How to hire international employees without a local entity

Key takeaways

• Start with the work, not the contract title. Great Britain’s employment-rights guidance bases status on the real working relationship, while ILO guidance likewise puts the facts of work and remuneration ahead of a contrary label. An independent-contractor agreement therefore fits only work that is genuinely independent.
• A subsidiary is not the only route to employing someone abroad. Depending on the worker’s country and the local model available, an Employer of Record or foreign-employer registration may support an employee hire. Check that route before comparing provider fees or estimated start dates.
• Keep company registration, employer/payroll registration and corporate tax presence as separate questions. UK guidance, for example, distinguishes Companies House registration and PAYE presence from other tax questions; the facts for a specific hire still need local review.
• A provider arrangement does not settle every obligation for you. Before you proceed, identify the local employer, inspect the agreements, and establish who owns worker support, employment terms, work-authorisation checks, records, data handling and intellectual-property assignments.
• Revisit the arrangement when the work becomes more closely directed, the worker moves, or local activity becomes sustained. There is no universal headcount, cost or timing threshold for replacing a provider arrangement with your own entity.

What hiring without a local entity actually means

A company can hire someone abroad without forming a subsidiary if the working relationship, physical work location and local rules support the chosen route. Identify the legal and administrative steps for this hire and assign each one to a responsible party.

A subsidiary, employer registration and tax presence are different questions

Check incorporation, employer registration and corporate tax presence separately. The absence of a local entity settles none of these questions.

The UK provides a useful, limited example. An overseas company with no UK base does not need to register with Companies House, although it may still need to register for Corporation Tax. HMRC also says that an employee’s presence in the UK alone does not create UK PAYE tax presence for an overseas employer. Those are UK-specific rules, but they show why a company-registration answer cannot stand in for payroll or tax analysis.

Start by mapping the parties and the local footprint: your company, any local employer or intermediary, the worker’s work location, and any branch, agency or representative office. Then ask local advisers or the relevant authority about the registrations, payroll duties and tax questions that apply to that arrangement.

The worker's location determines which rules need review

For an international hire, use the worker’s physical work location as a decision input from the outset. Put the employment, payroll, work-authorisation and local-registration questions for that location on your checklist. Do not treat a contract governed by your home law as a substitute for reviewing the rules connected with where the person will actually work.

Record the expected work country before you select a route, and repeat the review if that location changes. If the person will work in more than one country, identify the locations and the expected pattern of work before relying on a provider’s coverage statement or a standard employment agreement. The resulting work pattern gives a local adviser or authority a concrete basis for review.

Decide whether the role is employment or independent work

Make this decision before you compare providers, prices or onboarding plans. A contractor label cannot decide the status of the working relationship. Begin with what the person will actually do, how the work will be directed and where it will take place.

Look at the working relationship before the contract label

Great Britain’s employment-rights guidance says status depends on the reality of the working relationship rather than the contract label alone. ILO Recommendation 198 similarly says that national assessments should be guided primarily by the facts of work and remuneration, while remaining nonbinding guidance rather than a universal classification ruling.

it can’t make compliant or classify properly a contractor who is truly an employee.

— Diana J. Nehro, shareholder and chair of Ogletree Deakins' Cross-Border Practice Group

Build a short fact record before you choose a route: who gives instructions, who controls the work, whether the person is integrated into your organisation, whether personal service is expected, and whether the work is continuous. The ILO lists these as possible indicators for national systems to consider. In Great Britain, employment-rights and tax-status tests are also separate, so one answer does not settle the other.

When an independent contractor can fit

An independent-contractor route is worth assessing when the real arrangement is genuinely independent under the relevant local test. Document the facts behind that conclusion rather than relying on the agreement’s title: the scope of work, how the person operates, the expected degree of direction and the planned duration.

Once that route has been established, 4dev.com’s Contractor Platform can support post-selection contractor tasks, agreements, document and status checks, and work records. Classification still requires a separate local assessment.

When an employee route is needed

If the facts point toward an employment relationship under the applicable local rules, move to an employee route and obtain local advice on the arrangement. Instructions and control, integration into your organisation, personal service and continuity are factors that national systems may consider; their weight depends on the jurisdiction and the whole relationship.

