The Industry:

Organisations across every industry sector face challenges when expanding their global footprint to place and pay workers in overseas territories. In the professional sports industry, that challenge is no different: in a highly competitive environment, clubs and organisations must maintain a presence in territories around the world in order to spot and acquire emerging talent and keep pace with rivals both nationally and internationally.

That need is particularly important for football (soccer) clubs who scour the globe continuously to uncover ‘the next big thing’ in order to strengthen their teams and compete for sporting titles and trophies. New player talent is so important in the football industry that maintaining a network of international scouts is almost a prerequisite for middle to top tier clubs, and forms part of their long-term business strategy.

The Challenges:

In order to balance their sporting objectives with their business needs, clubs often engage scouts on an exclusive basis in specific global locations, and do so under an independent contractor model - rather than employing the scouts as traditional employees on payroll. The independent contractor approach works for clubs because they typically have no established legal entity in the jurisdiction where the scout is based (and no desire to establish one). The only physical presence the clubs maintain is the resource itself.

However, while the independent contractor model has its advantages for the payment of scout fees, clubs that take this approach must ensure that they are abiding by the employment laws of the jurisdictions in which their scouts are operating, ensuring they meet all relevant tax and social security obligations associated with this population.

That compliance burden can represent a significant challenge. With that in mind, given the potential for financial penalties and other forms of censure, clubs should seek guidance to ensure that the correct contractual arrangements are in place and that any employment tax and payroll related implications and obligations are fully met in every location where the organisation has a personnel footprint.

Global Mobility Solutions:

activpayroll has a dedicated in-house Global Mobility division to provide solutions for the employment challenges faced by international businesses that employ independent contractors in overseas territories. In the context of professional sports clubs and their scout populations, that means offering strategic and practical guidance, support, and advice, including:

• Reviewing the legality of employing independent contractors as scouts in overseas territories.
• Analysing the risk and exposure of using scouts in an overseas jurisdiction, based on the specific rules, regulations, legislation, and practical employment considerations.
• Clarifying the employment status of the scout population and the various employment tax related implications and obligations that status entails.

Where associated risks or legal challenges are found, our Global Mobility division seeks to provide measured guidance to employers on the extent of those risks, and potential steps that could be taken to mitigate them. Where mitigation is not available or possible, and the potential risk significant, we seek to outline the steps employers need to take to reduce that exposure both historically and going forward.

Payroll Solutions:

In some cases, employing scouts under the independent contractor model may be unsuitable or undesirable. Football clubs may gauge the compliance risk to be unacceptable, the mitigation steps too onerous, or simply find that a traditional employee-based model suits their business needs better. In this context, activpayroll can help clubs to transition their scout population to an employee-based model by providing guidance, support and advice on the payroll and employment tax requirements in the relevant overseas jurisdictions.

A range of factors may influence an organisation's decision to transition to an employee-model. In a professional football club, the following factors may be important:

• Is there a requirement for the club to register for payroll tax purposes to meet its compliance obligations in a territory where an international scout is based and where there is no established club entity?
• What type of entity must the club establish in territories where doing so is a requirement for payroll tax registration?
• If the club cannot or will not establish the required type of entity, does it have an alternate strategy for meeting its payroll compliance obligations?
• Where there is no requirement to establish an entity, can the club simply register for payroll tax purposes in the overseas territory and, if so, what does the process involve and how long does it take?
• How should the club ensure that employment contracts for its international scouts are fit for purpose in the territories in which the scouts are based?
• How should the club manage payroll for international scouts: where should they be paid, and in what currency? What income tax and social security withholding is required? What are the payroll reporting and remittance requirements in the relevant jurisdictions?

Next Steps:

As a leading provider of global mobility and payroll solutions, in over 150 international locations, activpayroll offers both expertise and experience in managing the needs and compliance requirements of overseas employees and independent contractors.

Beyond providing payroll and global mobility guidance, support and advice, we can help you register your business with the relevant tax authorities, and assist with the implementation and ongoing administration of payroll mechanisms in every corner of the world.

For more insight and information on overseas employment tax compliance get in touch with our specialised Global Mobility Team today.