How to Hire Employees Abroad Without a Local Legal Entity

Key Takeaways

• Atlas HXM’s EOR services simplify how to hire employees abroad without a local legal entity, manage payroll and compliance, and build a global team that supports your business expansion strategy in over 160 countries— all while keeping costs low and risks under control. 

• Global expansion helps companies fill skill gaps, test new markets, and diversify operations — but each country’s unique labor laws and tax systems make direct hiring risky. 

• Compared to establishing a foreign entity, an EOR offers faster onboarding, lower costs, and full legal protection, making it ideal for startups and enterprises alike. 

• Common challenges when hiring international employees include misclassification, permanent establishment risk, complex tax laws, and data privacy compliance. 

• Businesses can use an EOR to test new markets, hire remote talent, manage M&A transitions, or undertake short-term global projects without the burden of incorporation.

Why Companies Are Expanding Globally

The world has changed. Remote work and global connectivity have made it easier than ever to find and manage talent across borders. In fact, a majority of growing companies now look beyond their home country to access specialized skills, new customer bases, and innovation opportunities.

Global expansion enables businesses to:

• Fill talent gaps: Access hard-to-find professionals in markets like tech, engineering, and healthcare. 

• Test new markets: Evaluate international demand before fully committing. 

• Diversify operations: Build resilience by hiring in different time zones and economies. 

• Accelerate growth: Reach customers faster through a distributed team. 

But there's a catch — every country has unique labor laws, tax systems, and regulations. Hiring without understanding these can expose your company to compliance risks leading to fines, double taxation, or even being blacklisted by local authorities.

Assess your global compliance risk now → Try Atlas HXM's free Compliance Risk Calculator.

How to Hire Employees Abroad Without a Local Legal Entity

So, how can your company hire international employees legally and efficiently without going through the hassle of incorporation in every new country? There are four main options — but one stands out as the most compliant and scalable.

Option 1: Hire Independent Contractors

Hiring contractors can seem like the simplest path to hire employees internationally, especially for short-term or project-based work. You pay the contractor as a vendor, and they handle their own taxes.

Pros:

• Fast and flexible 

• No benefits or employment taxes 

• Ideal for temporary roles 

Cons:

• Risk of misclassification 

• Limited worker loyalty and integration 

• Harder to enforce confidentiality or IP protection 

If your contractor works exclusively for your business or follows your internal schedule, regulators may consider them an employee, which can lead to fines or back-pay obligations.

Option 2: Establish a Foreign Entity

Creating a subsidiary or branch in another country gives you full control over hiring and payroll. However, it's often impractical for small teams or initial market tests and can be costly for any business.

Pros:

• Complete ownership of operations 

• Long-term presence in new markets 

Cons:

• Costly setup and maintenance 

• Months of registration delays 

• Ongoing tax filings and compliance management

Option 3: Hire Abroad with Employer of Record (EOR)

When hiring international employees, an EOR like Atlas HXM acts as the legal employer on your behalf. You choose the talent, manage their daily work, and the EOR handles everything else — including local payroll, tax withholdings, benefits, and compliance.

When you hire international employees with an EOR, you avoid the need for entity setup, ensuring faster, safer global expansion.

With an EOR like Atlas HXM, you can:

• Onboard talent in as little as two weeks across 160+ countries 

• Get 99% payroll accuracy and global tax compliance 

• Offer world-class employee benefits aligned with local laws 

• Ensure full data security (ISO 27001, 27017, 27018, GDPR) compliance 

• Receive 24-hour support from real HR experts — not AI bots

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EOR vs. PEO: Understanding the Difference

Many organizations confuse Employer of Record (EOR) with Professional Employer Organization (PEO) — but they serve different purposes.

If you want to hire employees internationally, an EOR is the right choice.

Challenges of Hiring Internationally Without a Local Entity

If you try to hire employees internationally without local entity registration, you'll quickly discover the complexity that comes with it. Let's look at the most common challenges companies face:

1. Legal and Tax Compliance

Each country defines employment differently — including benefits, working hours, and termination procedures. Without a registered entity, you could unintentionally violate local labor laws. Misclassification of workers (e.g., calling an employee a contractor) can result in penalties or legal disputes.

2. Payroll and Benefits

Figuring out how to pay foreign employees compliantly involves complex payroll challenges, including calculations, statutory deductions, and benefits administration — all of which vary by country.

3. Data Privacy

Cross-border HR data transfers must comply with regulations like the EU's GDPR. Mishandling employee information can lead to data breaches or fines.

