Why This Matters
The talent pool is global now. The best engineer for your startup might be in Lisbon. Your ideal designer could be in Buenos Aires. The marketing lead who'll 10x your growth might be in Lagos. If you limit yourself to hiring locally, you're competing for the same candidates as every other well-funded company in your city — and paying top-of-market rates to do it.
International hiring used to be something only large enterprises could pull off. You needed local legal entities, international tax counsel, and an HR team that understood labor law across jurisdictions. In 2026, a two-person startup can hire a full-time employee in Germany by the end of the week. The infrastructure exists. The tools are mature. The question isn't whether you can hire internationally — it's whether you can afford not to.
This guide walks you through the entire process, from deciding between a contractor and an employee to running your first international payroll. No fluff. No legal jargon. Just the practical steps I've seen work across dozens of portfolio companies.
Decide: Employee vs. Contractor
This is the most important decision you'll make, and getting it wrong can cost you six figures in fines. Here's the difference:
Employee
- - Works set hours under your direction
- - Uses your tools and processes
- - Works exclusively (or primarily) for you
- - Entitled to local benefits, PTO, and protections
- - You withhold taxes and pay employer contributions
Contractor
- - Sets their own hours and methods
- - Uses their own tools
- - Works for multiple clients
- - No entitlement to benefits or protections
- - Handles their own taxes
Misclassification Risk
If someone works full-time, follows your schedule, and only works for you — they're an employee in most jurisdictions, even if your contract says “contractor.” Countries like Spain, Brazil, and the Netherlands actively enforce this. Penalties include back taxes, social contributions, and fines that can exceed $100K. Get this right from the start.
Choose Your Hiring Structure
There are three ways to legally hire someone in another country. Each has tradeoffs.
Option A: Set Up Your Own Entity
Register a legal business entity in the target country. You handle everything — incorporation, compliance, payroll, benefits, taxes.
- - Full control over employment terms
- - Cheapest per-employee at scale (20+ people)
- - Can build a real local presence
- - $15K-$80K+ setup cost per country
- - Takes 2-6 months to establish
- - Ongoing accounting and legal overhead
Option B: Use an Employer of Record (EOR)
RECOMMENDEDAn EOR becomes the legal employer on paper. They handle local compliance, payroll, taxes, and benefits. You manage the person's day-to-day work. Think of it as outsourcing the legal/HR side while keeping the working relationship.
- - Hire in days, not months
- - No entity setup required
- - Full compliance handled for you
- - Easy to scale across countries
- - $400-$700/employee/month
- - Less control over benefits customization
- - Dependent on vendor quality
Option C: Hire as a Contractor
Engage the person as an independent contractor. Simplest and cheapest, but only works if the relationship genuinely qualifies as a contractor arrangement.
- - Fastest to set up (same day)
- - Cheapest option ($49/mo or less)
- - No local entity needed
- - Misclassification risk if full-time
- - Less loyalty and commitment
- - No IP protection in some countries
My recommendation: For your first international hire who'll work full-time, go with an EOR. It's the sweet spot of speed, compliance, and cost for startups. Set up your own entity only when you have 15-20+ people in a single country.
Pick an EOR Platform
The EOR market has matured significantly. Here are the platforms I've seen work across portfolio companies:
Deel
TOP PICKThe all-in-one platform I recommend most. Deel covers EOR in 160+ countries, contractor payments, global payroll, HRIS, and IT management in a single dashboard. They're profitable with $1B+ ARR and 37K+ customers — this is the category leader. Onboarding is fast (often under a week), the UI is clean, and the compliance coverage is the broadest in the market.
EOR from $599/employee/month. Contractors from $49/month. Free HRIS included.
Remote.com
Strong EOR offering with a focus on owning their own entities (rather than using third-party partners). Good for companies that prioritize that direct-entity model. Slightly smaller country coverage than Deel.
Oyster HR
Well-designed platform with a strong focus on employee experience and benefits. Good choice if benefits customization is a top priority. Smaller scale than Deel but solid product.
For most startups making their first international hire, Deel is the safest bet. It has the broadest coverage, fastest onboarding, and the most complete feature set.