For an employment-shaped role, use the facts you have collected to review locally available employee routes. Identify the employer that would sign the worker agreement and the remaining duties the arrangement must address.

Choose a lawful hiring route

Once you have assessed the role and confirmed where the person will work, compare routes that are actually available for that country and arrangement. For each route, identify the local employer, the working relationship, any work-authorisation requirement and the registrations it may require.

Use the diagram to test the work, its location, the local employer and the remaining payroll, tax and work-authorisation questions before requesting a proposal.

For a worker in Australia, employers hiring a non-citizen are told to use VEVO and review visa conditions that may restrict the type or amount of work. Confirm that permission before treating any employment route as viable there; the check does not establish whether direct foreign-employer registration is available.

Employer of record

An employer of record (EOR) may be an option for an employee hire without your own local entity. Its availability and legal effect depend on the worker’s country and the actual local model. Ask for the identity of the legal employer and the documents that establish the arrangement before treating an EOR proposal as a solution for a particular hire.

How the local employer and client divide the work

The agreements among the local employer, client and worker should show how responsibilities are allocated. Establish who signs with the worker, who provides the required employment terms, who handles pay and support, and who owns escalation if the arrangement fails. Also trace the data and intellectual-property chain through the actual documents rather than assuming that the commercial agreement answers every question.

When the local model may be regulated as agency work

An intermediary arrangement can carry additional rules where it falls within an agency-work regime. In the UK, an employment business engages a work-seeker under contract, supplies that person to work under someone else’s supervision and pays the supplied worker. Where EU temporary-agency rules apply, the framework establishes equal treatment for essential work and employment conditions relative to comparable user-company recruits.

Whether an EOR falls under such rules depends on its local structure. Establish the model and applicable worker protections before signing.

Direct employment through foreign-employer registration

Direct employment through a foreign employer may be available in some jurisdictions, but it has to be tested locally for the proposed worker and arrangement. In the UK, HMRC says an employer without sufficient UK presence may voluntarily operate PAYE in the stated circumstance; a receiving UK entity can have the duty in the mobile-worker situation set out in the guidance. These PAYE conditions are specific to the UK.

Before choosing direct employment, map the employer, work country, payroll party and any employer-registration steps that apply. Build those requirements into the start plan rather than assuming that the absence of a subsidiary settles them.

Employment through an existing local entity or partner

If your group already has a local entity, or a local partner is involved, identify which party would actually employ the person and whether that arrangement fits the role and local rules. Review the worker agreement, payroll responsibilities, mandatory terms, work authorisation and data access with the parties named in the documents.

An existing local presence changes which parties and duties you need to map. Keep the operational owner for each handoff clear before the offer is issued.

Forming your own local entity

Forming an entity is another route to evaluate when the business needs a lasting local operating presence. It brings a separate incorporation and compliance project, so assess it alongside the work you expect the team to perform, the local footprint you are creating and the responsibilities you are prepared to run directly.

For a limited UK example, an overseas company that sets up a place of business in the UK must register with Companies House. Forming and operating an entity elsewhere requires a review of that country’s rules.

Why a professional employer organization is a different arrangement

A professional employer organization (PEO) may have a different legal role from an EOR. In the United States, the IRS describes a PEO as generally performing some or all federal employment-tax withholding, reporting and payment functions for a client, and says that a claimed “co-employer” label is not itself a federal-tax-law category. A certified PEO can assume specified federal employment-tax obligations for defined worksite employees under its customer contract.

That US treatment does not establish how another country will structure a local employment route. Ask which legal employer, tax responsibilities and worker protections apply under the actual arrangement instead of relying on a familiar label.

Compare viable routes for one hire

Compare routes only after you have established that each could support the actual role and work country. A price comparison is useful only after the employment, registration and work-authorisation questions have been answered for each route.

Use the same comparison file for every viable route. Record the local employer, worker agreement, eligibility assumptions, first-day dependencies, recurring cost components and the point at which you will review the arrangement again.

