In today’s borderless world, businesses hire talent wherever they find it – from product teams across Europe to support staff in Southeast Asia. Remote work has made global hiring easier, faster, and seemingly risk-free.
But as companies scale across jurisdictions, many realize that hiring internationally without the right legal, tax, and compliance structure is not just unsustainable; it’s risky.
At Encor, we work with ambitious startups, CFOs, and legal teams expanding across markets who need a structure that matches their growth. When you scale, quick fixes break. Cleaning up regulatory messes later is far costlier than doing it right from the start.
A Remote Team Is Still a Global Company
Many think hiring remote contractors does not make you a “global company.” In reality, engaging workers across borders creates potential tax exposure, legal risks, and intellectual property challenges in every jurisdiction where work is performed.
Here’s where problems arise:
Permanent Establishment (PE): Even without a physical office, a remote employee conducting core business can trigger PE. This subjects your company to local corporate taxes, compliance filings, and audits.
IP Ownership: In some countries, IP created by employees legally belongs to them, not the company.
Data Sovereignty: Hiring in regions like the EU means complying with strict data protection rules such as GDPR.
Worker Classification: Misclassifying employees as independent contractors in jurisdictions with strict labor laws can lead to back taxes, penalties, and lawsuits.
These risks are not hypothetical. They frequently emerge during funding rounds, acquisitions, and audits.
Why Payroll Is Not Enough
Employer-of-record (EOR) platforms are often seen as a quick fix for global hiring. But they only solve part of the challenge.
EORs help you pay workers, but they do not help you:
- Choose optimal entity jurisdictions to reduce tax burdens
- Align transfer pricing between related companies
- Centralize and protect intellectual property
- Draft contracts that comply with both local and headquarters’ laws
- Manage multi-country VAT or GST obligations
Without a clear entity strategy, you may face double taxation, lose control of your IP, or incur local penalties—even if payroll appears compliant. And once your company outgrows the EOR model, you will need a compliant exit plan that avoids tax liabilities or contract breaches.
Common Mistakes in Global Hiring
We often see fast-growing businesses make these errors:
- Hiring contractors worldwide using generic US-centric contracts without local legal input
- Realizing too late that key engineers do not assign IP rights to the company
- Using a single entity for payroll, client contracts, and IP holding without tax efficiency
- Operating commercial activities in one country but holding legal presence elsewhere, which triggers audit risks
These misalignments create liabilities that grow with your business.
A Structured Approach to Cross-Border Hiring
Encor focuses on building long-term hiring, IP, and revenue structures rather than quick fixes.
We enable enterprises to:
- Decide when to use an EOR and when to establish a legal entity
- Design tax structures that optimize intercompany billing, transfer pricing, and withholding tax exposure
- Create IP-holding entities that protect core business value
- Draft compliant employment agreements tailored to local laws
- Implement governance for distributed teams, including board oversight and compensation planning
Our goal is not just compliance but alignment with your business goals and scalability.
Key Questions to Ask Before Hiring Internationally
- Will this hire trigger permanent establishment risk in their country?
- Who legally owns the IP this hire creates?
- Is the worker classification compliant with local labor laws?
- What tax reporting obligations are we assuming?
- Does this structure support our future funding and exit plans?
If you hesitate answering any of these questions, your global hiring plan likely needs restructuring.
Build Smart, Not Just Fast
Global hiring is no longer optional but essential for growth. Hiring across borders without a solid structure is like building a skyscraper on unstable ground. At best, you will waste time and money fixing problems. At worst, you will face barriers to market entry or reputational damage.
Encor partners with companies to build compliant, secure, and strategic global hiring frameworks so you can scale with confidence and control.