Master Your External Talent: A Compliance Guide

At Malt, we’re committed to helping clients and freelancers establish a secure relationship from the very first project. We provide a mix of products and services that streamline your compliance efforts with technology, but always offer the human touch so that you can have support whenever you need it. With clear, proactive compliance on both sides, collaboration and trust can flourish.

Compliance can be thought of like a partnership’s safety net: when done right, it lets both businesses and freelancers focus on what they do best without worrying about crossing any legal lines. Ensuring compliance (the right worker classification) offers both businesses and independent talent the opportunity to create a safe working environment, demonstrates an ethical and responsible image, and long-term organisational success. 

In this article, we’re breaking down compliance to make it easy for you to understand and adhere to. That way, you can focus on what matters most–working with incredible freelancers and building your Superteams at a scale. We've even developed an onboarding and compliance checklist that includes actionable steps to ensure you work seamlessly with freelancers.*

Disclaimer*: The information provided below is for general informational purposes only and does not constitute legal advice. You should consult a qualified legal professional for advice specific to your company’s situation.

Contractor compliance requires being up to date with the unique and varied legal frameworks across Europe, so it’s important for companies to stay informed. For companies, ensuring compliance means that they align their operations with regulatory, legal, and internal policy requirements. With a regimented compliance framework, businesses can showcase transparency and accountability, minimise legal risks, and protect their reputation. 

Freelancers or contractors are self-employed individuals who work on time-based or fixed price/deliverables for various clients. Since they differ from full-time employees, it’s important that they meet all legal, regulatory, visa, tax, and organisational requirements before and during their engagement with a company. 

Staying compliant not only reduces tax liabilities, reduces potential misclassification issues (explained below), and enables companies to fully leverage the benefits of working with external talent. By fostering fair and transparent working relationships, companies can drive stronger engagement, and access specialised skills on-demand. This leads to faster project completion and the ability to scale resources efficiently.

Freelancing is built on autonomy, where individuals have the freedom to decide:

• On whether to accept a project or not
• If they accept a project, under which conditions (rates, deadlines, deliverables, etc.)
• They have to meet agreed upon deadlines and goals, but they are not subject to the employer’s control, supervision or discipline

Both freelancers and companies are responsible for reducing misclassification. Freelancers are responsible for registering their businesses in accordance with local laws. They should also make sure they have appropriate insurance coverage based on their country requirements (e.g., professional liability, accident insurance). On the other hand, companies are responsible for ensuring that their engagement with freelancers complies with local labour and tax laws, including correctly classifying workers. Companies need to provide clear, project-based contracts that reflect a freelancer’s autonomy, reduce imposing employer-like control, maintain proper documentation of freelancer engagements, and follow transparency and compliance requirements in their respective markets. 

It’s important to note that when it comes to misclassification, courts and authorities lean towards a combination of factors rather than a singular instance. 

By ensuring that freelancers maintain their independence and entrepreneurial nature, companies can create healthy working relationships that benefit both parties while staying compliant with labour regulations. The criteria used to assess whether a work relationship is independent or employment are largely similar across markets. However, slight nuances, such as variations in the weight given to individual criteria, may exist. This is why consulting with a legal team is recommended.

Ensuring the right type of classification protects freelancers’ freedom while giving companies the confidence to collaborate with freelancers without unnecessary legal, financial, or reputational risks. Misclassification is a term referring to any instance where a worker is incorrectly categorised as an independent contractor instead of an employee. 

This can sometimes be intentional to avoid certain costs and gain flexibility or it can be unintentional, due to misunderstanding labour laws or lack of attention. In such cases, local authorities assess the overall nature of a company-freelancer relationship rather than relying on a single criterion to determine compliance, let alone the qualification given to this relationship in the contract binding the parties. Contrary to popular belief, the vast majority of misclassification cases aren’t raised by individual workers themselves, but by the tax authorities.

Misclassifying freelancers can result in fines, back taxes, and reputational damage. With the right guidance it can be avoided. On the flip side, companies that are overly cautious, can inflate costs and limit their access to freelance talent. 

Freelancers on Malt's marketplace always have the flexibility to choose the projects they take - a core component in distinguishing them from employees. Malt offers much more though. Our platform provides a range of solutions that help you ensure compliance at every step.

Reduce the headaches and lean on built-in compliance features designed to make sourcing freelancers simple, secure, and stress-free. On Malt companies can access:

• GDPR-compliant document storage and verification with secured access and centralised storage of contracts 
• Freelancer compliance verification before they start a project to ensure they’ve registered their businesses in accordance with local laws

In addition to our compliance features, we’ve created freelance management features tailored to empower businesses and freelancers to confidently work together and focus on project success. 

