Hiring someone who lives abroad: B2B contractor or Employer of Record?

In short: a B2B contract is the simplest and cheapest way to work with a native speaker who lives abroad: they invoice you monthly. An Employer of Record (EOR) employs them locally for you, for a monthly fee, and takes the employment risk off your plate. This guide is general information, not legal advice.

Option 1: a B2B contract

The person works as a self-employed professional, either as a sole trader or through their own company, in the country where they live. They send you an invoice every month.

How it works

• You sign a service agreement that describes the work, the fee, notice periods and confidentiality.
• They register as self-employed where they live and handle their own tax, social security and insurance.
• Within the EU, services between two businesses are usually invoiced under the reverse-charge VAT rules, so you account for the VAT. Your accountant will know the details.

Pros

• The lowest cost. No payroll, no employer contributions at home. This is the model in our cost examples.
• Quick to set up.
• Flexible notice periods.

Watch out for

• Reclassification risk. Every country has rules to stop employment being dressed up as contracting. In Germany it’s called Scheinselbstständigkeit (bogus self-employment), and a status check can be requested from the Deutsche Rentenversicherung. The Netherlands has resumed enforcement of its rules on self-employment. Typical warning signs: one client only, fixed working hours set by you, full integration into your team, no business risk for the contractor, and your equipment.
• Tax presence. In rare cases, a contractor who concludes contracts on your behalf could create a taxable presence for your company in their country. Sales roles that sign deals are worth checking.

Option 2: an Employer of Record

An EOR is a company with its own legal entities in many countries. It becomes the person’s legal employer in their country of residence and charges you for the salary, the employer costs and a monthly service fee.

How it works

• The EOR signs a local employment contract with the person.
• It runs payroll, withholds tax, pays social contributions and provides the statutory benefits of that country.
• You direct the day-to-day work, just like with any employee.

Pros

• No reclassification risk for you: the person is properly employed.
• The person gets local employment protection and benefits, which some candidates prefer.
• You don’t need your own entity abroad.

Watch out for

• Cost. The EOR adds a monthly fee per employee, and the local employer contributions apply. Your saving is smaller than with a B2B contract, though usually still significant compared with hiring at home.
• Notice and termination follow local employment law.
• Coverage. Not every EOR covers every country, especially outside Europe.

Side by side

	B2B contract	Employer of Record
Who employs the person?	Nobody: they’re self-employed	The EOR, in their country
Monthly cost	Their invoice	Salary + local employer costs + EOR fee
Payroll & tax	The contractor handles it	The EOR handles it
Reclassification risk	Yours to manage	None for you
Set-up time	Days	Usually a few weeks
Best for	Clearly independent, project- or output-based work	Long-term, fully integrated team members

How to choose

Ask yourself three questions:

1. Will this person work like an employee? Fixed hours, only your company, part of your team? Lean towards an EOR, or get advice.
2. How long do you expect them to stay? For long-term, core roles, the extra cost of an EOR buys peace of mind.
3. What does the candidate prefer? Some people love the freedom of freelancing; others want an employment contract. It’s part of the conversation.

How RemoteAbroad handles it

Most of our placements work on a B2B contract. If you’d rather employ the person, we can set it up through an Employer of Record partner, for an extra monthly fee. Either way, our own fee stays the same: about 4–8% of a first-year salary at home, split into four payments that stop if the hire leaves. See pricing.

Next steps

• See how the options compare on our comparison page.
• Check the real cost of hiring a native speaker.
• Grab a 20-minute call and we’ll talk through your situation.

This article is general information, not legal or tax advice. Rules change and depend on the details, so check with a qualified adviser before you decide.