Context:
Certain NGOs / non-profits cannot reclaim VAT due to their legal structure. This means VAT becomes a real cost for them.
Why EOR can be expensive With EOR, VAT applies to:
MSF (Monthly Service Fee)
TCE (Total Cost of Employment) – salary + employer contributions
Because salaries are high, non-refundable VAT can easily add €1k+ per month per employee.
Solution: Direct Hiring With Direct Hiring:
The client pays salary and employer contributions directly to the talent
We only invoice the MSF
➡️ VAT only applies to the MSF, not the TCEs. Thus, making it much cheaper for NGOs that cannot reclaim VAT.
When to position this
Use Direct Hiring if:
Prospect cannot reclaim VAT
Is an NGO that says EOR is too expensive
Submitter:
Dominik Kudera