4. Visa and Immigration Barriers

If you plan to relocate employees, managing work visas, sponsorships, and residency permits becomes a legal maze that requires local expertise.

These challenges make global hiring difficult — unless you have the right partner to simplify the process.

The Benefits of Partnering with a Direct EOR Like Atlas HXM

Not all EORs are built the same. Some rely on third-party intermediaries (aggregator models), which can create compliance risks and inconsistent employee experiences.

Atlas HXM uses a direct Employer of Record model, meaning it owns its entities in 160+ countries. This gives clients a single, trusted partner across all regions — without outsourcing your compliance to middlemen.

Here's how Atlas HXM empowers your global hire strategy:

1. Fast, Compliant Market Entry

Hire and onboard employees abroad in two weeks or less. Atlas manages all registration, contracts, and payroll locally, so you can expand into new markets with confidence.

2. Full Legal Protection

Because Atlas is the legal employer, you're shielded from tax or employment law liabilities in foreign jurisdictions.

3. Seamless Payroll and Benefits

With Atlas, companies can achieve 99% payroll accuracy. We ensure employees receive the right pay, in the right currency, on time — along with healthcare, pension, and statutory leave benefits.

4. Data and Security Compliance

Atlas upholds industry-leading data protection standards, giving peace of mind that sensitive HR and payroll data stays secure.

5. Real People, Local Support

Atlas HXM's “For People, By People” approach means your business gets real, multilingual experts available 24 hours a day to solve issues in your time zone.

6. World-Class Employee Experience

Offer competitive benefits, learning opportunities, and localized onboarding that help you attract and retain top global talent.

7. Visa Sponsorship and Global Mobility

Atlas offers unmatched visa sponsorship coverage across 100 countries, helping you relocate or hire top talent wherever they are. From work permit management to relocation support, our global mobility services ensure compliance and a smooth transition for every employee.

When to Use an Employer of Record

An EOR can support your business expansion strategy in multiple scenarios:

• Testing new markets: Hire one or two employees to assess potential before investing in a local office. 

• Hiring remote talent: Bring on global professionals who prefer to work from their home countries. 

• Mergers & acquisitions: Manage compliance while integrating teams across borders. 

• Short-term projects: Quickly deploy specialized talent for temporary assignments. 

• Risk reduction: Stay compliant while operating in complex jurisdictions. 

Using an EOR like Atlas HXM ensures that every global hire aligns with your strategic goals — without operational headaches.

How to Pay Foreign Employees Through an EOR

Managing international payroll on your own can be overwhelming. Currency conversions, tax deductions, and benefits vary by country. Partnering with an EOR simplifies paying foreign employees — accurately and compliantly.

Atlas HXM handles everything through its secure, integrated platform:

• Payroll processing and tax withholding 

• Social security and pension contributions 

• Expense reimbursement 

• Benefits administration and equity management 

With Atlas, you maintain full visibility into every transaction through real-time dashboards, ensuring transparency and peace of mind.

Atlas HXM EOR Pricing Structure

Atlas HXM is the world's largest direct EOR provider, offering transparent, scalable EOR pricing and unmatched compliance coverage across 160+ countries.

• Starting from $599 per employee per month  – no hidden fees; clear itemized pricing for accurate budgeting. 

• Volume-based discounts available for teams of 5+ employees. Per-employee costs decrease as your team grows. 

• Transparent pricing: All costs itemized before contract signing 

• Savings up to 82% compared to setting up local entities

Atlas is trusted by thousands of global companies — it consistently earns top ratings across review platforms:

• Capterra: 5.0 

• Crozdesk: 5.0 

• GetApp: 5.0 

• G2: 4.5 

• Gartner: 4.7

Partner with Atlas HXM to Simplify Global Hiring

Global expansion is no longer limited to large corporations. With the right partner, you can hire abroad with Employer of Record solutions that give you instant access to international talent, ensure compliance, and protect your brand.

At Atlas HXM, we empower businesses to hire internationally with confidence. Our platform combines technology, compliance, and human support to simplify global employment.

Key Capabilities Include:

• 160+ owned entities for faster onboarding 

• Visa sponsorship in 100+ countries 

• 99% global payroll accuracy 

• GDPR and ISO-certified data security 

• Support in 50+ languages 

• Premium benefits and employee learning programs 

Atlas HXM makes it simple to hire international employees, manage payroll, and build thriving teams across more than 160 countries — all without the need for local incorporation.

Contact Atlas HXM to explore how we can help your company hire employees abroad, streamline compliance, and unlock global growth.