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I run a small consultancy in the UK (not web dev) and hiring people outside the country is a pain.

You have to really want that person because it is a trade off in terms of admin overhead and cost.

Today, we have one full time team member in Germany and in the past we had someone in the Netherlands too.

In both cases, we used specialised payroll companies who charge a fee to be that person’s legal employer. They take care of taxes, health insurance, and other legal requirements. The cost of such a service has varied between €350 and €450 a month.

The real cost though is in covering the different payroll taxes in other countries. Add that to the payroll company’s fee and it costs us at least £10,000 more each year to employ someone in Germany than if they were in the UK.

I’ve seen confusion here and on twitter as to why more companies won’t hire remote outside their own country. The reason might be that it’s relatively expensive and outside the company’s competence.

I don't get that. Just do what I did: open a single person company and charge them monthly for your (pre-tax) salary. This has drawbacks like not being protected by the employment laws of the country you live in (are any of us really concerned about losing a job?) but advantages such as having a lot more flexibility tax-wise along with usually very significantly lower tax rates due to you paying yourself via dividends instead of salary, also you can have multiple clients simultaneously if you can handle the workload.

Details on tax optimization vary depending on your country of residence and the country where you opened your company.

For the "employer" company this is also very simple as they're just paying the invoices you send them.

Not everyone wants the overhead of running a company.

Some countries, including the Netherlands and Germany, specifically prevent this in either law or regulation.

Why not just ask them to set up their own company and bill you? It seems easier that way and would allow them to optimize their own taxes better...

That makes some things like ISO27001 and Cyber Essentials really hard. Each company involved with user data (which includes things like server logs) has to be assessed separately.

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