There are several benefits to hiring global talent, including the ability to more easily enter new markets and gain access to a larger talent pool of potential candidates.
But before you begin international hiring, there are several financial factors to take into account, such as the cost of a global team’s salaries, local taxes, employee benefits, and more.
Understanding the impact these variables will have on international employment costs is important in order for companies to create accurate budgets, and to offer competitive salaries when hiring remote workers in global markets.
Why Consider Hiring International Employees?
Part of running a good business model is knowing your target market. It makes sense to hire local employees to work new branches when you are on the path of global expansion. After all, who knows the local target market better than the locals themselves?
Additionally, it brings about the benefit of creating local connection routes that could build lucrative relationships with investors, suppliers, and more. Today, it is easier than every to hire employees anywhere in the world.
The Costs Involved With Hiring International Employees
Compliance and Taxes
With global hiring, employers also need to meet the tax obligations of the countries where their international talent live — which can impact employment expenses. The intricacies of tax laws and compliance vary widely from country to country, so it's crucial for employers to be aware of the rules in each location.
Every country also has its own regulations regarding mandatory benefits that impact the cost of hiring an employee in their home country. This could include pension contributions, vacation pay, taxes, health insurance, or parental leave, just to name a few.
For example, in Belgium, there are a range of mandatory employer taxes, including 24.9% of the employee’s gross salary for social security benefits. There are also mandatory vacation and paternity leave benefits that employees are entitled to, including a minimum of 20 days of paid vacation leave, 15 weeks of paid maternity leave, and one month of paid paternity leave.
Meanwhile, in Romania, employer taxes range between only 4-8% for social security benefits. Romanian employees are also entitled to a minimum of 20 days of annual leave per year, pregnant employees receive 126 days of paid maternity leave, and fathers receive 15 days of paid leave.
And in Germany, employers may need to contribute to a social security system which covers robust health insurance, pension, and unemployment benefits. This leads to increased employment costs.
Where Singapore focuses on contributions to the Central Provident Fund (CPF) rather than hefty social security payments. The CPF acts as a savings plan for workers and impacts cost structures at a lower rate compared to Germany.
It can get pretty complicated, really fast. Failure to adhere to local tax laws and compliance like those outlined above can result in expensive fines, as well as reputational costs that may make it difficult to hire talent in a particular country.
Employee Benefits
When hiring international employees, it’s key to have a firm understanding of the mandatory benefits offered in different countries and develop a global benefits strategy.
For instance, European employees often enjoy generous paid time off — with countries like France providing 25 days of paid vacation and 11 paid public holidays.
In addition, many nations have generous mandatory parental leave policies in place. Sweden is particularly noteworthy for offering up to 480 days of leave for parents to divide between them while caring for their newborn child.
And in Asia, countries such as Japan and South Korea typically offer a minimum of 10 and 11 days of paid leave respectively, along with perks that focus on maintaining work life balance and promoting health.
There is a mix of evolving benefits in South America. For example, Brazil mandates paying employees a full month’s salary at the end of each year, known as the 13th month payment. In addition, Brazilian employees are entitled to 30 days of vacation after completing one year of work.
Recruitment Costs
Hiring international employees allows you to tap into the world’s greatest talent regardless of borders, but finding the best candidates across the globe often requires additional hiring resources.
These could entail a variety of additional expenses, such as the cost of partnering with global staffing firms or paying to advertise on international job boards, especially if you’re hiring for a specialized skill set.
Onboarding and Training Costs
Hiring employees globally can increase costs to onboard and train new workers for a variety of reasons, including the following:
- Translation of company handbooks and training materials both for both language and cultural understanding
- Cross-cultural and communication training for both new hires and the teams they work with
- Software and asynchronous communication tools to streamline the training process
- Potentially longer onboarding periods to ensure international employees integrate with company culture and operations
Travel Costs
Depending on employees’ roles, you may also need to pay for international travel costs to and from the worker’s country for company meetings, retreats, conferences, and events. In addition to airfare, this could also include visa fees and temporary housing costs.
Termination Costs
It’s also important to consider the cost of letting go of an international employee since termination laws vary widely from country to country in terms of notice periods and severance pay, and many countries have strict labor protections.