Eligibility, control and worker protections

Ask the same questions of each route: who would employ the person, which facts support the chosen status, which country rules apply, and what protections attach to the model? If an intermediary is involved, establish whether the local arrangement could fall within agency-work rules instead of assuming that an EOR or PEO label answers the question.

Comparison question	What to establish before choosing
Employment route	The legal employer, the worker agreement and the locally available model for this hire
Working relationship	The facts about direction, integration, personal service and continuity that local classification review needs
Worker protections	The mandatory terms, benefits and protections relevant to the local arrangement
Responsibilities	The party that owns payroll, records, support, work-authorisation and escalation steps

Use the documents and local advice for the proposed hire to fill in the comparison; a provider’s standard description cannot establish eligibility for that person.

Setup and ongoing cost components

Separate a provider’s service charge from the employment costs that apply in the work country. Ask for a written breakdown of pay, employer contributions, benefits, payroll administration, provider charges, equipment and any registration or professional-advice costs. The relevant components and their treatment vary by country and arrangement.

The OECD’s 2025 model-worker data illustrates why a country-specific breakdown matters: employer social-security contributions, including payroll taxes where applicable, represented 17.3% of total labour costs in Germany, 12.0% in the United Kingdom and 7.5% in the United States. These figures apply to a single worker without children at each country’s average wage. They are neither EOR fees nor a total cost for an actual hire.

There is no universal route price or headcount break-even for this decision. Compare like-for-like written proposals only after confirming that the routes being priced are viable.

Timing and first-day dependencies

Ask what must be complete before the person starts work, then assign an owner and date to every dependency. The list can include a signed worker agreement, work-authorisation checks, registration, payroll details, benefits setup, equipment, system access and a support contact.

Where UK PAYE registration applies, the employer normally must register before the first payday to obtain an employer PAYE reference number. Check the required sequence and timetable in the worker’s country before you promise a start date.

What changes as the team grows

Keep the initial route under review as the facts change. A growing local team, closer direction of the work, a new office or representative presence, or a worker’s move can all create questions that were not present for one hire.

Review the route when the local footprint or operating model changes; a fixed headcount alone cannot determine whether to form an entity or replace a provider. Assess the country-specific implications at that point.

Check obligations that a provider contract may not remove

A provider contract describes services. Review the employment arrangement separately. Keep a separate checklist for the obligations and risks that depend on the work country, the parties’ actual roles and the worker’s circumstances. Name an owner for every open question before the person starts.

Employment terms, benefits and social insurance

Ask which party gives the worker the required employment terms, administers benefits and handles social-insurance obligations under the local arrangement. Request the worker agreement and the local explanation of any mandatory terms rather than relying on a commercial proposal or a high-level description of coverage.

Where an intermediary model falls within applicable EU temporary-agency rules, the framework establishes equal treatment for essential work and employment conditions relative to comparable user-company recruits. Check whether the local model falls within those rules before relying on its worker protections.

In the United States, a certified PEO can assume specified federal employment-tax obligations for defined worksite employees under its customer contract. The IRS scope and employee categories matter; this does not allocate tax or benefits duties in other PEO, EOR or country arrangements.

Work authorization and changes in work location

Make work authorisation a pre-start check owned by a named person. For a UK worker coming from abroad, government guidance says the hirer must check the person’s right to work before work begins. Australia likewise tells employers hiring a non-citizen to use VEVO to verify work rights and examine visa conditions that may limit the type or amount of work. Each is a local example, not a global procedure.

If the worker changes country, role or expected work pattern, reopen the check. Ask the local employer or adviser which right-to-work and immigration questions apply to the person’s updated circumstances rather than assuming the original review carries over.

Corporate tax presence and local registration

Keep corporate tax presence separate from the employment route. The OECD’s 2025 model treaty commentary says cross-border home working alone should not automatically lead to the conclusion that a home is a place of business for the enterprise; the facts and circumstances still govern. The relevant treaty, domestic law and facts still require review.

