Understanding the economic employer concept.
The economic employer concept defines an employer not only by who signs the employment contract, but by who actually:
Directs and controls the employee’s work,
Benefits from the work performed, and
Bears the costs of the salary or assignment.
In countries that apply this approach, a host company can be treated as the “actual” employer. That can trigger payroll registration and wage tax withholding obligations for business travellers or short-term assignees, sometimes from day one.
Country-specific.
Each country has an approach towards this kind of business trips, some of them have established a threshold of days that an employee can work in the destination country for a domestic client without meeting the requirements of an economic employer.
Some countries have no threshold (for example, Austria, Denmark, Germany, Norway, Poland, Slovakia, and the Czech Republic), while others apply day-count limits (e.g. Sweden, the Netherlands, China, Switzerland, or the UK).
Steps employers should take to comply once you get an “Attention” outcome in the CS:
Confirm whether an economic employer situation exists by:
Reviewing who benefits from the employee’s work and who controls it.
Identifying whether the local entity, client, or subsidiary is effectively acting as the economic employer (e.g., in the destination country, the company assigns the employee’s tasks, sets priorities, approves vacation or overtime, controls where/how the employee works or provides the tools/badge used, and the employee’s working hours are charged to the destination entity as for example via intercompany recharge).
Documenting this analysis, as it may be requested by tax authorities.
2. Assess potential payroll obligations
If the host entity is deemed the economic employer, it may need to withhold and remit income tax.
3. Handle withholding tax
Wage tax will need to be withheld from day one if local rules apply.
Relief from withholding could be available if proper payroll mechanisms and treaty conditions are met.
4. Maintain compliance documentation
Keep evidence of which entity benefits from the work performed and how costs are recharged.
Ensure timely submission of wage tax reports or filings, if required locally.
5. Review business travel structure
Avoid long-term business trips that blur the line between home and host responsibilities.
Consider contractual clarity: ensure that business trips are defined in writing to prevent inadvertent creation of a local employment relationship.
6. Seek further expert advice
Because countries apply the OECD framework differently, check the country-specific requirements that may apply to your trip.
Where needed, seek a brief local confirmation on points like reporting or payroll treatment to prevent later corrections.