Hiring your first person abroad

1. Choose how to hire them

As a contractor

Only if they genuinely run their own business. In the UK, US, Canada and Australia, for example, control over the work, whether they must do it personally and who carries the financial risk count, not the label on the contract. GOV.UK, employment status, October 2026, IRS, independent contractor or employee, May 2026, CRA, employee or self-employed, January 2026

Through an employer of record

The employer of record employs and pays the person for you, and handles local payroll and employment rules, so you can hire where you have no branch or subsidiary. King & Spalding, April 2022, Cripps, July 2022

The catches

King & Spalding warns that you can still be treated as a co-employer, and that some countries have outlawed employer of record arrangements. Cripps notes you won't own the person's work, so your contract with the provider needs to deal with it. King & Spalding, April 2022, Cripps, July 2022

Through your own company there

Setting up a local company, or registering a branch, means your own business employs them directly, with its own registrations and payroll in that country.

Contractor or employee? How 18 countries decide · Employers of record compared · Employer cost by country

2. The tax risk to your company

If an employee gives your company a "permanent establishment" in their country, then under most tax treaties that country can tax the profits that belong to it. That's on top of any tax on the employee's own pay. HMRC manual INTM265020, HMRC manual INTM262040

Home offices

The OECD Council approved new guidance on home offices on 18 November 2025. Law firms summarising it say a home office generally isn't your place of business if the person works there less than 50% of their working time over any 12 months. OECD, the 2025 Update to the Model Tax Convention, Baker McKenzie, November 2025, Binder Grösswang, 2025

50% or more

Then it turns on whether there's a commercial reason for the work being done in that country, such as dealing directly with customers or suppliers there, finding new ones, or covering a time zone. Letting someone live there to keep them, or to save money, isn't a commercial reason, Baker McKenzie says. Baker McKenzie, November 2025

Signing deals

Separately, someone who habitually concludes contracts for the company, or habitually plays the principal role in getting them signed, can create one. Older tax treaties word this as having, and habitually using, authority to conclude contracts in the company's name. HMRC manual INTM264300, October 2026, HMRC manual INTM266140

Which rules apply

The OECD guidance isn't law: the treaty between your country and theirs, and their own law, decide, and older treaties use different wording. For anyone senior or customer-facing, take advice. HMRC manual INTM266140

3. Payroll and social security

If you're a UK company

Income tax

Someone who isn't UK resident is only taxed in the UK on pay for their UK work. Where an employee leaves the UK and keeps working for a UK employer abroad, HMRC can issue tax code NT so that their pay for work abroad is made without UK tax taken off. HMRC's guidance doesn't spell out what to do for someone who has never worked in the UK, so check with HMRC or an adviser. HMRC, globally mobile employees and PAYE, April 2026, HMRC manual PAYE81665, HMRC manual PAYE81670

National Insurance

Code NT doesn't stop National Insurance. Whether it's due depends on where they work and any agreement with that country. For example, in a country with no social security agreement, UK National Insurance is still due for the first 52 weeks if they're working abroad temporarily, are ordinarily resident in the UK, lived in the UK immediately before, and your company has a UK place of business. HMRC manual PAYE81670, GOV.UK, National Insurance if you work abroad

National Insurance abroad and the State Pension

If you're a US company

Income tax

Wages paid to a nonresident alien for work done outside the US are foreign-source income, so there's no US federal income tax reporting or withholding on them. IRS, persons employed abroad by a US person, May 2026

Social Security, Medicare and FUTA

FUTA generally doesn't apply to wages paid to nonresident aliens for work outside the US. Social Security and Medicare apply to work done in the US, and only in limited situations to work abroad. The IRS page on those situations covers US citizens and residents employed by American employers, not nonresident aliens. IRS, FUTA for employees abroad, March 2026, IRS, Social Security and Medicare tax, May 2026, IRS, citizens and residents employed abroad, May 2026

Where they work

In the EU

An employer with no office in the country whose social security rules apply must still meet all the employer's duties there, as if it had one. Where the employer has no establishment there, the employer and employee can agree that the employee carries out the employer's duty to pay the contributions. Your Europe says employers hiring in another EU country need to register with the local authorities. HMRC manual NIM33120 (EU Regulation 987/2009 art. 21), Swiss social insurance office, art. 21 agreement form, Your Europe, registering as an employer, July 2026