For UK PAYE, HMRC treats a UK branch, agency or representative office as UK PAYE tax presence, while corporate permanent-establishment analysis is a separate issue. Map the actual local footprint and ask the relevant advisers about registrations and tax obligations rather than using a provider contract as an answer for either question.

Intellectual property, confidentiality and employment records

Trace IP, confidentiality and record-handling obligations through the real contract chain. Under UK copyright guidance, an employer is normally the first owner of work made by an employee in the course of employment, subject to agreement; for commissioned work, the creator is normally the first owner unless there is a written agreement to the contrary. These are UK rules, so review the applicable law and every necessary assignment for the chosen arrangement.

Worker records need the same discipline. UK ICO guidance says a controller remains responsible for access requests when a processor stores records on its behalf, and calls for appropriate security and clarity about who collects the records. Identify the controller, the processor, the people who can access the records and the owner for worker requests before documents begin moving between systems.

Verify an employer-of-record provider's local model

An EOR proposal needs to be tested against the specific hire. Before you select a provider, get the named local employer, the relevant agreements and a clear account of who will own the worker-facing and compliance handoffs.

The diagram shows the documents to request: local employer and model, worker terms, data and IP provisions, and escalation paths for pay, support and exit.

Identify the employer and inspect the contract chain

Ask the provider to identify the local employer and give you the documents that connect the client, employer and worker. Read the worker agreement alongside the client agreement. Confirm who signs with the worker, who provides the employment terms, what services each party agrees to perform and how the documents handle changes or termination.

Do not infer the legal model from the EOR label. In the UK, an employment business engages a work-seeker under contract, supplies that person to work under someone else’s supervision and pays the supplied worker. Where EU temporary-agency rules apply, they establish equal treatment for essential work and employment conditions. Neither example classifies every EOR, but both show why the real structure and local rules matter.

Trace intellectual-property and data terms through the same chain. UK copyright guidance says a commissioned work’s creator is normally its first legal owner unless the parties agree otherwise in writing. In a UK employment relationship, the employer is normally first owner of work made in the course of employment, subject to agreement. These rules are UK-specific, so obtain advice for the applicable law and the actual agreements.

Confirm worker support, escalation and exit terms

Find out who the worker contacts about pay, benefits, leave, disputes and an end to the arrangement, and what happens if the client and provider disagree. Put the service owner and escalation route in writing before the worker starts.

For a limited UK example, an employment business must pay a supplied temporary worker for hours worked even if the hirer has not paid it. That does not allocate payment duties in every EOR arrangement, but it is a reason to inspect the local model and the agreement instead of relying on a commercial promise.

the indemnification provision is only going to be as good as the paper it’s written on

— Diana J. Nehro, shareholder and chair of Ogletree Deakins' Cross-Border Practice Group

Test country coverage, service scope, security and pricing

Ask for country coverage and service scope for the named worker and location, then verify the local employer, work-authorisation assumptions and any registration steps that the proposal relies on. Availability, licensing and the actual duty allocation still need confirmation for the worker and country in question.

Review how worker records move between the provider and your systems. UK ICO guidance says a controller remains responsible for access requests when its processor stores records on its behalf, and calls for appropriate security and clarity about who collects records. Identify the controller, processor, access rules and request owner in the arrangement you are considering.

Request a written price breakdown and document the assumptions behind it. Use the provider’s proposal to assess price and timing only after you have confirmed that its local model is viable for this hire.

Prepare the hire for day one

Before the first day, turn the chosen route into a dated handoff plan for people, records and approvals. Every item should have an owner, a document or system of record, and an escalation contact if it is late or incomplete.

Assign an owner for each approval and document

Create one working list that names the person responsible for each approval and document. Include the worker agreement, local-employer documents, work-authorisation check, registration, payroll inputs, benefits, equipment, system access, records and worker-support contact.

Handoff	Owner to name	Record to keep
Employment arrangement	Local employer and client contact	Signed worker agreement and local terms
Right to work	Named compliance owner	Check outcome and any conditions
Payroll and registration	Employer or payroll owner	Registration reference and payroll inputs
Access, equipment and support	Manager or operations owner	Start plan and worker contact route

Do not leave an item with “the provider” or “HR” as the owner. A named accountable person makes it possible to resolve missing information before the start date instead of after the worker has begun.

