Learn · Global payroll
International payroll: how businesses pay employees and contractors across borders
How international payroll works for SMBs: EOR versus entity versus contractor, current published cost examples, currency, funding, compliance, and controls.
On this page
In short
How can a small business run international payroll?
Choose a lawful engagement model for each worker and country: employ through your own entity or another permitted employer registration and payroll, use an employer of record as legal employer, or engage a genuine independent contractor. Then build a country calendar for gross-to-net inputs, approvals, funding, filings, payslips, payment, and reconciliation in the required currency.
Three ways to engage someone in another country
Direct entity, EOR, or contractor
| Feature | Own entity payrollYour company is employer | Employer of recordProvider is legal employer | Independent contractorSelf-employed supplier |
|---|---|---|---|
| Best starting fit | Durable country presence and enough activity to own local operations | Employee hire where the company lacks a local employing entity | Genuinely independent, project or service relationship |
| Who runs employment payroll | Company or its payroll provider | EOR within the service agreement | Nobody; contractor invoices for services |
| Core company obligation | Entity, employer registration, compliance, funding, records, governance | Accurate instructions, funding, workplace management, provider oversight | Correct classification, contract, invoice approval, tax documentation, payment |
| Main scaling friction | Fixed setup and ongoing country administration | Per-employee fee and provider process dependency | Classification limits and inconsistent worker administration |
Remote defines the EOR as legal employer and distinguishes it from global payroll, which requires the client’s own entity. IRS Topic 762 supplies the US federal contractor-classification framework; other countries apply their own tests.
An EOR changes the legal-employer structure, not who decides the business need for the role. Remote’s definition says the EOR legally employs the worker and handles employment contracts, payroll, tax withholding, mandatory benefits, contributions, insurance, and termination compliance, while the client directs day-to-day work. Read the actual agreement: service scope, direct versus partner entities, funding deadlines, intellectual-property terms, benefits, data access, and termination process vary by provider and country.
What direct international payroll requires
Exact obligations are country-specific. This operating sequence shows the questions an SMB must answer before the first payday.
Establish the employing route
Confirm whether the business needs a local entity, branch, employer registration, or another lawful structure. The EU’s Your Europe guidance, for example, says an employer hiring in another EU country needs to register with local authorities and follow that country’s registration procedures.
Build the worker master record
Store the legal employer, worker identity, work location, start date, role, contract, salary currency, pay frequency, bank details, tax and social-security identifiers, benefit elections, leave rules, and authorized deductions. Limit access and track every approved change.
Define gross-to-net rules
Map taxable pay, employee deductions, employer contributions, benefits, reimbursements, and required reports under local law. The ILO says enterprises should pay required social-security contributions under national law and transparently collect and forward worker contributions where required.
Create a country payroll calendar
Work backward from the legal and contractual payday. Include input cut-off, variable-pay approval, gross-to-net review, funding deadline, bank release, payslip, statutory remittance, filing, and reconciliation dates. Add local holidays and a named backup approver.
Reconcile and retain evidence
Tie gross pay to approved compensation, net pay to the payment file, deductions and employer costs to liabilities, bank debit to funding, and liabilities to filings and remittances. Keep the version of inputs and outputs that produced each pay run.
Do not plan payroll from net salary alone. The OECD’s Taxing Wages work separately tracks worker income tax, employee social-security contributions, and employer social-security contributions, and its methodology notes that payroll-tax bases can differ from employer-contribution bases. Add provider fees, benefits, insurance, statutory leave, currency cost, and possible termination obligations to produce a country-specific total-cost model.
What international payroll costs in practice
| Vendor | Published EOR price | Publication framing |
|---|---|---|
| Deel | $599 per EOR employee per month | Starting/listed EOR price on its pricing page |
| Remote | $699 per employee per month | Standard EOR management fee in its support article |
As published August 2026 on each vendor’s own site. These are management-fee examples, not quotes for a particular country or worker. Obtain a full landed-cost quote including compensation, employer obligations, benefits, deposits, FX, taxes, and any country-specific items.
