This is where an Employer of Record (EOR) becomes a strategic partner to be opted. It is the official employer for teams in different countries on behalf of the partnering firm. This means you can hire people in another country without starting your own legal entity from scratch.

However, when companies start operating in different regions, one major concern is Permanent Establishment (PE) risk. A PE occurs when a business is considered to have a taxable presence in another country, even if it hasn’t formally set up a local office, and it becomes liable to pay corporate taxes there.

Types of PE 

Working with an EOR helps companies operate globally without creating a taxable presence. With an EOR being the legal employer for your remote employees, your company doesn’t have a direct legal or taxable footprint there. This eliminates the risk of your firm falling under Permanent Establishment.