Germany, for example

Unless they're only temporarily posted there or an exception has been agreed, a foreign employer must register its staff working in Germany for social insurance, needs a business number and a German tax number to do it, and must name a representative in Germany. German wage tax withholding, though, only applies to an employer with a base in Germany, such as its seat, management, a permanent establishment or a permanent representative. That doesn't mean the employee owes no German tax. Techniker Krankenkasse, no company seat in Germany, May 2026, informationsportal.de, employers based abroad, Income Tax Act (EStG) section 38

Everywhere else

Check the local rules for registering and paying contributions, or use an employer of record, whose job is to run local payroll and employment compliance for you. King & Spalding, April 2022

4. The contract

In the EU

Workers must get the core terms in writing, such as the place of work, the job, pay and working hours, no later than the seventh calendar day after they start. Some other details can follow later. Probation can't exceed 6 months, except where exceptionally justified. European Parliament, summary of Directive 2019/1152, EU-OSHA, Directive 2019/1152, European Commission, transparent working conditions

In the UK

The main written statement is due on the first day, covering things like pay, hours, holiday, place of work and probation. Pensions, collective agreements, training that isn't compulsory, and disciplinary and grievance procedures can follow within 2 months. GOV.UK, written statement of employment particulars

Everywhere

Local law can require more than this. If you hire directly, have a local lawyer check your contract; with an employer of record, local employment compliance is its job.

5. Who owns their work

US employees

Work an employee creates within the scope of their job is a "work made for hire", owned by the employer. US Copyright Office, Circular 30, August 2024

US contractors

A contractor's work is only a work made for hire if it falls in one of nine categories (such as a translation, a compilation or part of a film) and you both sign a written agreement saying so. Otherwise the contractor normally owns it, and a transfer only works in writing, signed by them. US Copyright Office, Circular 30, August 2024, 17 U.S.C. 204(a)

UK

The employer owns the copyright in work an employee makes in the course of their job, unless agreed otherwise. For you to own work made by anyone else, contractors included, they must assign it to you in writing, signed by them or on their behalf. CDPA 1988 section 11, CDPA 1988 section 90

Abroad

IP rights are territorial: they only protect you in the countries where they're granted or registered, so get local advice on who owns work made there. Put a clear written assignment of their work in the contract, and with an employer of record, in your agreement with the provider too. GOV.UK, protecting your UK IP abroad, October 2026, Cripps, July 2022

6. The right to work

Where they live

The person needs the right to work in the country where they'll do the job. In the UK, for example, employers must check this before employing someone, and can face a civil penalty if they employ someone who isn't allowed to work and haven't done a correct check. GOV.UK, check a job applicant's right to work

Visas

If they're not a citizen or permanent resident there, check what their visa allows before you agree a start date.

Check remote work visas by passport

7. Their data

Does GDPR apply to you?

Possibly. The EU data protection board says even one employee in the EU can count as an establishment, but only if the data handling is linked to what that person does there. Running payroll and HR for them from outside the EU isn't, on its own, "offering services" in the EU, according to the board's guidance. The EU country's own employment and data rules may still apply. EDPB Guidelines 3/2018 on territorial scope, EDPB Guidelines 3/2018 (text copy)

Moving data to the US

US companies certified under the EU-US Data Privacy Framework can receive EU personal data without extra safeguards (since 10 July 2023). The EU General Court rejected a challenge to it on 3 September 2025, a law firm reports; an appeal was lodged on 31 October 2025, and we found no ruling on it when we checked. European Commission, EU-US Data Privacy Framework, July 2023, Jones Day, September 2025, EUR-Lex, appeal C-703/25 P

Standard contractual clauses

The other common route: pre-approved clauses written into your contracts. The US safeguards agreed for the Data Privacy Framework also apply to transfers made under these clauses. The European Commission's Q&A says the current set doesn't fit an importer that is already subject to GDPR itself, and that extra clauses for that case are being developed; we couldn't confirm whether they've since been adopted. European Commission, standard contractual clauses Q&A, European Commission, EU-US Data Privacy Framework, July 2023

From the UK

Since 12 October 2023, the UK-US data bridge lets data go to US organisations certified to the UK Extension of the Data Privacy Framework. GOV.UK, UK-US data bridge, Data Protection (Adequacy) (United States of America) Regulations 2023

8. Their home desk

In the UK

Employers have the same health and safety duties for home workers as for office staff. For people using a screen daily for an hour or more at a time, that includes a display screen equipment assessment, and you can't charge them for equipment they need. HSE, March 2026, HSE, display screen equipment at home, June 2024, HSE, home working environment

In the EU

The framework directive makes the employer responsible for workers' safety and health in every aspect related to work. EU-OSHA, framework directive 89/391