As published August 2026, Deel also listed contractor management at $49 per contractor per month and Contractor of Record at $325 per contractor per month. Those lower service fees do not make an employee relationship eligible for contractor treatment. They price different products with different legal roles. Compare each model only after classification and local-law review, then examine deposits, implementation, off-cycle runs, benefits, termination support, and currency charges in the actual proposal.
How cost shape changes by engagement model
| Feature | Own entityHigher fixed ownership | EORPer-worker service model | ContractorCommercial supplier model |
|---|---|---|---|
| Cost shape | Formation, advice, payroll, accounting, filings, banking, internal time | Management fee plus employment and country costs | Contractor fee plus onboarding, payment, and classification controls |
| May fit when | Country presence is durable and operational control matters | Initial employee count is limited or market entry is uncertain | Work is genuinely independent and deliverable-based |
| Do not ignore | Exit, dormant filings, local directors, governance, internal ownership | Funding cut-offs, provider dependence, contract transfer, termination workflow | Misclassification, tax documentation, IP, data, availability, continuity |
The table is a decision framework. Compare country costs, compensation, risk, and operating strategy rather than applying a single headcount threshold.
Currency and timing are payroll controls
State salary and payment currency in the employment agreement in a form local law allows. The ILO’s labour-migration guidance treats remuneration, including the medium of wage payment, as an employment-contract matter. If payroll is calculated in local currency but funded from another currency, separate the salary obligation from the employer’s FX cost. Confirm that bank and intermediary deductions cannot reduce the employee’s required net pay.
- Use a payroll-specific funding account or approval path so supplier payments cannot consume payday liquidity.
- Fund before the provider or banking cut-off, with a buffer for review and rejected-payment repair.
- Validate bank-account formats during onboarding and reverify every change through an independent known contact.
- Send a small verification payment only when lawful and supported; do not treat it as a substitute for ownership checks.
- Track the salary currency, funding currency, applied FX rate, fee, employee net amount, and value date separately.
- Maintain an exception owner for returned payments, closed accounts, name mismatches, and workers who did not receive funds.
A monthly international payroll control file
| Control area | Minimum evidence |
|---|---|
| Population | Active workers, starters, leavers, legal employer, work country |
| Compensation | Approved salary, variable pay, leave, expenses, deductions, benefits |
| Calculation | Gross-to-net output, exceptions, reviewer sign-off, version |
| Funding | Currency, amount, rate, fee, account, release approval, value date |
| Employee output | Payslip, payment status, returned-payment resolution |
| Statutory output | Tax and contribution returns, remittances, receipts, deadlines |
| Accounting | Payroll journal, cash reconciliation, liability roll-forward, FX |
Control framework only. Required records, retention periods, privacy controls, and filing evidence are jurisdiction-specific.
International payroll questions for growing teams
What is the difference between global payroll and an EOR?
When should a startup consider an employer of record?
How much does an EOR cost?
Can I use contractors instead of international payroll?
Should an international employee be paid in USD or local currency?
What causes international payroll delays?
When does a local entity make more sense than an EOR?
Sources
External links open in a new tab.
- Employer of record glossary — Remote
- What does an employer of record do? — Remote
- Registering as an employer and registering employees in another EU country — European Union, Your Europe
- ILO Helpdesk questions and answers on business and labour migration — International Labour Organization
- Topic 762, Independent contractor vs. employee — Internal Revenue Service
- Taxing Wages — Organisation for Economic Co-operation and Development
- Deel pricing — Deel
- How much is the management fee for employees? — Remote
- Cross-border payments research on correspondent banking costs — Swift Institute
Written by
Glide Research
Payments research
Glide Research maps payment rails, FX corridors, and banking access so travellers, freelancers, and treasury teams can move money without legacy wire tax.
- Published
- Last reviewed
Glide · Borderless banking
Moving money across borders?
Run payroll and cross-border payments from one account: hold USDC and 80+ currencies, convert close to the mid-market rate, and pay out on local rails instead of paying the wire tax. Solo, or with multisig for teams.
- Currencies
- 80+
- Spend anywhere
- Visa card
- Regulated legs run by
- Licensed partners