How to Hire Remote Workers in Europe Compliantly

If you plan to expand your company internationally, or just want to hire from a larger talent pool, hiring remote workers in Europe is a great option. It’s no secret that businesses of all sizes, from new startups to major corporations,have been hiring remote workers in Europe for quite some time. 

However, hiring remote workers in other countries, especially those in Europe, can seem a bit daunting. If you’re based in the US, how do you pay them in a new currency? If you need to establish a subsidiary, what laws and regulations do you need to follow? Let's dive in.

What are the benefits of hiring remote workers in Europe? 

1. Larger talent pool

One of the many benefits of hiring remote workers and building a remote team in Europe (and abroad more generally) is that you have a larger talent pool to choose from. Across Europe, employers can find candidates with specialized skills.

2. Cost effective

Remote hiring in Europe is also a cost effective way to hire employees, especially if they can work from home. In general, hiring remote employees saves employers time and money with both the recruiting and onboarding process. You can use all the power of the internet to search for the right candidates and fill open roles seamlessly through remote job posts. 

3. More flexibility

Most importantly, you will give your remote workers more flexibility to work their own schedules based on where they live. While navigating time zones can be challenging, having employees across the globe can be beneficial in the long run, as your team will be faster to respond to urgent requests. 

4. Language skills

Many Europeans speak and read more than one language, including English, which is a huge advantage for US-based businesses. Many companies in Europe conduct business in English. 

6 considerations for hiring remote workers in Europe 

Although hiring remote workers in Europe is similar to hiring remote employees in the United States, there are some key differences that you should keep in mind. 

1. Deciding between full-time employees and contractors

When hiring remote workers in Europe, the first thing you need to decide is if you’re planning to classify the worker as a full-time employee or an independent contractor. Although both options have their benefits, most businesses opt to hire independent contractors remotely in Europe. 

This makes the relationship between the business and the worker a contractor agreement and not an employment agreement. It means one company (the business) is entering into an agreement with another business (the contractor) to perform a service or duty. 

The remote contractor will be subject to taxes based on their local country and need to keep track of what they are paid so that they can make their own tax payments to their government. 

Opting to onboard remote employees in Europe as full-time requires you to handle all the essential HR duties, including complying with the intricacies of paying employees in their home country. Alternatively, you can consider growing your global team effortlessly by teaming up with an international EOR service like Justworks.

2. Whether to set up an entity for full-time employees or use an EOR

There are quite a few different ways to hire talent in Europe. 

If you plan to hire remote full-time European employees, you will most likely need to set up a subsidiary in the foreign country where the employee lives, or use a EOR service like Justworks. 

Most countries in Europe require a subsidiary to be established in order to legally pay employees, even if they’re remote. This process can be expensive, time-consuming, and confusing, so your best option for hiring remote full-time employees may be using an employer of record service like Justworks that already has legal entities in specific countries. 

3. Know the specific country’s tax and employment laws

Whether you plan to hire and pay full-time remote European employees or independent contractors, you will need to understand the tax and employment laws that govern the specific country you’re planning to hire in. 

Almost all countries in Europe have strong social security systems in place, especially compared to the US. Most Europeans receive healthcare benefits, pension, and paid time off, as guaranteed by the individual country. 

Taxes in Europe are calculated differently than taxes in the United States. European countries have more robust social security systems and benefits for citizens, so workers pay more into taxes. If you plan to hire remote employees in Europe, even if you only hire independent contractors, you should still research all of the necessary laws and regulations that both employees and employers are required to follow for payroll and taxes. 

4. Understanding European benefits requirements 

If you work with remote independent contractors in Europe, you will not need to pay their employee benefits. Either the worker or the government will be responsible for administering benefits like pension or healthcare. However, if you plan to hire full-time remote employees, you will need to offer all of the benefits mandated by the government. 

Some countries like Spain and Portugal require employers to give their in-person and remote teams large chunks of paid time off. Other countries, including Germany and the United Kingdom, have strong social security benefits and taxes that employers are required to pay as a part of each employee’s compensation and benefits package. 

Even if you plan to only onboard remote independent contractors, you should still be aware of what workers are entitled to in their home country. Most importantly, if an employee is being treated as a full-time remote employee but classified as an independent contractor, they are able to sue your company for any benefits that you are shorting them by misclassifying them as independent contractors. 

5. Remote workers and US visa laws

According to US law, remote employees in Europe do not need a visa to be employed by a United States-based company as a remote worker abroad. Foreign workers do not need a work permit or visa to be employed by a US company, as long as they are not performing any duties on US soil. However, if you are employing a remote worker in another country, that employee will need a visa in order to legally live and work in the other country. 

6. Consider cultural and language differences

Although hiring remote employees in Europe has many advantages, you should still consider time zone and language differences for your remote workers abroad. Some employees may have their regular work days at a complete opposite time than during standard US work hours.

When you choose to hire employees in Europe, you should be aware of the cultural differences that separate United States culture from different countries in Europe. Many countries in Europe highly value a strong work/life balance, so if you want to make the jump to hiring there, be respectful and do some research about how people go about their day-to-day lives in the country you plan to hire in. 

Most importantly, you should strongly consider what language and cultural differences may exist. Many US-based employers are surprised when they hire employees in the UK and discover that, despite sharing a language, the country has a radically different culture. In countries where English isn’t the official language, the cultural differences can feel even more pronounced.

How Justworks Provides International EOR Services for Small Business

Through Justworks, you can now expand the boundaries of your talent search without setting up a local entity. Focus on building your team, and leave worrying about the nitty-gritty of HR and international compliance to us. 

Our team of local labor lawyers and experts ensure that your small business always remains compliant while expanding internationally. We handle the responsibility side of things so you can focus on what matters: managing your team. 

Learn more about how you can expand your international business through Justworks, and get started today.

FAQ

How do I hire remote employees in another country? 

To hire remote employees in another country, you will need to establish a legal entity, onboard them as independent contractors, or work with an EOR service like Justworks that already has established entities. 

Can you work a remote US job in Europe? 

Most of the time, yes you can work a remote US job from Europe. You will need to make sure you have the proper visas and pay attention to the taxes and other regulations in the country you’re living in. 

Can a US company employ and pay someone in another country? 

Yes, a US company can employ and pay someone in another country. Workers can be based in Europe but working for a US company. You will need to hire them as either full-time employees or independent contractors. However, you will need to know the laws about establishing an entity in another country, as well as the tax and employment laws in the country the employee lives in. 

Can I live in Italy and work remotely for a US company? 

Yes, you can live in Italy and work remotely for a US company. However, if you're an American, you will need to have the proper visas and work permits as well as know the taxes and regulations as a foreigner living in Italy.