5 Key Steps to Keep Your Business Compliant Internationally

As businesses expand into global markets, navigating diverse legal frameworks becomes increasingly complex. Compliance missteps can lead to hefty fines, reputational damage, and operational disruptions. 

In this guide, we’ll walk you through 5 key strategies to ensure your business remains compliant across jurisdictions and avoids common pitfalls.

1. Master Local Regulations to Prevent Costly Penalties

The biggest challenge in international compliance is understanding and adhering to the unique regulatory landscape of each country. Non-compliance can lead to severe penalties, such as fines under the GDPR (General Data Protection Regulation), where organizations face fines of up to €20 million or 4% of their annual global turnover, whichever is higher.

General Counsels and legal teams aiming to ensure international regulatory compliance for businesses need to establish clear processes to address existing and emerging regulations across jurisdictions. 

The list of effective cross-border compliance action steps includes:

• Fostering industry relationships: By creating a network of advisors in new jurisdictions, businesses can ensure early adoption and apply best practices for compliance.
• Establishing comprehensive due diligence: Cross-border companies facing global expansion compliance challenges need to identify all existing and new regulations applicable to their operations.
• Assessing the applicability: After identifying local regulations, legal teams need to assess their applicability, impact, and consequences.

2. Navigate Complex Tax and Employment Laws

Expanding internationally requires a thorough understanding of both local tax regulations and employment laws, which can significantly impact the success of your global operations. Countries have diverse rules governing corporate taxes, social contributions, and labor rights, and non-compliance can result in severe penalties or employee-related disputes.

Tax Considerations:

• The OECD Global Tax Reform and the application of the arm's length principle can affect the allocation of taxable profits, introducing new tax obligations.
• Businesses should analyze local taxes and global initiatives to determine their impact on intercompany agreements and broader tax planning.
• It is critical to involve local tax advisors to ensure your tax structures remain efficient and compliant.

Employment Law Considerations:

• Local employment laws vary widely, covering aspects such as working hours, social security contributions, and termination procedures.
• Legal teams must research jurisdiction-specific employment regulations and work closely with local experts to avoid compliance risks when hiring in new countries.
• Address key areas like hiring practices, tax withholdings, and compliance with local labor standards to ensure smooth international operations.

3. Solidify Intercompany Agreements to Avoid Double Taxation

Establishing clear and accurate intercompany agreements is crucial for maintaining international compliance and avoiding tax-related penalties. Without well-defined agreements, businesses face the risk of double taxation and potential disputes over profit allocations across jurisdictions.

Key Steps for Ensuring Compliance:

• Define the Scope: Clearly outline the relationships and transactions between business entities to ensure transparency and proper tax allocation.
• Validate Entities: Identify and verify the legal entities involved in each agreement, ensuring all parties are properly recognized.
• Draft and Localize Contracts: Prepare template agreements for all entities, then localize them for each jurisdiction to comply with local laws.
• Review Regularly: Conduct periodic reviews of intercompany agreements to address changes in local regulations and ensure compliance.
• Implement and Finalize: Ensure agreements are signed and validated by local directors in a timely manner to avoid backdating issues or disputes.

By proactively managing intercompany agreements, multinational companies can mitigate tax risks, streamline compliance processes, and avoid costly penalties.

4. Implement Robust Data Governance and Reporting Protocols

Establishing clear data governance policies and effective reporting systems is essential to ensuring international compliance. As businesses expand globally, they must navigate various data privacy regulations, including GDPR, CCPA, and other local standards. Effective data governance helps avoid costly compliance gaps and data breaches, while also streamlining corporate record management across jurisdictions.

Key Steps to Implement Data Governance:

• Centralize Data with a Single Source of Truth (SSOT): Maintaining consistent, updated corporate records is crucial for ensuring data accuracy and reliability across all entities.
• Assign Roles and Responsibilities: Clearly define who is responsible for each compliance task to avoid ambiguity and ensure accountability.
• Control Access to Sensitive Information: Implement access rights and permissions to protect corporate records and prevent unauthorized use.
• Automate Compliance Processes: Utilize platforms like Athennian to automate entity formations, filings, disclosures, and reporting to ensure timely compliance across all jurisdictions.

By automating these governance protocols, legal teams can enhance data integrity, improve collaboration, and mitigate compliance risks associated with global expansion. Legal technology solutions, such as Athennian, help streamline compliance tasks, making it easier for General Counsels and legal teams to focus on other critical areas.

5. Leverage Legal Technology to Stay Ahead of Compliance Challenges

Managing international compliance manually is inefficient and prone to errors, especially when dealing with multiple jurisdictions. By integrating legal technology into your operations, you can automate key compliance workflows, reduce the risk of non-compliance, and ensure data integrity across your global entities.

Key Benefits of Legal Technology:

• Centralized Corporate Records: Legal technology platforms, such as Athennian’s entity management software, allow businesses to centralize their corporate records in a single source of truth (SSOT), accessible by teams globally.
• Automated Compliance Reports and Reminders: Generate compliance reports with just a few clicks and set automated reminders for filing deadlines, ensuring that your team avoids penalties for late submissions.
• Collaborative Platform for Cross-Border Compliance: With a collaborative platform, legal, compliance, finance, and General Counsel teams can work together in real-time, sharing updates and data from anywhere, on any device, to maintain compliance across all jurisdictions.

By replacing manual processes with automated systems, businesses can efficiently handle the complexity of international expansion, maintain compliance, and safeguard the integrity of corporate records.

This approach not only improves workflow efficiency but also ensures that global operations stay ahead of evolving regulatory requirements, helping legal teams stay compliant without the burden of manual, siloed processes.

Extra: Simplify Global Compliance with Athennian

Managing international compliance doesn’t have to be overwhelming or prone to costly errors. With the right legal technology, like Athennian’s entity management platform, your team can streamline workflows, enhance data accuracy, and stay ahead of compliance challenges across multiple jurisdictions. 

By automating key tasks such as filing deadlines, entity formations, and compliance reporting, you reduce the risk of penalties and maintain a clear, centralized view of your global operations.

If you're ready to simplify your compliance process, consider exploring Athennian’s platform firsthand. Request a free demo today, and see how automating your compliance workflows can help you focus on strategic growth, confident in the quality and security of your data.