6th April 2018
Earlier this month we discussed some of the key compliance concerns that recruiters are facing when it comes to international contractor placement. In this we touched on the misuse of A1 forms. This week we delve deeper into this issue and outline why agencies need to avoid any association with preferential social security schemes.
Misuse of A1 forms
There’s still a worrying number of contractor management solution providers offering schemes which see A1 forms (formally E101) misused. In these cases, these firms are using their location in a country with preferential social security schemes to offer contractors a reduction in their payments by employing the individual through their company and issuing them an A1 form. In many cases, professionals haven’t even set foot in the country their form is issued in.
The result is that host destinations are losing out on social security payments for the individual during their assignment. While this loop hole has been utilised for several years now, we are seeing an increase in local authorities implementing changes to halt this abuse of the system. In fact, some contractors are now facing backdated liabilities that go back as far as 2009.
As governments in these locations battle to close this loophole and penalise those benefiting from it, recruiters need to ensure their contractors aren’t involved in any illicit activity in order to avoid facing penalties themselves. In order to do this, agencies need to be aware of the specific criteria for applying for A1 forms to ensure they avoid any association with non-compliant solutions. Here’s what you need to know:
- Forms can be applied for by workers expecting to relocate across borders for an assignment that will last no longer than 24 months.
- The individual must have pursued activity in the country issuing the A1 form for the requisite period leading up to the posting overseas.
- The contractor must be able to demonstrate an ongoing ability to carry out substantial work in the country where the A1 form has been issued from.
Get it right
Arguably the most sure-fire way to eliminate this risk is to partner with an expert in international contractor management solutions. At 6CATS International we have extensive experience in this field. Our team of experts have a wealth of knowledge to draw on and are able to provide advice on compliance in over 70 different countries.