Verify the offer, work authorization and mandatory terms

Check that the offer, worker agreement and local mandatory terms match the route you selected. The agreement should name the employer, work location, role, pay arrangement and the people responsible for questions or changes.

For a UK worker coming from abroad, government guidance requires the hirer to check the legal right to work before work begins. The exact authorisation process and any immigration conditions remain specific to the worker and country, so confirm them locally rather than treating a right-to-work check in one jurisdiction as a reusable template.

Complete registration, payroll inputs and equipment handoffs

Put registration and payroll steps on the start-date checklist. In the UK, where employer PAYE registration applies, the employer normally must register before the first payday to obtain an employer PAYE reference number. For an incoming UK worker, government guidance also identifies starter information including the person’s name, date of birth, address and starter declaration for payroll reporting. These are UK examples; the local sequence and inputs must be checked for each hire.

Confirm equipment, access and document circulation with the same care. A Latvia-centred study of cross-border hiring reported employer concerns about taxation, equipment, document circulation and data security; it does not establish an EOR outcome or a universal prevalence figure. Assign an owner to each of those handoffs.

Plan supervision, record access and employee support

Give the worker a clear manager, a practical route for questions and a way to raise a problem that does not depend on finding the right person in a shared inbox. Record which party can change employment details, access worker records or approve a request, and how the worker will be supported if the client and local employer need to coordinate.

Review the plan again if the work location, role or supervision changes. This keeps the initial route, the records it relies on and the worker’s support path aligned with the arrangement that actually develops.

Know when to change the arrangement

Set review triggers for a move, closer direction of work or sustained local activity. Each change may affect the route chosen for the original hire.

Reassess a contractor role that becomes closely directed work

Reopen the classification review when the contractor’s work becomes more closely directed, more integrated into your organisation, more continuous or more dependent on personal service. ILO Recommendation 198 identifies instructions and control, integration, personal service and continuity as possible employment indicators for national systems to consider.

These factors do not produce a universal answer. Record what has changed in the working relationship and ask for the relevant local assessment rather than trying to preserve a contractor label after the underlying facts have moved.

Review sustained local activity and the case for an entity

Review the local footprint when work becomes sustained or commercially connected to the country. The OECD’s 2025 model treaty commentary says cross-border home working alone should not automatically make a home a place of business for the enterprise; the facts and circumstances govern. It also treats a commercial reason for the worker’s physical presence, such as customer or supplier engagement, as relevant to the analysis.

The commentary generally excludes a home as the enterprise’s place of business below 50% of that worker’s enterprise working time over the relevant twelve months, subject to exceptions. At or above 50%, it still calls for a fact-specific assessment. The 50% figure is neither a universal permanent-establishment safe harbour nor an entity-formation threshold.

Best to use a legal entity when you're planning a long-term market expansion.

— Logan Jackonis, Head of Operations, Commenda

Use changes in local activity, management plans and actual work patterns to decide when to obtain local tax and corporate advice. Do not substitute a fixed headcount, a provider contract or the quoted opinion for that review.

Protect continuity when changing providers or employers

Plan a transition before you need one. Compare the worker’s agreement, pay timing, benefits, records, IP and confidentiality terms, data access, manager and support route across the outgoing and incoming arrangements. Give the worker a named contact and a clear escalation path throughout the change.

A Dutch study of domestic payrolling from 2006 to 2019 found worse subsequent employment and job-quality outcomes for transferred workers than for matched direct hires under the regime studied. For a cross-border transition, use it to frame questions about terms, contract type, benefits and the worker’s position, without assuming the same outcome.

Frequently asked questions

Can a company legally employ someone abroad without a subsidiary?

Sometimes, but the available route depends on the worker’s country, the actual role and the local model. An EOR arrangement or direct foreign-employer registration may be options to assess; neither is automatic. In the UK, an overseas company with no UK base does not need to register with Companies House, although it may still need to register for Corporation Tax. Check the employment route, payroll registration, work authorisation and local employer requirements for the proposed hire.

