Frequently Asked Questions
Answers to common questions about global payroll, employer burdens, and international compliance.
1. Why is the "Employer Burden" so much higher than the base salary?
When you hire an employee, the agreed-upon base salary (gross pay) is only part of the equation. Governments require employers to pay additional taxes on top of that salary to fund public services like healthcare, social security, unemployment insurance, and national pension schemes. Depending on the country, these mandatory employer contributions can range from 7% to over 40% of the base salary.
2. Do I need to set up a local entity to hire internationally?
No, but your options depend on the employment relationship. If you want to hire someone as a full-time employee, you either need to establish a legal entity (a subsidiary) in their country to run local payroll, or you must use an Employer of Record (EOR) service. An EOR acts as the legal employer on paper, handling all localized taxes and compliance on your behalf for a monthly fee.
3. Can't I just hire international workers as Independent Contractors?
While hiring contractors is easier because it bypasses employer taxes and EOR fees, it carries massive compliance risks. Almost every country has strict laws defining what constitutes an employee versus a contractor. If your contractor works set hours, uses company equipment, and only works for your business, local authorities will likely classify them as a defacto employee. The penalties for misclassification include severe fines and mandatory back-payment of taxes and benefits.
4. Does this calculator include Employer of Record (EOR) platform fees?
Our baseline calculator focuses strictly on statutory government taxes and mandatory localized contributions. Because EOR providers charge varying rates—usually either a flat monthly fee (e.g., $599/month) or a percentage of the payroll—those specific private vendor costs are not automatically baked into the statutory tax percentages. Always add your specific EOR platform fee to our calculation for a completely accurate budget.
5. What is a 13th-month salary?
In many Latin American, Asian, and European countries, a 13th-month salary is a legally mandated annual bonus, typically paid out in December. It is not a discretionary perk; it is a strict legal requirement. This means when budgeting for an employee in these regions, you must divide their target annual compensation by 13, not 12, or prepare for an additional month of base salary expenses at year-end.