From my anecdotal observation, in case of EU usually a company is set up in a "permissive" country like Netherlands or Luxembourg, and the employees are implicitly required to handle the taxes and social insurances by themselves, the salary adjusted to the "cost of living" in where the employee is located.
Ask HN: How do you pay remote employees in different countries?
31–40 of 62 posts
Re: Ask HN: How do you pay remote employees in different countries?
#32I don't want to sound rude, but if you don't know how this works perhaps you'd like to hire legal and accounting professional services from the country where your company is registered. HN comments won't shield you from thousands of euros in fines, double taxation, possibly tax evasion charges and other issues you really should know about before trying to manage a business.
Re: Ask HN: How do you pay remote employees in different countries?
#33Thanks for posting this as I'm anticipating to be going down the same journey as well.
I'm surprised that there isn't already some sort of service that handles this although it does sound like quite an administrative entanglement.
Off topic: Do you get requests around embedding AI/NLP in your chat program?
Re: Ask HN: How do you pay remote employees in different countries?
#34Nothing to add, just glad to hear that folks are asking this. I work remotely for a US firm and I'm baffled in their choices viz-a-viz payment sometimes.
Re: Ask HN: How do you pay remote employees in different countries?
#35As far as I know, the only way to avoid creating a tax nexus in each country where you have "employees" (or contractors) is to make sure the contractors invoice you. The way this usually works is indeed the contractors have a sole proprietorship or legal entity from which they invoice you. If you just pay them without an invoice but as payroll then congratulations you're now on the hook for all taxes and social secur…
One downside for employees is that stuff like getting a mortgage will often be a lot harder if you're a contractor.
Re: Ask HN: How do you pay remote employees in different countries?
#36Re: Ask HN: How do you pay remote employees in different countries?
#37What’s the best solution if you’re a CEO but work in a different country to where your company is founded?
Will the contractor model still work?
N:B I’ve created a company in the UK but I’m thinking of moving to Denmark.
Re: Ask HN: How do you pay remote employees in different countries?
#38From my experience: sole proprietorship, invoices and SEPA - that is the right way to go. Some people create Limited companies. Some "employers" create one HR proxy company to group all contractors as a shield and a way to offload administrative burden from the mother company.
Unfortunately EU currently has no framework for cross-border remote employees, local laws are too different to unify them all. This is not going to change soon.
Re: Ask HN: How do you pay remote employees in different countries?
#39You have 2 options:
1. Hire them as "freelancer/self employed" and let them invoice your company. They can either invoice as individuals or through their own company if setup. But laws get tricky depending on countries. For example, if you are an employer-based out of the US and the freelancer is NOT a US person (US person has a specific definition) , you need them to fill out something called W8-BEN form but you need to talk to a CPA/tax lawyer to determine if that's the right setup.
2. If you have more than 1 person from the same remote country, you may have to setup a subsidiary of some sort which again depends on where your business is setup and where the remote team is setup. That subsidiary can then still provide services to the parent company etc. But it then adds tons of overhead for the remote country laws, business setup and also something called "Transfer Pricing". Can get complex for smaller companies. But the advantage of this option is that you have an official local company that can pay employees on payroll, follow the local employment and tax laws etc.
Re: Ask HN: How do you pay remote employees in different countries?
#40What’s the best solution if you’re a CEO but work in a different country to where your company is founded? Will the contractor model still work? N:B I’ve created a company in the UK but I’m thinking of moving to Denmark.
Fwiw, in the Netherlands most startup founders have a limited liability holding company to own the shares, and also use it send invoices from the holding to the startup. We don't, because being employed by our own conpany instead of sending invoices allows us to benefit from some R&D related tax cuts. But at least for Dutch law, founders sending invoices is allows and super common, maybe the same holds in the UK.