Can a US or UK company hire a foreign employee remotely?

The answer depends on where the person will physically work and on the arrangement. UK guidance provides limited examples: an employer without sufficient UK presence may voluntarily operate PAYE in a stated circumstance, while a receiving UK entity can have the duty in the mobile-worker situation covered by HMRC. Those UK rules do not answer the position in another country or for a US company. Obtain local advice for the work country and the specific employment model.

Is an employer of record the same as a staffing agency or professional employer organization?

No label settles the legal model. In the UK, an employment business engages a work-seeker under contract, supplies that person to work under someone else’s supervision and pays the supplied worker. Where applicable, EU temporary-agency rules establish equal treatment for essential work and employment conditions. In the United States, the IRS describes a PEO as generally performing some or all federal employment-tax withholding, reporting and payment functions for a client; a claimed “co-employer” label is not itself a federal-tax-law category. Review the actual local employer, agreements and duties rather than treating these names as interchangeable.

Does an employer of record eliminate permanent-establishment risk?

No provider label can answer that question by itself. The OECD’s 2025 model treaty commentary says cross-border home working alone should not automatically make a home a place of business for the enterprise, but the facts and circumstances govern. The relevant treaty, domestic law, local activity and actual working pattern all need review. Model commentary is not a universal safe harbour.

How much does an international hire cost, and how long can onboarding take?

Cost and timing depend on the work country and the chosen route; a fixed headcount cannot determine the break-even. Request a written breakdown of pay, employer contributions, benefits, payroll administration, provider charges, equipment, registration and advice. For context only, OECD 2025 model-worker data puts employer social-security contributions, including payroll taxes where applicable, at 17.3% of total labour costs in Germany, 12.0% in the United Kingdom and 7.5% in the United States. Those figures are not EOR fees or a total hiring cost.

Does the employee need a visa to work remotely for a foreign company?

The worker’s status and the country where they will work determine the check. For a UK worker coming from abroad, the hirer must check the legal right to work before work begins. Australia directs employers hiring a non-citizen to use VEVO and review visa conditions that may restrict the type or amount of work. These examples do not establish permission for a particular worker elsewhere; confirm the person’s current status and local requirements.

Who pays taxes and provides benefits for an international employee?

The answer belongs in the local employment arrangement and its documents. Identify the legal employer, the payroll party, the party responsible for mandatory terms and benefits, and the worker-support owner before the offer is issued. In the United States, a certified PEO can assume specified federal employment-tax obligations for defined worksite employees under its customer contract; that does not allocate duties in every PEO, EOR or country.

Can an employee later move to the company's own entity?

It may be possible, but the new arrangement needs a transition review rather than a simple transfer instruction. Compare the outgoing and incoming agreements, pay timing, benefits, records, IP and confidentiality terms, data access and support contacts. Reassess the local employment, tax and registration questions for the new employer and give the worker a clear escalation path throughout the change.

Sources

• Employment status and employment rights — UK Government
• Employment Relationship Recommendation, 2006 (No. 198) — International Labour Organization
• Register as an overseas company — UK Government
• Globally mobile employees and PAYE — HMRC
• PAYE81610: Overseas employers — tax presence — HMRC
• Register as an employer — UK Government
• Employment agencies and businesses — UK Government
• Temporary agency workers — European Commission
• Professional employer organizations — Internal Revenue Service
• CPEO customers: What you need to know — Internal Revenue Service
• New employee coming to work from abroad — UK Government
• Hire an overseas worker — Australian Government
• The 2025 update to the OECD Model Tax Convention — OECD
• Ownership of copyright works — UK Intellectual Property Office
• Collecting and keeping employment records — Information Commissioner’s Office
• Taxing Wages 2026: Overview — OECD
• Payrolling: Consequences for workers — IZA Institute of Labor Economics
• Remote work: Employment-related legal regulation and related challenges — Frontiers in Sociology
• Cross-Border Catch-Up: Global Hiring — Choosing Between Employer and Agent of Record — Ogletree Deakins
• EOR vs. Entity: When to Make the Switch for International Hiring — Commenda