Why are companies so much against B2B contracts?

As most of you know, it can be extremely difficult to land a remote job in the EU or US due to the tax rules which are a major headache to deal with. I moved from Europe to Japan 2 years ago and up until last week I was working fully remote for a European company that I had previously worked at as a normal company employee.

After moving I simply switched to being a sole proprietor running my own consultancy, which meant that instead of having me as an employee, my boss simply hired me on a B2B contract. No hassle at all, and he was free from dealing with tax and legal stuff.

So when I started job hunting last week, I thought that going the B2B route would be easy, but so far I have only been turned down. A lot of the rejections start with the recruiter mentioning the tax issue, which I have to remind them isn’t actually an issue if they hire me as a consultant instead, but then they reject me again saying that they do not hire freelancers.

I am very curious about this. Why is this such an issue? If they hire me on B2B contract instead of hiring me as an employee they don’t need to worry about taxes, pensions or all the other benefits they have to give to their in-house employees. Heck, they can even hire me for a cheaper rate if they want.

Is there some hidden law or rule that I (and apparently also my former boss) have overlooked?