There’s no doubt that international assignments are not only proving to be increasingly of interest in the contracting world, but also hugely profitable for those recruitment agencies with a global perspective. However, knowing where to hone your attention (and that of the contingent workforce) can be challenging. According to 6CATS International data, there are several hotspots for contractor activity at the moment.
While it perhaps might not be the first destination to spring to mind, Nigeria is, in fact, a location that agencies should keep an eye on. In the three months to September 2018, the country saw a stark increase (63 per cent) in demand for contract talent, with business across pharmaceutical, engineering and energy seeking large numbers of contingent workers. Much of this uptick in activity is likely a result of economic expansion, with projects such as a Nigerian pilot cancer drug access programand a push for greater investmentin the country’s oil and gas industry driving demand for niche experts.
However, placing contractors across the African continent in general can be hugely complex. Even those with experience in a bordering country shouldn’t be lulled into a false sense of security when looking at Nigerian placements as tax and compliance requirements can vary significantly from country-to-country. For example, there are a number of work permit options available, ranging from ‘critical skills’ visas which will be permitted if the workers’ specific abilities are in demand in the destination, to intercompany transfers where an individual is remaining with the same business, just relocating.
Famed for being a source of some of the most prized commodities in the world, including gold, oil, diamonds and the cocoa beans that make chocolate, Ghana has also developed a reputation as a hotspot for contingent workers. From July – September of this year, contractor demand in the country grew 30 per cent, with short-term assignments in the oil and gas industries proving particularly rife.
This increase in contract demand perhaps comes as no surprise when we consider how well the economy is currently doing. In fact, the country is now on track to become one of the world’s fastest growing economies, according to the World Bank, the African Development Bank, the International Monetary Fund and the Brookings Institution.
While recruiters can certainly profit from looking at Ghana for contractor opportunities, there are a number of compliance challenges to be aware of when negotiating deals. Firstly, overseas workers will need a Work and Residence Permit, however only highly qualified and experienced candidates may apply to the Ministry of Labour for one. Crucially, while the application is in progress, the individual cannot be present in Ghana. Once this permit has been authorised, contractors will need to apply to the Department of Immigration for a Residence Permit. Until this is approved, they can’t legally work. It can be a lengthy process, usually taking anywhere between 3-6 months for it to be processed, so agencies will need to factor this in when agreeing start dates and other practicalities.
This European destination is also noting a real uptick in contractor activity. According to our data, in the three months to September the number of these professionals operating in the country rose by 29 per cent. Arguably, this demand comes from the significant skills shortages currently being noted by businesses across multiple industries, with statistics suggesting that 55 per cent of Portuguese CEOs are currently unable to find enough skilled professionals to support their planned growth.
Agencies placing contract professionals in this destination should, however, be wary of the multi-faceted tax and compliance system. For example, if the individual is registered as self-employed, they will need a fixed address in the country in order to take up a placement and within a week of finding accommodation they will need to inform the residency office of the local town.
When negotiating pay, recruiters should also consider how the individual’s employment status will impact their payments and expense claims. For example, income tax is deducted at variable rates according to their earnings, but self-employed workers are exempt from social security payments for the first year. The system for claiming business expenses is also relatively unique. If the individual earns less than €200,000 per year, 25 per cent of their gross income can be offset by expenses without providing documentation.
As an ‘award-winning’ country – it secured the top spot on the 2017 Forbes list of the best countries for business and was ranked number one on the European Commission’s Innovation Scoreboard last year – it’s no wonder that Sweden made our list of contracting hotspots, with a 29 per cent increase in contractor demand from July to September 2018.
However, of all of the countries on this list, this destination in particular has an extremely complex compliance landscape that could impact contractor placement timescales and even successes. For example, authorities have enforced strict deemed employment legislation which makes many Swedish firms hesitant to employ contractors under a self-employed model. Much of this reluctance comes from the increased risks for the business, with tax liabilities transferred to the end client if incorrect payments are made. Many firms will also find that tax administration is particularly burdensome if a self-employed contractor is deemed to be a permanent fixture, making this employment model unfavourable with a large number of companies.
When making a placement here, it is also worth being aware that expat contractors operating in Sweden can potentially benefit from tax relief. There are of course a number of criteria that the individual must meet before they can be considered for this, including a minimum rate of pay. Last year this figure was SEK 89,600, or £8,104, per month. A contractor who doesn’t meet this first criterion can potentially gain tax relief if they are deemed to be specialist or key personnel, such as a scientist, researcher, technician or any other skilled professional considered difficult to recruit for in Sweden.
For recruiters placing contractors globally, the world really is your oyster, but wherever you chose to invest your time and money, ensuring your agency and its contractors are compliant with local tax legislation is something that quite simply cannot be overlooked.