Global Employment Companies (GECs) are not new, and have been utilised for decades, with their ‘popularity’ fluctuating over time. Originally GECs were often utilised to effectively handle the employment of global nomads who moved regularly from country to country, or to benefit from the tax and social security regimes applicable to offshore employment (particularly in the Energy and Resources sector). In response to the competitive talent environment, organisations focusing on developing their talent deployment strategies, global shifts in remote work technology and attitudes (which have made remote working more accessible than ever), and regulatory changes, we have seen over the past three years a period of increased activity. Many organisations are now considering whether a GEC entity offers a potential solution to global workforce employment for populations of employees, either by implementing a new GEC model or expanding the use of an existing GEC.
The importance of GEC location analysis
Selecting the most appropriate location for a GEC is an important part of the due diligence process for implementing a GEC and the review must be multi disciplinary in nature, covering all key business functions. As well as reviewing key tax aspects (including corporate tax, ability to establish and maintain corporate tax residence, transfer pricing, indirect tax, and employment taxes), there are several other significant areas which should be onsidered such as employment law, regulatory considerations, and corporate governance: