An EU Employer is a solution to compliantly hire your remote workers in their EU country, with your company being the actual employer (instead of us as the Employer of Record), without opening a local entity.
Your foreign entity gets registered as an employer in another European country and receives a tax number to pay social security contributions and income tax. The Employees are then hired in accordance with local labor laws, on your own local employment contracts, and WorkMotion performs the monthly payroll, provides you with compliant work contracts and continuous HR support.
Common questions about this model:
When to use it?
You plan on hiring only a limited number of employees in the near future, and you prefer a direct work relationship. The employees perform no commercial activity in that country, to the extent that no contracts will be signed by the employees themselves.
When not to use it?
When you plan on hiring a bigger team, rent an office, and have a commercial presence in that country. Also, when you plan on only employing workers on a short-term contract for a single project.
Does it create an actual legal entity (e.g. subsidiary)?
No, there is no new legal entity itself, since the foreign company becomes registered in the other country. This is only possible because there is no local office presence or local commercial activity.
Is there any “Permanent Establishment” risk?
Yes, as the foreign company has some presence in the other country, there is a certain risk. This risk is reduced by not having a physical office presence, avoiding job titles that indicate management responsibilities, not hiring directors of the company in the other country, not signing contracts or generating revenue locally, and limiting the number of employees. (We can provide permanent establishment risk checks through local tax consultants, to ensure full compliance, charged at cost.)