Onboarding & Compliance
Once you've picked your platform and found your hire, here's what the onboarding process typically involves:
Documents You'll Need
- - Employee's government-issued ID or passport
- - Proof of address in their country
- - Tax identification number (local equivalent)
- - Bank account details for payroll
- - Signed employment agreement (your EOR generates this)
Local Labor Laws to Know About
Every country has different rules. Your EOR handles the details, but you should understand the basics:
- - Notice periods: Some countries require 1-3 months notice for termination (Germany: 4 weeks to 7 months depending on tenure)
- - Mandatory benefits: Many countries require 13th/14th month salary, meal vouchers, or transportation allowances
- - PTO minimums: EU countries typically mandate 20-30 paid vacation days per year
- - Working hours: Maximum work week varies (France: 35 hours, most of EU: 48 hours max)
- - Probation periods: Many countries allow 3-6 month probation with easier termination terms
Benefits Packages
Your EOR will offer a standard local benefits package that meets minimum legal requirements. This typically includes health insurance, pension contributions, and statutory leave. You can often upgrade to premium packages for an additional fee. My advice: start with the standard package and ask your employee if anything specific matters to them — it varies a lot by country and individual.
Set Up Payroll & Payments
One of the biggest practical headaches of international hiring is actually getting people paid correctly and on time. Here's what to know:
Currency Considerations
You'll typically pay your EOR in USD. They pay your employee in local currency. The FX rate is usually baked into the monthly invoice. Some platforms let you lock rates or pay in local currency directly to save on conversion fees.
Tax Withholding
Your EOR handles all local tax withholding and employer contributions (social security, pension, health insurance). You don't need to become an expert in Portuguese tax law. That's literally what you're paying for.
Pay Schedules
Different countries have different pay norms. Monthly is standard in Europe and LatAm. Bi-weekly is common in North America. Your EOR will align with local norms, but you'll need to fund payroll a few days before each cycle.
Payment Methods
For EOR employees, payments go through the standard local payroll system (bank transfer). For contractors, platforms like Deel offer flexibility: bank transfer, Wise, PayPal, or even crypto withdrawal options.
Build Your Remote Culture
Hiring internationally is the easy part. Making it work day-to-day requires intentional effort around communication and culture.
Timezone Management
Define a “collaboration window” — 3-4 hours of overlap where everyone is available for sync meetings and real-time discussion. For a US East Coast team working with Europe, this is usually 9am-1pm ET (3pm-7pm CET). For US West Coast and Asia, it's tighter — consider having async-first as the default.
Communication Tools
Build your stack around async-first communication:
- - Slack/Teams for quick discussions (but don't expect instant replies across timezones)
- - Loom/video updates for sharing context without scheduling a meeting
- - Notion/Linear/docs for decisions and project tracking that anyone can read asynchronously
- - Weekly all-hands during the overlap window to maintain team cohesion
Async Work Best Practices
The biggest shift in going international is moving from “can we hop on a quick call?” to “let me write this up so anyone can review it.” Write more. Document decisions. Record meetings for people who couldn't attend. Over-communicate context. The companies I've seen succeed with international teams treat written communication as a core skill, not an afterthought.
Common Mistakes to Avoid
Calling a full-time worker a “contractor” to save money
This is the #1 mistake. If they work 40 hours, follow your schedule, and only work for you — they're an employee. Misclassification penalties are severe and getting more aggressively enforced worldwide.
Ignoring local labor laws until there's a problem
You can't fire someone in the Netherlands the same way you can in the US. Some countries require 3+ months severance. Learn the basics before you hire, not when you need to terminate.
Setting up a local entity too early
An entity costs $15K-$80K+ to set up and creates ongoing compliance obligations. Don't do it for 1-5 employees. Use an EOR until you have enough people in one country to justify the investment (usually 15-20+).
Paying everyone the same salary regardless of location
Cost of living varies dramatically. Paying San Francisco rates everywhere wastes money. Paying below local market anywhere hurts retention. Research local compensation benchmarks and pay competitively for each market.
Forgetting about IP protection
In some countries, IP created by contractors belongs to the contractor by default. Make sure your contracts (or your EOR's employment agreements) include proper IP assignment clauses that are enforceable under local law.
Cost Breakdown: What to Expect
The total cost of an international employee includes their salary plus employer contributions, benefits, and platform fees. Here's a rough breakdown for popular hiring countries:
| Country | Employer Cost on Top of Salary | Mandatory PTO | Notice Period |
|---|---|---|---|
| UK | 13-15% (National Insurance + pension) | 28 days | 1 week - 12 weeks |
| Germany | 20-22% (social contributions) | 20 days minimum | 4 weeks - 7 months |
| Portugal | 23.75% (social security) | 22 days | 15-75 days |
| Brazil | 30-40% (INSS, FGTS, 13th salary) | 30 days | 30 days |
| India | 12-15% (EPF + ESI + gratuity) | 15-21 days | 1-3 months |
| Canada | 10-14% (CPP, EI, health tax) | 10 days minimum | 1-8 weeks |
| Philippines | 10-12% (SSS, PhilHealth, Pag-IBIG) | 5 days + holidays | 30 days |
Add $400-$700/month for EOR platform fees on top of these costs. For contractors, expect to pay the agreed rate plus $49/month for the management platform.