In most European countries, severance pay is often based on length of employment at the company and a percentage of wages. In Germany, for example, severance pay is 50% of monthly wages for each year of service.
And in some countries, such as Japan, there’s no legal requirement for severance pay, but it’s customary to provide it to avoid expensive legal disputes.
Other Cost Considerations for International Hiring
Local Wage Rates
Local wages play an important role in the cost of hiring international workers, with factors like a country’s economic situation and currency value coming into play.
The average monthly income in Vietnam, for example, amounts to 7.5 million Vietnamese Dong (VND), which equates to approximately USD 293. On the other hand, the average monthly wage in the United Kingdom is 2,442 British Pound Sterling (GBP), equivalent to USD 3,155 (as of March 2025).
While it’s important to understand the salary dynamics when hiring international workers, companies will still need to offer competitive wages to attract the best talent and increase retention, especially when competing with other global companies for highly skilled workers.
Currency Fluctuations
Because currency exchange rates are constantly in flux, a global workforce can make it challenging and time-consuming for your HR department to accurately calculate exchange rates and pay your international team in multiple currencies — especially if the process is manual.
Changes in currency exchange rates can also shift whether it’s affordable or costly to hire new employees in one particular country.
For example, a strong US dollar (USD) against the Euro could make hiring in Portugal more attractive for U.S. companies.
Conversely, a weaker US dollar against the Singapore Dollar (SDG) could raise costs for companies hiring in Singapore. But, if rates shift, that could change where it’s most economical to recruit new hires.
These currency fluctuations can make it challenging to accurately forecast global payroll expenses, and might lead to unforeseen cost overages. It could also result in errors in an employee’s pay.
Cost & Benefit Breakdowns by Region
Eastern Europe
In Eastern Europe, countries like Poland and Hungary are appealing because of their lower wage structures — but employer taxes can be significantly higher due to the social security tax employers are responsible for paying.
For example, in Hungary the rate is roughly 13% of an employee’s wages, and in Poland the rate is 19% to 22% of an employee’s wages. The statutory annual leave benefits in Eastern Europe countries typically range from 20 to 26 days, excluding holidays.
Western Europe
Western Europe, including countries like Germany, France, and the U.K., is known for its higher wages and higher cost of living.
The benefits offered in Western Europe go beyond the basics of health insurance and pension plans, although these costs are often shared by both the employer and the employee.
For example, in Spain, social security contributions are paid on wages and salaries. The minimum monthly base is EUR 1,322 and the maximum is EUR 4,909.
The general contribution rates are 6.35% for employees, depending on the type of contract, and 30.48% for employers, plus a variable rate for occupational accidents (e.g., 1.50% office work).
Latin America
In Latin America, wage structures vary across countries. For example, Brazil and Chile offer lower average wages compared to Panama and Uruguay. Social security taxes can vary as well. In Panama taxes are 12.25% for employers, while in Paraguay it’s 16.5%.
Benefits in Latin America also often go beyond what is offered in many other countries, like the 13th month payment, an extra payment — typically a month’s salary — that’s often given to employees at the end of December.
In addition, the amount of leave in Latin America can range from 10 to 30 days, with an average of 15 days, in addition to public holidays.
Asia
In Asia, there are a wide range of costs associated with wages and benefits due to the mix of developed economies. Japan and South Korea have higher average wages compared to emerging markets like Vietnam and Indonesia, notable for their lower wages.
Standard benefits across most Asian countries usually include health insurance and pension plans, with some countries providing perks such as housing allowances or bonuses.
Indonesia’s requirements for employer tax contributions are similar to Japan and South Korea, at approximately 11%. And while the average Vietnamese wage is lower compared with other Asian countries, the employer tax contributions are significantly higher, coming in at 17.5% of an employee’s salary.
Time off policies also vary greatly across Asia. For example, China offers five to 15 days of leave while India’s leave allowances can reach as many as 33 days.
How to Budget When Hiring Abroad
The following tips will help you create a well-planned budget to manage international hiring costs.
Accurately Estimate Employment Costs.
