How to Hire Employees Internationally Without Setting Up a Local Entity (2026 Guide)

 

Hiring internationally gives companies access to skilled professionals beyond their domestic markets. A business can find the right developer, sales manager, marketing specialist, or operations professional in another country without limiting recruitment to one location.

However, hiring someone abroad is not as simple as sending an employment offer. Companies may need to consider local employment contracts, payroll taxes, statutory benefits, labor regulations, and registration requirements.

One major challenge is that a company may want to hire an employee in another country without establishing a local legal entity.

Fortunately, there are several ways to approach international hiring. One increasingly common option is an Employer of Record (EOR) service, which allows a company to employ workers in supported countries without setting up its own local entity.

This guide explains how international hiring works, what options businesses can consider, how to manage compliance, and when an EOR solution such as Deel may be worth evaluating.

Why Companies Hire Employees Internationally

Businesses expand their hiring beyond domestic markets for several reasons.

Access to a wider talent pool: Companies can recruit professionals with specialized skills that may be difficult to find locally.

Business expansion: Hiring employees in new markets can help companies understand local customers, establish business relationships, and support international operations.

Time-zone coverage: Distributed teams can provide support and maintain business operations across different regions.

Specialized expertise: Some industries require skills that are more readily available in particular international markets.

Flexible growth: International recruitment can help companies build teams based on business needs rather than geographical limitations.

However, every international hire introduces local employment and administrative considerations. Companies should understand these requirements before making an offer.

Can You Hire Employees in Another Country Without a Local Entity?

Yes. In many situations, a company can hire an employee in another country without establishing its own legal entity.

The available options depend on the worker’s actual relationship with the business, the destination country’s laws, and the company’s operating plans.

There are three common approaches:

1. Establish a local legal entity.
2. Use an Employer of Record (EOR).
3. Engage a genuinely independent contractor.

Each option has different costs, responsibilities, and legal implications.

1. Establish a Local Legal Entity

A company can create a subsidiary or another appropriate legal entity in the country where it wants to hire employees.

The local entity can then employ workers directly, register for relevant taxes, operate payroll, and meet local employment requirements.

This approach may make sense when a company plans to build a substantial, long-term presence in a market.

However, establishing an entity can involve:

• Company registration and incorporation.
• Local legal and accounting services.
• Tax registrations and reporting.
• Payroll administration.
• Employment contracts and statutory benefits.
• Ongoing corporate compliance.

The process and costs vary significantly between countries.

For a business hiring only one or two employees abroad, establishing a separate entity may create more administration than necessary.

2. Use an Employer of Record (EOR)

An Employer of Record is a third-party organization that legally employs workers on behalf of another company in a country where that company does not have its own legal entity.

The EOR becomes the legal employer for employment administration, while the client company generally manages the employee’s daily responsibilities, projects, and performance.

Depending on the country and agreement, the EOR can manage:

• Local employment contracts.

• Payroll processing and required tax filings.

• Statutory benefits and applicable contributions.

• Employee onboarding documentation.

• Employment administration and compliance support.

• Certain termination and offboarding procedures.

This arrangement allows businesses to hire internationally without creating a separate legal entity in every country.

How Does the EOR Hiring Process Work?

A typical EOR hiring process involves several steps:

Step 1: Choose the country

Identify where the employee will work and confirm that the provider supports hiring in that location.

Step 2: Select the employment arrangement

Determine whether the role should be a full-time employee position or a genuine independent contractor engagement.

Step 3: Review employment requirements

Check local rules concerning salary, working hours, benefits, leave, probation, notice periods, and other employment conditions.

Step 4: Estimate the total employment cost

Consider the employee’s salary, employer contributions, mandatory benefits, and the EOR service fee.

Step 5: Prepare the employment contract

The EOR prepares or coordinates a locally compliant employment agreement based on the relevant country’s requirements.

Step 6: Complete onboarding

The employee provides the necessary information and documentation, reviews the contract, and completes the required onboarding process.

Step 7: Manage the employee

The client company manages the employee’s everyday work, while the EOR handles the employment administration agreed between the parties.

3. Hire Independent Contractors

Another option is to work with independent contractors in other countries.

This can be appropriate when a business needs an external specialist for a defined project or service and the working relationship genuinely meets the local legal definition of independent contracting.

Contractors commonly manage their own business activities, invoices, taxes, and working arrangements, depending on local rules.

However, businesses should not classify someone as a contractor simply to avoid employment responsibilities.

If the actual working relationship resembles employment, local authorities may determine that the worker has been misclassified. This can create financial and legal consequences.

Before choosing this arrangement, companies should assess the real nature of the relationship and obtain local advice where necessary.

EOR vs. Local Entity vs. Independent Contractor

The following comparison can help businesses understand the main differences.

Factor	Local entity	EOR	Independent contractor
Own local entity required	Yes	Usually no	Usually no
Legal employment	Your entity	EOR provider	Not an employment relationship
Payroll administration	Your company	EOR provider	Contractor arrangement
Local compliance	Your company	Shared according to law and contract	Depends on the genuine relationship
Best suited for	Established operations	International employee hiring	Genuine independent services
Initial administration	Often substantial	Generally lower	Often simpler

There is no universal solution for every business. The right choice depends on the number of employees, the countries involved, the length of the project, and the company’s long-term plans.

How to Choose an EOR Provider for International Hiring

Choosing an Employer of Record provider requires more than comparing monthly fees.

Businesses should evaluate the following areas before signing an agreement.

1. Country Coverage

Check whether the provider can legally support employment in the specific country where you want to hire.

Do not assume that every provider supports the same countries or employment arrangements.

