International Payroll: How to Pay Remote Employees Globally (2026)
Hiring someone full-time in another country creates legal employer obligations in that country. You can't just pay them as a contractor indefinitely. Here's the full spectrum of options — from simple contractor arrangements to full Employer of Record.
Your four structural options
- Independent contractor: simplest. The person invoices you. No employment relationship. Works until tax/labour authorities reclassify them as an employee. Risk increases with: exclusivity, set hours, management direction.
- EOR (Employer of Record): a local company (Deel, Remote, Rippling, etc.) hires the person on your behalf. They're legally employed in their country, you pay the EOR a monthly fee. No local entity needed. Cost: $499–700/employee/month.
- PEO (Professional Employer Organization): similar to EOR but requires you to have some local presence. Less common for pure remote work.
- Local entity: set up a subsidiary in the employee's country. Full compliance, no middleman fee. But costs $5,000–20,000 to set up and $10,000+/year to maintain. Only worth it for 10+ employees in one country.
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