruiters and also for employers directly.
Our supplier assessment criteria are the foundation of our partner network.
Please contact us with your questions about hiring contractors for international assignments.