[nivertech]

In my country there is something called "self-invoicing", basically the company issues the invoice on-behalf of a freelancer, withholds the maximum tax at source (eg 50%) and then pays the rest to the freelancer. Not much different from a payroll.

It is then the responsibility of the unregistered freelancer to go and reclaim their share of taxes from the tax authority (since they usually don't have to pay taxes, not even VAT, until they reach a certain annual income limit). IMO, it is much less of a hassle to simply register as a sole proprietor correctly than to go through this process.

Also, working with such people (who didn't even bothered to register as self-employed) can create accounting and legal/HR headaches for a properly run company.

The first time I encountered this was when the startup company, I worked for, hired an 18 y.o. freelancer for a one-time job.

Nex time at another company, we wanted to purchase a software, and turned out it was just a single guy without any business license or a company, so our CFO had to spend days to draw a purchase contract, so he could've been paid.