You’ve found the perfect candidate. They have the skills, the experience, and the availability. There’s just one thing: they don’t live in Ireland. Maybe they’re in Portugal, or Poland, or the US. And now you’re wondering how you actually employ them without creating a compliance nightmare.
Hiring remote employees outside of Ireland is increasingly common for Irish businesses, particularly in technology, professional services, and creative industries. But it introduces layers of complexity around employment law, payroll, tax, and immigration that don’t exist when everyone works from the same country. This guide explains the key considerations, the options available, and how to get it right.
Why hire internationally?
The case for hiring outside Ireland is straightforward:
- Access to talent. The Irish labour market is competitive. If the specialist skills you need aren’t available locally, international hiring opens a much wider pool.
- Cost considerations. Salaries vary significantly by country. Hiring in markets with lower cost of living can be more affordable, though fair pay and compliance should always be the priority.
- Time zone coverage. For businesses serving customers globally, having team members in different time zones means better support coverage and faster response times.
- Speed. Setting up an overseas entity takes months. Hiring a remote worker through the right structure can happen in weeks.
But the benefits only hold if you comply with the rules. Getting it wrong can result in tax penalties, employment claims, and even corporate tax exposure in the employee’s country.
What are the main compliance risks?
Employment law in the employee’s country
When someone works in another country, that country’s employment law applies to them, regardless of where your company is incorporated. This means local rules on working hours, minimum wage, annual leave, notice periods, maternity/paternity leave, and termination all apply.
These rules vary enormously. France has 25 days of statutory annual leave and strict dismissal protections. The US has no federal requirement for paid leave. Germany requires written employment contracts within one month. You cannot simply apply Irish employment law to a worker based abroad.
Employee vs contractor misclassification
One of the most common mistakes is treating an international worker as a contractor when they are, in substance, an employee. If the person works exclusively for you, follows your direction, uses your tools, and works your hours, most countries will consider them an employee, regardless of what the contract says.
Misclassification carries serious consequences: back taxes, social security contributions, penalties, and potential employment claims. Several countries (notably Spain, the Netherlands, and Australia) have been actively cracking down on this.
Permanent establishment risk
If your remote worker carries out significant business activities in their country (negotiating contracts, making decisions on behalf of the company, or operating from a fixed location), you may inadvertently create a permanent establishment (PE). This can trigger corporate tax obligations in that country, meaning your Irish company would need to register, file returns, and pay tax there.
PE risk depends on the employee’s role, authority, and the specific tax treaty between Ireland and the other country. Senior roles with decision-making authority carry more risk than technical or administrative positions.
Tax and payroll obligations
Employment income is generally taxed where the work is performed. If your employee works in Germany, Germany expects employer payroll registration, income tax withholding, and social security contributions. You can’t simply run their pay through Irish PAYE.
Within the EU/EEA, social security coordination rules may allow the employee to remain in the Irish system for up to two years using an A1 certificate. Outside the EU, bilateral agreements may or may not exist, and the rules are more complex.
Data protection
If the employee accesses personal data from outside the EEA, you need to ensure your data protection arrangements cover cross-border access. GDPR still applies to the data itself, and you may need additional safeguards depending on the country.
What are your options for hiring internationally?
1. Set up a local entity
Incorporate a subsidiary or branch in the employee’s country. This gives you full control over employment, payroll, and compliance. It’s the right approach if you’re hiring multiple people in the same country or establishing a permanent presence.
The downside: it’s expensive and time-consuming. Legal setup, local accounting, ongoing compliance, and annual filings all add cost. For a single hire, this is usually overkill.
2. Use an Employer of Record (EOR)
An Employer of Record is a third-party company that legally employs the worker on your behalf in their country. The EOR handles payroll, tax withholding, social security, employment contracts, and local compliance. You manage the day-to-day work; the EOR handles the legal and administrative side.
This is the most popular option for Irish SMEs hiring one or two people abroad. Providers like Remote, Deel, Oyster, and Papaya Global operate in dozens of countries. Costs typically range from €300 to €700 per employee per month, depending on the country and services included.
