International payroll processing: providers, types and best practices
Discover how Remote’s global employment specialists can help you manage international payroll for a geographically distributed team.
Get the guide · research/international-payroll-processing-guide
Get the guide
Provide a few brief details below to gain access to the global payroll guide.
Payroll processing matters to your strategic priorities
Hiring talent worldwide is straightforward today, but ensuring accurate and compliant pay introduces a separate set of challenges.
Beyond paying people on time, you must navigate local compliance and tax rules for each country. When team members are spread across many jurisdictions, complexity increases very quickly.
That is why choosing the correct solution is essential. Your global payroll system should be more than an administrative utility; it must act as a strategic resource enabling you to hire and pay top talent worldwide while minimising compliance risk.
What you'll learn
This guide helps you determine the most suitable global payroll provider for your organisation, outlines led practices for international payroll processing, and answers common questions from payroll leaders.
What is international payroll?
Partner-dependent or owned entity?
Best practices for international payroll
What is international payroll processing?
How to pay your global employees
How to pay international employees
Payroll covers the processes involved in paying your workforce. These typically include:
Salary calculation
Benefits administration
Tax deductions and withholding
Overtime
Record-keeping
Payroll tax forms
Compliance with all relevant tax and labour laws
When you employ and pay people in multiple countries, that is global payroll.
For organisations operating internationally, these tasks rapidly increase in complexity — notably around tax and compliance.
Managing global payroll: the expert guide
Key considerations of international payroll processing
Here are some of the processes to examine if you are expanding hiring across borders:
Labor and employment laws vary by country (and sometimes by state or province). You must understand what each jurisdiction requires regarding minimum wage, paid and unpaid leave, overtime and breaks.
Tax laws also vary across locations, with different rates, reporting duties and filing timelines.
Salaries and wages must be calculated accurately and on schedule. In some countries, including the US, distinctions between salaried and hourly roles affect payroll treatment.
Employee benefits need to be computed and administered in line with local rules. Some jurisdictions mandate particular benefits; others leave them optional. This can include health and dental cover, life insurance, retirement provisions and protected PTO.
Methods and timelines of payment differ by country. Some require monthly pay, others fortnightly. Payment frequency can also depend on role and contract terms.
Managing these payroll functions demands time, resources and local expertise — which many businesses, especially smaller ones, do not have.
Consequently, outsourcing payroll is increasingly common: a 2021 study by EY found that 64% of companies do so.
But what does outsourcing look like for international organisations? How does it operate and which solution fits your needs?
Global payroll providers generally offer three core services:
1. Global employment services
If you do not have a legal entity in an employee’s country, you will need an employer of record (EOR) — such as Remote — to hire, manage and pay that person. EORs act as the legal employer, allowing you to onboard workers quickly and compliantly. This approach suits businesses wanting rapid, flexible expansion. With Remote’s EOR, we handle payroll, benefits administration (including equity), and day-to-day HR, ensuring compliance so you can focus on recruiting and running your business.
2. Localized payroll services
If you do have a legal entity in the employee’s country, you can process payroll internally or outsource it. Remote offers localized payroll via our Global Payroll platform. This suits companies that have invested in a market and expect to retain a significant in-country team. You remain the legal employer while Remote (or another provider) executes payroll; you retain responsibility for meeting local legal obligations.
3. Contractor management services
Paying independent contractors differs from employee payroll. Many businesses default to engaging international workers as contractors because it appears simpler, but misclassification risk is real. Misclassification happens when a worker effectively operates as an employee without the associated benefits and protections, exposing you to fines and reputational harm. Because definitions of employee status vary by country, your global payroll provider is a key safeguard. Remote can help prevent misclassification, simplify contractor-to-employee conversions and manage bona fide contractors efficiently.
Partner-dependent or owned entity?
Global payroll providers typically fall into two categories: partner-dependent services or owned-entity providers such as Remote.
Both models usually cover the three services above (global employment, localized payroll and contractor management) and can support payroll across many countries.
Which model should you choose?
Partner-dependent payroll providers
Partner-dependent providers rely on third-party partners in each country to deliver services.
This approach often brings several drawbacks, including:
Increased costs
Hidden fees
Longer waiting times
Involvement of unknown third parties
Generally poor experience for employees
Limited IP protections
Working with a partner-dependent supplier can be suitable short-term, but it is usually not recommended if you plan to scale significantly.
Owned-entity payroll providers
Owned-entity providers deliver payroll, benefits, HR and compliance services directly and operate their own legal entities in the countries they serve, avoiding outsourcing.
Remote is an owned-entity provider. Consequently, we aim to deliver a positive experience for employers and employees, with no hidden costs, robust security, and strong IP protections.
International payroll processing: best practices
After you’ve chosen the right type of global payroll provider, bear the following points in mind:
Choose your global payroll partner carefully
Select an international payroll partner that understands your requirements and can support them at scale. You want to avoid switching providers as you grow or delaying hiring because a supplier cannot meet your needs.
Specifically, your chosen partner should:
Have local, on-the-ground experts in all the countries it operates in
Fully understand and monitor changes to all local employment and tax laws
Own its own entities
Be open and transparent about all fees and payments
Provide the highest standard of security and data protection
If you plan to use global employment services, also consider a provider that:
Is fully compliant with labour and tax laws in each country it operates in
Allows you to handpick and offer statutory and supplementary benefits, including health insurance, retirement plans and equity incentives
Integrates HR processes into a single platform, including HRIS
Provides prompt, practical support when needed
Remote meets these criteria. To find out how we can support your global payroll and global HR needs, speak to one of our friendly experts today.