2. Local Employment Expertise

Employment rules differ from one country to another. A reliable provider should understand local contracts, payroll requirements, statutory benefits, and termination procedures.

3. Transparent Pricing

Ask for a breakdown of the expected costs.

The total budget may include:

• Employee gross salary.

• Employer taxes and mandatory contributions.

• Required benefits.

• EOR service fees.

• Optional services or additional charges.

A low advertised monthly fee does not necessarily represent the full cost of employment.

4. Payroll and Payment Reliability

International payroll requires accurate calculations and timely payments.

Ask how the provider handles payroll schedules, currency, payslips, tax documentation, and payment issues.

5. Employee Benefits

Benefits can affect recruitment and retention. Check which statutory and supplementary benefits are available in the country.

6. Support and Technology

A centralized platform can help HR and finance teams manage employee information, contracts, payroll, and administrative tasks.

It is also important to understand what support is available when employment questions or problems arise.

How Deel Helps Companies Hire Internationally

For companies exploring international employment, Deel is one platform worth evaluating.

Deel offers Employer of Record services designed to help businesses hire employees in supported countries without opening their own local legal entities.

Its EOR solution can support several important parts of the employment process, including:

• Employment contracts and onboarding.
• Payroll administration and tax filings.
• Localized employee benefits.
• Employment compliance support.
• Centralized management of international employees.

Deel also offers other services for businesses managing international teams, including contractor management and global payroll for companies with their own entities.

This can be useful for businesses that need different employment arrangements across multiple markets.

Explore Deel’s international hiring solutions:

Explore Deel and see whether its global hiring solutions fit your business

Before choosing a provider, companies should review the services available in their target countries and request a country-specific cost estimate.

How Much Does It Cost to Hire an Employee Through an EOR?

EOR pricing depends on the provider, country, employment arrangement, and services included.

Deel’s published pricing currently lists its Employer of Record service starting at $599 per employee per month.

This is the starting service price, not the employee’s complete employment cost. Salary, employer contributions, benefits, and country-specific requirements should also be considered when calculating the total budget.

For example, hiring an employee with a monthly salary of $4,000 does not mean the total monthly employment cost will simply be $4,000 plus the EOR fee. Mandatory employer costs and other applicable expenses may increase the final amount.

Businesses should request a detailed estimate for the specific country and role before making a hiring decision.

You can review Deel’s current pricing and available services through its official pricing page.

When Is an EOR the Right Choice?

An EOR can be a practical option in several situations.

When testing a new market: A company wants to hire its first employee in a country before committing to establishing a local entity.

When hiring specialized talent: The best candidate lives in another country, and the company wants to employ that person directly through a compliant arrangement.

When expanding a remote team: A business needs employees across multiple countries but does not want to manage separate employment entities in each market.

When reducing administrative complexity: HR and finance teams want a centralized approach to employment administration and payroll.

However, an EOR is not always the best long-term solution. Companies planning substantial operations, local sales activities, or a large permanent workforce may find that establishing their own entity is more suitable.

Businesses should also assess permanent establishment, tax, regulatory, and other local obligations. Using an EOR does not automatically eliminate every legal or tax obligation connected with operating internationally.

International Hiring Checklist for Businesses

Before hiring an employee abroad, consider the following checklist:

• Identify the country where the employee will work.

• Confirm whether the role should be employment or independent contracting.

• Research local employment requirements.

• Compare establishing an entity with using an EOR.

• Estimate salary, taxes, benefits, and service fees.

• Review the provider’s country coverage.

• Understand the employment contract and responsibilities.

• Confirm payroll schedules and payment methods.

• Review data protection and employee information handling.

• Plan ongoing HR administration and offboarding procedures.

Taking these steps before recruitment can help prevent avoidable delays and unexpected expenses.

Frequently Asked Questions

Can a company hire employees internationally without opening a local entity?

Yes. In supported countries, a company can use an Employer of Record to employ workers without establishing its own local legal entity. The EOR becomes the legal employer for the employment arrangement, subject to local laws and the contract.

What is an Employer of Record?

An Employer of Record is an organization that legally employs a worker on behalf of another business. It generally handles employment administration, payroll, contracts, and applicable local requirements.

Is using an EOR legal?

EOR arrangements are available in many countries, but the legal requirements and permitted structures vary. Companies should confirm that the provider’s arrangement is compliant in the specific country.

How much does an Employer of Record cost?

Pricing varies by provider and country. Deel’s published EOR starting price is $599 per employee per month. The full employment budget can also include salary, employer contributions, and applicable benefits.

Is an EOR better than establishing a local entity?

It depends on the company’s plans. An EOR may be more practical for hiring a small number of employees or testing a market. Establishing a local entity may be more appropriate for businesses planning substantial, long-term operations.

Can small businesses use an Employer of Record?

Yes. Small businesses and startups can use EOR services when they need to hire employees in other countries without establishing their own local entities, provided the service supports the relevant country and employment arrangement.

Does Deel support hiring in every country?

No provider should be assumed to support every country or every employment arrangement. Deel advertises EOR coverage in 130+ countries, but businesses should verify current availability and local requirements for their intended hiring location.

Final Thoughts

Hiring internationally can help companies access new talent, expand their operations, and build more flexible teams. However, businesses need to understand the employment, payroll, and compliance responsibilities that come with hiring across borders.

For some companies, establishing a local entity is the right long-term decision. For others, an Employer of Record offers a more practical way to hire employees in supported countries without managing a separate legal entity.

The most important step is to compare the available options, understand the total cost, and choose an arrangement that fits the company’s actual business needs.

If your business is considering international recruitment, exploring an EOR solution such as Deel can be a useful starting point.

Explore Deel’s global hiring solutions and review whether the available services meet your company’s requirements.