The EOR model is fast (often operational within one to two weeks), compliant, and avoids PE risk because the employment relationship sits with the EOR, not with your Irish company.
3. Hire as a contractor
If the relationship genuinely qualifies as a contractor arrangement (the person controls how and when they work, serves multiple clients, invoices for work completed, and bears their own business risk), engaging them as a contractor is straightforward. You pay invoices; they handle their own tax and social security.
The critical point: this only works if the arrangement is genuinely one of independent contracting. If the reality is closer to employment, the “contractor” label won’t protect you from misclassification risk.
What should the employment contract include?
For international hires, the employment contract needs to be more detailed than a standard Irish contract. Key elements include:
- Governing law and jurisdiction: Which country’s employment law applies (typically the country where work is performed, regardless of what you write in the contract)
- Role, responsibilities, and reporting lines
- Compensation: Currency, payment frequency, and how local statutory entitlements are met
- Working hours and leave: Compliant with local requirements, not Irish defaults
- Termination terms: Local notice periods, severance, and dismissal protections
- Data protection obligations
- Confidentiality and IP assignment: Ensure your company retains ownership of work product
- Equipment and expenses: Who provides equipment, what expenses are reimbursed
If you’re using an EOR, they handle the contract, but you should review it to ensure your commercial interests are protected.
What about Irish employees who want to work from abroad?
This is increasingly common: an existing Irish employee asks to work remotely from Spain, Italy, or another country. The HR and compliance implications depend on duration and permanence.
Short-term (under 183 days)
Most double tax treaties allow an employee to work in another country for up to 183 days per tax year without triggering local income tax obligations. Within the EU, the employee can usually remain in the Irish social security system using an A1 certificate during this period.
Long-term or permanent
If the employee relocates permanently, they will become tax resident and subject to local employment law in the new country. You’ll need to either register as an employer there or use an EOR. Irish PAYE would no longer apply.
Create a clear remote work policy that addresses:
- Whether overseas remote work is permitted (and for how long)
- Which countries are approved (some create more risk than others)
- The approval process and advance notice required
- Who bears the cost of compliance (the employee or the company)
Frequently asked questions
Can I just pay someone abroad as a contractor to avoid the complexity?
Only if the arrangement genuinely qualifies as independent contracting. If the person works exclusively for you, on your schedule, with your tools, they’re likely an employee in the eyes of local authorities. The consequences of misclassification (back taxes, fines, employment claims) are far more expensive than doing it properly from the start.
Do I need to register my Irish company in the other country?
Not if you use an EOR. If you employ someone directly, you may need to register as a foreign employer for payroll and social security purposes. If you create a permanent establishment through the employee’s activities, corporate registration may also be required.
How much does it cost to use an Employer of Record?
Typically €300 to €700 per employee per month, depending on the country and provider. This covers employment contract management, payroll, tax withholding, social security, and compliance. For a single hire, this is almost always cheaper than setting up a local entity.
What about visa and work permits?
If you’re hiring someone who already has the right to work in their country, no visa is needed from your side. If you’re relocating someone to a new country, visa and work authorisation requirements depend on the destination. EU/EEA nationals generally have freedom of movement within the EU; non-EU nationals typically need a work permit or visa.
Need help with international hiring?
Hiring remote employees outside of Ireland is achievable for businesses of any size, but the compliance requirements are real. Getting the employment structure, payroll, and tax treatment right from the start avoids costly mistakes down the line.
At Kinore, we advise Irish businesses on the payroll, tax, and compliance implications of international hiring. Whether you’re considering your first overseas hire or managing a distributed team across multiple countries, we can help you choose the right structure and keep everything compliant.
Book a consultation and let’s work out the best approach for your business.
The information provided in this article is for general guidance and informational purposes only. It does not constitute professional accounting, tax, or financial advice, and should not be relied upon as a substitute for advice tailored to your specific circumstances. While we take care to ensure the content is accurate and up to date at the time of publication, legislation, tax rates, thresholds, and compliance requirements in Ireland can change.
