Contractor compliance tips: The 80% take home pay that could land you in jail

contractor take home pay

20th April 2018

It’s perhaps common knowledge that contract work presents a number of fantastic opportunities for individuals looking to make the most of their expertise. Not only is it a great way to develop and grow professionally due to the varied nature of work available, but it also allows you to experience new countries and cultures.

However, there are also risks involved, particularly when it comes to remaining compliant in your chosen destination, an issue that many individuals will turn to their recruiters and contractor management solutions providers for guidance on. But professionals must be cautious when choosing which supplier to take advice from, particularly at a time when governments worldwide are clamping down on loophole usage and non-compliance. So how can you best ensure you are selecting a risk-free option?

Don’t be lured by big numbers

Naturally, take-home pay plays a significant role when deciding whether or not to accept that next assignment. However, it is important not to be wowed by the proposition of a large pay-cheque without careful consideration of how compliant the solution available really is. Remember, if an offer sounds too good to be true, it probably is, and the ramifications of non-compliance certainly out-weigh the benefits.

Contract professionals are now operating in a world where they could face fines, deportation or even jail time for flouting local tax laws, so that offer of 80% take-home pay, for example, could land you in jail. But how can you avoid these risks?

Contractor compliance tips

While your recruitment agency might have an employment solutions provider they recommend, it is important that you do your own research into the company as well to ensure you will be using a fully compliant option. Here are a few key tips to consider:

  • Use your network: speak to any contacts with experience in your desired destination to see what rates they are on and what tax and compliance regulations they fall under in order to make sure the solution you are being offered is truly kosher.
  • Check the values of the firm: this can often give you a clear indication as to how trustworthy they are. For example, at 6CATS International we stress that we would rather turn down business with an agency or contractor than send them away with an ineffective or non-compliant solution.
  • Consider what else is on offer: you want to know that you or your recruitment agency are working with a solutions provider that is committed to helping you succeed in a placement. Review what extra value they can offer. We provide our contractors with a complete care package, including dedicated contractor care consultants, local tax compliance & invoicing, immigration support and much more.
  • Get to know how a provider operates: You want to know that your compliance and tax solutions are in good hands, so find out how they work. What experience do they have in your chosen destination? How do they remain up-to-date with regulation changes? What research do they undertake into local legislation, licensing requirements and employment structures? Have they been known to use loopholes in the past?

Working in a foreign country can lead to any number of unforeseen problems, not least where compliance is concerned, and without specialist guidance it can be all too easy to make mistakes regarding tax, social security and immigration laws when contracting overseas.

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