“If I had to handle local taxes and country-specific compliance myself, something would probably be missed and issues could arise. Remote covers everything — payroll, taxes and all related tasks. That peace of mind is the most important thing for me."
Stefan Kende, COO at Swell
Prioritise the employee experience
When evaluating payroll partners — and after you onboard one — keep your employees’ experience front of mind. Don’t select the cheapest option without considering its impact on day-to-day employee experience.
It’s also about protecting morale. If payroll is late or incorrect, staff will become frustrated and disengaged and may start looking for other opportunities.
Discuss benefits with your provider to identify the packages your people value, and ensure they understand the role of your payroll representatives.
Avoid misclassification risk
As noted, it is vital to define the employment relationship for each team member in every country.
If you determine a person’s hours, pay, role and provide tools and equipment, they will generally be classed as an employee.
If a worker sets their own hours, supplies their own tools and works for multiple clients rather than exclusively for your company, they are more likely to be an independent contractor. Contractors often work on discrete projects.
Recognising this distinction is important: employees are typically entitled to statutory benefits and protections while contractors usually are not. Employers usually withhold tax for employees; contractors normally handle their own tax filings. This affects payroll planning and processing significantly.
Penalties for misclassification can be severe — fines, backdated taxes and benefits, legal costs, bans on contractor engagement in a country, and potentially criminal charges.
Remote helps you classify team members correctly and avoid these risks. We can also convert contractors into employees if required.
“Many believe it is hard or impossible to hire people internationally as employees or contractors. Remote simplifies both approaches, allowing companies to engage contractors and employees with confidence that classification is correct.”
Sam Ross, CLO at Remote
Consider your objectives carefully
Opening a legal entity in another country is one route, but partnering with a global employment provider can meet short- and medium-term expansion goals while creating a scalable foundation for the long term.
Bear in mind that establishing a new entity can be expensive and time-consuming. The effort and strain on internal teams makes this impractical for many organisations. Using an EOR can be faster and more cost-effective, removing the need to recruit costly in-house specialists.
"If we coordinated everything in-house, I’d need to hire four extra people to manage entities, local solicitors, tax firms, accountants, payroll, and translation services; it would cost upwards of $500,000 extra per year. Remote takes that burden off of our plate."
Luke McKinlay, VP of Finance at Fountain
Ultimately, the right approach depends on your goals, budget and preferences. If you are uncertain, we can outline your options and recommend the most appropriate path. Whether you establish your own entity or partner with an EOR, we provide a flexible, scalable and secure payroll solution.
Book a demo
Extra payroll management research
Global payroll information for specific countries
These are some of our most-viewed countries. Visit our Country Explorer to learn more about global payroll in individual countries.
International payroll processing FAQs
Want to know more about international payroll management? Below are some of the questions we are most often asked:
International team members are usually paid the same way as domestic staff: directly into their personal bank accounts. As with local payroll, you must first calculate and withhold any applicable taxes, contributions and benefits (see below).
If you operate your own entity, you will typically make these payments from a business bank account in that country. Alternatively, if you use a payroll provider (an EOR or a localised payroll partner), you usually submit the payroll funds and the provider distributes them on your behalf.
For contractors, the payment method and currency should be set out in the contractor agreement. Some contractors may insist on specific channels or currencies, which might not suit you, and certain jurisdictions restrict permissible payment currencies. Remote’s Contractor Management platform enables you to manage and pay contractor invoices quickly and easily in multiple currencies and via multiple methods.
Payroll calculation typically allocates salaries, withholdings and benefits. For global payroll, employers must do this in line with the tax, employment and labour laws of every country where they have staff.
This can be complex. To ensure accuracy and compliance, you can hire local specialists, outsource to local providers, or use a centralised global payroll platform, like Remote.
Pay levels for international employees depend on your budget and compensation strategy. Some employers apply a single global rate; others use geo-adjusted ranges based on local market rates and living costs.
For example, a role that pays £80,000 in London might be offered at that figure regardless of location by some firms.
Alternatively, other employers may adapt the £80,000 figure to local market expectations, using geo ranges and local benchmarks.
Which approach you choose is up to you. To remain competitive, research local salary ranges and the benefits required. Remote can assist with local benchmarking and tailoring competitive benefit packages.
“Something I hadn't anticipated but really appreciated was Remote's benefits offering. This enabled us to work out what someone in California would expect, and how much it would cost us as a business. In the end we were able to make a really great and professional offer to our prospective employee, whereas without Remote we'd have no idea what was expected or appropriate.”
Ed Nutter, CEO of Midspace (formerly Clowdr)
When managing compliance, do your international employees fall under the laws of their country or yours?
Generally, your company must comply fully with the laws of the country where it is headquartered.
However, when hiring in other jurisdictions, you must follow the employment rules and regulations there. For example, a company in Australia hiring in Germany must provide relevant PTO, make employer contributions (such as social security) and meet German employment conditions.
In some cases you may have extra obligations depending on your base location. For instance, US-based firms hiring overseas contractors may need to file forms such as the W-8 BEN with the IRS.
Remote can clarify your compliance duties in various countries and help you meet them.
“With employment laws and regulations varying from country to country, we don’t have time to go through the bureaucratic and time-consuming process of setting up a new legal entity every time we make a new hire. Remote allows us to effortlessly onboard new employees, safe in the knowledge that we are fully compliant. We are free to select the best candidates available, enabling us to focus on growing our business.”
Andy Firth, Finance and Operations at Nearcut
Generally, US-based companies cannot legally make direct payments to overseas employees (note this differs for independent contractors).
As mentioned, you must pay international employees either through your local legal entities or via a global payroll service.
If your business is US-based and you want to explore your options, our friendly experts can explain everything in detail.