We understand the complexities involved in expanding your business into new markets, especially when it comes to navigating the intricate landscape of local and international payroll regulations. For example, establishing a limited liability company in certain countries can be daunting, with high minimum share capital requirements and stringent accounting responsibilities.
That’s where our Non-Resident Payroll services come into play as a strategic alternative to traditional Employer of Record (EOR) setups and entity establishments.
While the EOR model is widely used and can be a very flexible solution, it may not always align perfectly with your specific needs. In some jurisdictions, EOR arrangements have limitations that restrict the duration of employment for individuals under local laws. This limitation can pose challenges for retaining valuable talent beyond the prescribed timeframe, impacting your business objectives.
Furthermore, some employees prefer the stability and benefits of direct employment with the principal employer rather than being engaged through third-party labor leasing companies. Our tailored solutions address these preferences, ensuring seamless employment arrangements that meet both your business needs and the expectations of your workforce.
What is Non-Residential Payroll (NRP)?
Non-residential payroll (NRP) is a smart choice for businesses seeking to enter new markets without committing to a permanent establishment. It offers foreign employers without an in-country entity the opportunity to engage in “payroll-only” registrations with local tax and social security authorities. This allows for efficient management of a local payroll without the necessity to file corporate income tax in the host country. NRP simplifies the process, enabling businesses to establish a presence and effectively manage their workforce in new territories.
Quite often, transitioning from EOR to NRP is a natural progression when establishing your footprint in a new market, especially when you remain uncertain about establishing a full legal presence, in form of a legal entity, in the new country.
What’s the Difference Between Non-Resident Payroll and Employer of Record?
Both models are very flexible and allow you to hire talents efficiently, without the need to set up your legal entity in the country.
Under the EOR model, the employees are legally employed and managed by the EOR agent, who assumes full responsibility for all local payroll compliance.
NRP is direct employment, where the employees are employed by your company, in the country where they’re based, under the local labor law. Consequently, as an employer in that country, your company is obligated to adhere to local regulations and compliance requirements, a responsibility we are fully equipped to assist with.
Which Countries Offer Non-Resident Payroll Solutions?
NRP, or foreign payroll registration only, is widely used in European countries, Canada as well as Australia. Asia Pacific countries have a similar concept called “Representative Office.” However, unlike NRP, it imposes significant restrictions on the employees’ activities and the duration of its operation.
Advantages of Non-Resident Payroll
It’s a quick registration process, in comparison to setting up a legal entity. The process is typically completed within 4 to 6 weeks.
NRP is a cost-efficient solution as it doesn’t require share capital and eliminates the requirement of annual compliance related to running your own legal entity, thus significantly reducing the cost of your presence in the country.
Most of all, it’s a direct employment solution, meaning the employees you hire will be your employees and feel a part of the company.
Limitations of Non-Resident Payroll
The main focus is to prevent the establishment of a permanent presence or tax nexus for your company in the country. It’s crucial to comply with the local regulations regarding permanent establishment within your NRP setup. Our experts can offer guidance on this aspect to ensure proper management in accordance with the law.
NRP does not grant a complete legal presence in the country, meaning you won’t have the ability to open your own bank account or sponsor visas for foreign employees. However, we can assist with processing local payments through our payment platform. Additionally, if you require employees who need visas, our EOR solution can accommodate such requests.
Expand Globally
Contact our experts to explore the optimal solution tailored to your unique circumstances. We’ll offer advice on the most suitable approach and provide guidance every step of the way.