• Automated contract creation to ensure that 100% of projects have the right contract in place
• Robust legal setup with easy compliance, ensuring freelancers adhere to companies’ legal and contractual requirements
• Invoice and payment processing and collection
• Note: we have a tax-engine embedded in our invoicing tool to ensure VAT compliance within most countries in the European Union 
• Activity trackers to ensure autonomy and transparency
• Detailed reporting to know exactly who is in your workforce, for how long, on which team, and country 
• Client reviews and ratings on freelancers’ projects to ensure transparency and showcase quality of work

As a part of our thorough checking process, Malt reviews freelancers’ identity and paperwork to ensure they’re compliant with workforce classification and payment regulations. 

• For freelancers on Malt: we ask for a legal form, company name and address, registration number, and a VAT number (if applicable). Since our payment partners conduct KYC and KYB verifications for freelancers, they may ask them for documents like proof of identity, proof of company registration, and articles of association. In addition, we also verify complementary documents per local regulations (e.g., the attestation de vigilance in France).
• For clients using Malt: we ask for the company name, registration number, VAT number, a legal headquarter address and billing information. 

69% of freelancers feel confident about their long-term future in freelancing.

- Malt’s Freelancing in Europe 2024 report 

Global freelancer compliance can seem challenging. However, with the right tools and knowledge, businesses and freelancers can collaborate smoothly

Here’s a high-level overview of key regulations in the countries where we operate to help you get started. For further information, it’s advised to set up an appointment with your legal, procurement, and HR departments. 

• IR35 legislation: This ensures freelancers are correctly classified as either self-employed or employees for tax purposes. Businesses need to evaluate working relationships to avoid reclassification.
• Agency worker regulation: Freelancers shall not be placed under the supervision and direction of end clients
• Data protection: Adherence to the Data Protection Act 2018 (aligned with GDPR) is essential when handling freelancer information.
• Conduct regulations: The regulations provide a minimum set of standards that must be adhered to when placing a freelancer into a project
• Post-brexit changes: Cross-border hiring with EU freelancers requires awareness of updated regulations.

• Freelancer autonomy: Freelancers should not be integrated into company structures (e.g., no employee benefits or hierarchical management).
• Distinguishing from CDI (permanent employment contracts) contracts: Freelancer engagements must clearly distinguish themselves from CDI contracts. To avoid any confusion and ensure freelancers are correctly classified, the working relationship should clearly define their independent status by minimising features typical of employment, such as no direct supervision and company benefits, while emphasising the freelancer's autonomy and control over their work.
• Social security contributions: Contractors manage their own contributions, based on earnings, and are responsible for staying compliant with French tax authorities.
• Cross-border rules: If hiring freelancers from other EU countries, it’s important to understand both French regulations and the freelancer’s home country laws.

• Distinguish from employment contracts: Freelancers should not be integrated into company structures (e.g., no employee benefits or hierarchical management). Ensure freelancers remain independent, and are clearly differentiated from traditional employment relationships. This includes the absence of subordination, meaning that the freelancers maintain control over their work, set their own schedules, and not get direct supervision from clients, fixed working hours, or company-provided benefits.
• Tax compliance: Freelancers need a tax identification number also known as a DNI (documento nacional de identidad) and have specific tax obligations (in particular, with respect to IVA and IRPF).
• Social security contributions: Contractors and Freelancers are responsible for their own social security contributions under the Special Regime for Self-employed workers (RETA). These contributions are mandatory and depend on their income level.
• Beckham Law: Foreign professionals may qualify for tax benefits under this regime, provided they meet a set of specific requirements.

• Wet DBA: Updated in 2025, this regulation clarifies freelancer and client roles, helping companies avoid costly misclassification errors while ensuring freelancers maintain economic independence and autonomy.
• Economic independence: Freelancers should maintain autonomy, avoiding contracts that create dependency on one client.

• Scheinselbstständigkeit (pseudo self-employment): Pseudo Self-Employment is defined as a relationship between client and a self-employed person that is in fact treated like a dependent employment based on the characteristics derived from the German Labour Law definition of dependent employment (entrepreneurial risk, binding instructions, integration in the company organisation) 
• Social security: Freelancers have the possibility to choose freely their social insurance coverage and (unlike employees) do not have an obligation to contribute to the public pension fund. One of the main risks of a reclassification is the subsequent payment of social security contributions linked to a dependent employment. 

• Freelance visas: Professionals need freelance permits to work legally in sectors like media, tech, and education.
• Data Security: Compliance with local data protection laws ensures secure information handling. 

• Liability legislation: As of 2025, freelancers must have appropriate liability insurance, as clients can now file claims directly.
• Registration: Freelancers must register with the Crossroads Bank for Enterprises, may need a professional card and a VAT number.
• Social security contributions: Freelancers register with a social security fund, contributing to healthcare, pensions, and unemployment insurance.

Onboarding freelancers in a compliant manner is the chance to create a seamless, efficient, and positive experience that sets the tone for long-term collaboration and project success. By integrating freelancers into your company culture, you not only foster engagement and make them feel valued, but also enhance retention by building a stronger connection to your organisation and its mission.

This global checklist covers the foundational steps to onboard freelancers efficiently and compliantly. Keep in mind that there may be additional local requirements, so always consult with your legal and HR teams. 

Download your compliance checklist here!