Misjudging the financial requirements of international hiring can lead to unexpected expenses, so be sure to account for all potential costs, including:
- Compensation and benefits
- Social security contributions and local employment taxes
- Legal and compliance fees
- Work permits and visa expenses
- Payroll and human resource management systems
Prepare for Unforeseen Expenses.
Hiring internationally often involves unexpected costs, such as fluctuations in currency exchange rates, regulatory changes, or administrative delays. To mitigate these risks:
- Allocate contingency funds (around 10-20% of your projected budget).
- Stay informed about shifting labor laws and tax regulations. (Partnering with an Employer of Record will ensure you’re on top of these.)
- Create an emergency fund to handle unanticipated expenses.
Stay Flexible.
Your hiring budget should remain adaptable to accommodate evolving business needs and economic shifts. To maintain financial stability:
- Review budget allocations on a quarterly or biannual basis.
- Compare initial estimates to actual hiring costs.
- Adjust figures based on inflation, currency fluctuations, and new regulatory requirements.
Leverage Technology.
The right digital tools can simplify and enhance the accuracy of international hiring budgets. Such key resources may include:
- Employment cost calculators to estimate wages, benefits, and taxes in different countries
- Global payroll systems to facilitate payments and regulatory compliance
- HR software to streamline benefits administration and workforce management
- Employer of Record (EOR) platforms to legally and compliantly employ global talent, handle payroll, and other HR services.
Get Professional Guidance.
Navigating the complexities of foreign employment laws, tax structures, and compensation models can be challenging, but working with an Employer of Record like RemoFirst can simplify hiring internationally — and help you stay within budget.
For example, our expert teams can provide clear answers to all your questions about global employment, compliance, and countries with growing talent hubs for global expansion.
Tips to Reduce the Costs of International Hiring
Clearly, there’s a lot to consider when hiring internationally, so let’s take a look at several strategies you can use to control expenses when expanding into other countries.
Avoid Setting up a Local Entity.
To hire workers in another country you’ll often need to set up a subsidiary or branch of your company in that country, a process that can involve submitting detailed documentation, as well as paying high setup fees, plus ongoing maintenance fees.
But you can avoid this by hiring employees through an Employer of Record — just keep an eye out for these hidden EOR fees.
Evaluate Where to Hire.
The cost of hiring employees in other countries varies greatly depending on where talent is located. Certain countries have a low cost of living and low employer taxes, making them affordable choices for international hiring.
Consider the Costs of Cultural Expectations.
Local labor laws that dictate compensation, employer taxes, and employee benefits aren’t the only costs associated with hiring internationally. You also need to think about the cultural expectations around making competitive offers.
For example, certain countries, including the United States, don’t mandate specific benefits; however, it’s still common practice for employers to provide them.
Offer Compensation in Local Currency.
Paying employees in their local currency helps mitigate the risks of exchange rate fluctuations.
This provides stability for both employers and employees — employers can maintain consistent salary expenses, while employees don’t have to worry about fluctuating exchange rates affecting their earnings.
Use Salary Benchmarking.
To avoid overpaying while ensuring competitive compensation, you can leverage salary benchmarking tools. These resources help align salaries with local market rates, ensuring fair pay while optimizing labor costs.
Be Flexible.
Hiring a global workforce can be unpredictable at times, so be prepared to adjust start dates or negotiate salaries depending on the country where you’re hiring.
The Benefits of EORs When Hiring Internationally
As we’ve noted above, one way for companies to manage international hiring expenses and ensure compliance with all local laws regarding taxes and employee benefits is by working with an Employer of Record.
EORs like RemoFirst eliminate the need for companies to open a legal entity in international markets where they are hiring remote employees.
Instead, RemoFirst assumes responsibility for all formal employment tasks associated with the hiring process for international candidates, including drawing up employment contracts, onboarding, running payroll, and managing employee benefits. We can also perform background checks and assist with applying for work visas or work permits.
RemoFirst partners with local HR and legal experts to stay up to date on each country’s employment laws. Meanwhile, your company is still firmly in control of your team members’ work environment and work hours.
Your global employees' hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll via our platform, and we’ll pay your global employees on time and in their local currencies. That means no worrying about fluctuating exchange rates.
Book a demo to learn more about how we can help your company with its global employment needs.
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