How to Hire Someone in Another Country Without Setting Up a Company

A business finds the right person, and the person lives in a country where the business has no legal presence. It happens when a strong candidate applies from abroad, when a long-serving contractor should really be an employee, or when the first hire in a new market comes before any decision to open an office there. The instinct is to put them on the payroll and sort out the paperwork later, but payroll is the paperwork: in most countries, only a locally registered employer can lawfully employ someone and run their payroll. This guide sets out what a company can actually do in that position, what each option costs and risks, and how an employer of record makes the hire work without a company being formed at all.

The short answer

A business can employ someone in another country without opening a company there by using an employer of record, a licensed local company that legally employs the person on the business's behalf while the business directs their day-to-day work. The employer of record, usually shortened to EOR, holds the local registrations, issues a compliant employment contract, runs payroll, files the taxes and social contributions, and sponsors a work visa where one is needed. The hiring business pays a salary plus a service fee and manages the person exactly as it would any other team member.

Why hiring abroad is not just a payroll problem

Employment is regulated locally, so a foreign business without a local registration usually has no lawful way to put someone on its own payroll. An employment relationship triggers obligations that only exist inside the country's own systems: income tax withholding, social security registration, statutory benefits, a compliant written contract in the right form and sometimes the right language, and in some markets a wage-protection or reporting platform that only registered employers can access. A company in the UK or the US cannot register for those systems in, say, Saudi Arabia or Germany without first establishing a legal presence there.

Paying the person anyway, through the home-country payroll or as an informal transfer, creates the problem rather than deferring it. The worker ends up with no local employment rights, no social security record, and often an undeclared tax position, while the company builds up liability for unpaid contributions and, in many countries, the risk that the arrangement creates a taxable permanent establishment. The three lawful routes are set out below.

The options when there is no local entity

A company with no entity in the worker's country has three realistic options: incorporate locally, engage the person as a contractor, or employ them through an employer of record.

Option	Speed	Cost profile	Main risk	When it fits
Set up a local entity	Months; three to five months is common in Saudi Arabia	Incorporation, capital, registered office, accounting, and annual filings before salary costs begin	Heavy fixed overhead for a small headcount; slow exit if plans change	A committed market entry with local invoicing, tenders, or a large team
Engage them as a contractor	Days	Invoice-based; no employer costs on paper	Misclassification: back taxes, contributions, and penalties if the relationship is really employment	Genuinely independent, project-based work with autonomy over how and when it is done
Employer of record	Days to weeks; visa cases take longer	Salary plus statutory costs plus a monthly service fee	Not a trading presence; the company still cannot invoice locally through it	One to roughly 20 employees per market, or any hire made before an entity exists

The contractor route deserves the strongest caution, because it is the one companies drift into by default. If the person works fixed hours, uses company systems, reports to a manager, and serves one client, most tax authorities will treat them as an employee regardless of what the contract says, and the liability for the missed employment falls on the company. The tests and the consequences are set out in the guide to contractor and employee misclassification in the GCC, and the same logic applies in most jurisdictions. Where the work is genuinely independent, a contractor payroll service keeps the engagement clean; where it is not, the choice is really between an entity and an EOR.

What an employer of record actually is

An employer of record is a company licensed to employ staff in a country, which becomes the legal employer of a worker on another business's behalf. The EOR signs a locally compliant employment contract with the worker, registers them with the tax and social security authorities, runs monthly payroll in local currency, administers statutory benefits and leave, and sponsors the work visa and residence permit where the worker needs one. The hiring business signs a service agreement with the EOR, reimburses the salary and statutory costs, pays the service fee, and keeps full control of what the person works on, who they report to, and how they are managed day to day.

The arrangement is sometimes confused with staffing or outsourcing, but the worker is not shared, leased, or managed by the provider. They work for one business, on that business's projects, and appear to clients and colleagues like any other employee; only the legal employment sits with the EOR. Common misunderstandings about the model, including who owns the work product and what happens when the arrangement ends, are addressed in the guide to misconceptions about employer of record services, and a fuller description of the service itself is on the employer of record service page.

What it costs and how fast it is

An employer of record typically charges a flat monthly fee from a few hundred US dollars to around USD 1,000 per employee, on top of the salary and statutory employment costs. Providers price either as a flat fee per employee or as a percentage of salary, and the difference compounds meaningfully at higher salaries, as set out in the comparison of flat-fee and percentage-of-salary EOR pricing. Against that fee, the company avoids incorporation costs, share capital, local accounting and audit, and the management time of running a dormant-scale entity, which is why an EOR is usually cheaper than an entity below roughly 15 to 25 employees in one market.

Speed follows the same pattern. Aspirock's onboarding data shows an employee with an existing right to work is typically on compliant local payroll within ten working days of a signed agreement. Where the hire needs a work visa, the EOR's existing registrations carry the sponsorship, and the timeline becomes the government's visa process rather than a company-formation project in front of it. Employing the same person through a newly incorporated entity means completing incorporation, tax registration, and a corporate bank account first, which commonly takes months.

Hiring without a company in the Gulf

The Gulf is the clearest case of a region where hiring without a local company requires a licensed local sponsor. Employing an expatriate in Saudi Arabia, the UAE, or Qatar means sponsoring their work visa and residence permit, and only a locally registered employer can sponsor. A foreign company cannot sponsor an Iqama in Saudi Arabia or a work permit in the UAE from abroad, so without an entity the employer of record is not just the fastest route but effectively the only compliant one. The EOR employs the worker on its own registrations, sponsors the visa, and runs payroll through the wage-protection systems that Gulf regulators use to monitor salary payments.

The mechanics differ by country, and the decision of where to base the person matters as much as how to employ them, which is covered in the guide to hiring a first employee in the Gulf. Country-level detail sits in the Saudi Arabia employer of record guide and the UAE hiring guide, including the registrations, costs, and end-of-service obligations a compliant employment carries in each market.

About Aspirock

Aspirock is an Employer of Record and payroll provider operating across 70+ countries, with six global offices and over 22 years of combined experience supporting more than 5,000 workers. Every client works with a named account team that owns the deployment end to end, so contracts, payroll, visas, and compliance filings in each market are handled by people accountable for the outcome. For engagement terms and deployment timelines, see the employer of record service page.

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