How a US Company Can Hire Employees Abroad (2026)

When someone works in another country, that country's employment law, payroll tax and social security rules apply to them, whoever employs them. So a US company hiring abroad needs a local employer: either its own entity in that country, or an Employer of Record (EOR) that employs the person on its behalf. Engaging the person as an independent contractor avoids that, but only if the relationship is genuinely independent under the other country's law.

On the US side, pay for work done outside the United States by someone who isn't a US person is generally foreign-source income, so US withholding rules don't reach it. Sending a US employee abroad is different: US Social Security and Medicare usually still apply, and a social security agreement decides which country's system covers them.

IRS Publication 515 says the place where services are performed determines the source of the income, whatever the contract says and wherever the payment is made. Work done abroad by a nonresident is foreign-source income, which falls outside the US withholding rules for foreign persons on US-source income.

To document that a contractor is a foreign person, payers commonly ask for Form W-8BEN. The contractor gives it to you, the payer, and doesn't send it to the IRS. You can rely on a properly completed form to treat the payment as made to a foreign person.

The bigger risk is usually the other country's law. If the contractor works like an employee, under your direction and as part of your team, local authorities can treat them as one, with back taxes and contributions to pay. See EOR vs contractor.

Employer costs on top of salary at the mid-level example salary in each of our country guides, and the total cost through an EOR at a US$599 monthly fee, in US dollars at the US Treasury rate of 2026-09-30. The last column shows whether the United States has a social security agreement with the country, which matters if you send US staff there.

According to the IRS, US Social Security and Medicare taxes generally continue to apply to a US citizen or resident working abroad for an American employer, which includes a corporation organised in the United States. The host country may also charge its own social security contributions, so without an agreement you could pay twice.

The United States has social security (totalization) agreements with 31 countries. Of the places we cover, these have one: Australia, Austria, Belgium, Brazil, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Poland, Portugal, South Korea, Spain, Sweden, Switzerland and the UK. These don't: Argentina, Colombia, Hong Kong, India, Malaysia, Mexico, New Zealand, the Philippines, Singapore, South Africa and the UAE.

Under the agreements' detached-worker rule, a US employee temporarily sent abroad by an American employer stays covered only by US Social Security if the assignment is expected to last 5 years or less. The Italy agreement is the exception. To use the exemption, get a certificate of coverage from the Social Security Administration and give it to the foreign authorities.

Having people work for you in another country can, depending on what they do, give your company a taxable presence there (often called a permanent establishment). The United States' income tax treaty with that country, where there is one, sets out when that happens. This applies whether you use an EOR or not, so take advice before staff abroad negotiate or sign contracts for you.

• Decide whether the person is an employee or a genuinely independent contractor under the other country's law.
• For an employee, choose between your own entity and an EOR. Compare the EOR fees with what running an entity would cost (see our country guides for each country's official fees and audit rules).
• For a contractor, put a written contract in place and collect Form W-8BEN.
• For a US employee you're sending abroad, check whether there's a social security agreement and get a certificate of coverage if it applies.
• Check whether the role could create a taxable presence, especially for sales roles.
• Get itemised quotes: see the EOR pricing tracker for every provider's published price, setup fees and deposits.