Yes, a US company can hire someone in another country to work remotely, and it does this in one of three ways: as an independent contractor, through an Employer of Record (EOR), or as a direct employee on its own foreign payroll. The right choice comes down to how long the role lasts, how much control the company needs over the work, and how much compliance risk it is willing to carry. For most companies making their first hire abroad, the practical answer is contractor for short or independent work and an EOR once the role looks and feels like a real job. Below is how each model actually works, what it costs in real numbers, the tax paperwork involved, and how you, the worker, end up getting paid.

The three legal models, in one minute

A US company can't just 'put a foreigner on US payroll' the way it would a domestic W-2 employee. US payroll and W-2s are for work performed inside the United States. When the worker lives and works abroad, the company has to fit the relationship into a structure the worker's own country recognizes. There are three ways to do that.

Model 1: Hiring as an independent contractor

This is where most US companies start. The worker registers as self-employed (or as a small company) in their own country, signs a services agreement, sends monthly or milestone invoices, and is responsible for their own income tax and social contributions where they live. The US company withholds nothing and provides no benefits, paid leave, or severance.

The paperwork on the US side is light but specific. Before the first payment, the company should collect a Form W-8BEN (from an individual) or a Form W-8BEN-E (from a foreign company). This form certifies the worker is not a US person and that the work happens outside the US, which is what lets the company pay without the default 30% US withholding on certain US-source income. No valid W-8BEN on file, and the payer may have to withhold at that 30% rate. As of 2026, a signed W-8BEN is generally valid through the end of the third calendar year after the year it was signed (for example, one signed in 2026 typically runs through December 31, 2029), then it has to be refreshed. Some cases allow indefinite validity. Always confirm your situation with a CPA, because the rules turn on details most people get wrong.

The misclassification trap

The real danger with contractors is misclassification: calling someone a contractor when their country's law says they are actually an employee. Enforcement has tightened in much of the world. If a labor authority reclassifies the worker, the company can owe back taxes (both employer and employee side), social contributions, interest, penalties, and sometimes severance, all retroactively. The tell-tale signs that a 'contractor' is functionally an employee: they work the fixed hours you set, only for you, on your equipment, inside your internal tools, sitting in your daily standups, with no real independence. The more of those that are true, the weaker the contractor argument gets.

Model 2: Employer of Record (EOR), explained

An EOR solves the classification problem by making the worker a genuine, legal employee of the EOR, not of the US company. The EOR already has a registered entity in, say, Poland or the Philippines. It puts the worker on its local payroll, withholds the correct income tax and social contributions, provides the benefits local law demands (paid leave, statutory insurance, severance rules), and issues a compliant local contract. The US company still does all the actual managing: it decides what the person works on, sets priorities, runs performance reviews, and treats them as a normal teammate.

Think of the EOR as a compliance-and-payroll layer you rent. You get a real employment relationship, which is usually what you want for a long-term, full-time, integrated role, without registering your own company in every country you hire in. Well-known providers include Deel, Remote, Oyster, Velocity Global, and Papaya Global, among others.

What an EOR costs

The trade-off is that EOR fees add up. A common rule of thumb: once you have somewhere around 15 to 20 employees in a single country, opening your own local entity may become cheaper than paying per-head EOR fees. Below that, the EOR is usually the cleaner choice. Run the math for your specific country, since employer costs differ.

Model 3: Direct employment on a local entity

Here the US company stands up its own legal presence in the country, a subsidiary or branch, and employs the worker directly. This buys the most control and the lowest cost per person once you have a real team there, but it means registering a business, opening local bank and payroll accounts, filing local taxes, and living by local employment law on hiring and firing. It only pays off when you plan to hire several people in one country and stay for the long haul. Most companies grow into this model rather than start with it.

A risk US companies often miss: permanent establishment

Hiring abroad can create a 'permanent establishment,' a finding by a foreign tax authority that your US company is effectively doing business in that country and therefore owes corporate tax there. The risk climbs when a remote worker does things like sign contracts on the company's behalf or run core revenue operations from inside the country. An EOR reduces this exposure (it does not automatically eliminate it) because the employment sits with the EOR's entity. The rules are technical and hinge on tax treaties, so treat this as a flag to raise with a cross-border tax advisor, not something to self-diagnose.

How to decide: a quick framework

Getting paid as an international contractor for a US company

If you're the worker, here's the practical side. As a contractor you'll typically sign a services agreement, submit a W-8BEN, and invoice in an agreed currency (often USD). You declare that income and pay tax where you live; the US company won't do it for you. Pick a payment method before the first invoice so fees don't quietly eat your pay.

Hired through an EOR instead? Then you're an employee of the EOR: paid in local currency on a normal payroll cycle, taxes already withheld, with a payslip you can hand to a bank or landlord. Less to manage, but you give up the deductions and flexibility of being self-employed.

The one rule that protects you from scams

Remote international hiring attracts fraud, so memorize this: a legitimate employer never asks you to pay to get the job, never asks you to buy your own equipment with a check they mailed you, and never asks you to move or forward money. Real onboarding collects tax forms (like a W-8BEN) and your banking details so they can pay you. Money flows to you, not from you. If a 'recruiter' wants gift cards, crypto, a 'training fee,' or asks you to deposit a check and wire part of it back, it's a scam. Walk away.

Bottom line

US companies hire international remote workers as contractors, through an EOR, or as direct employees, and the choice is mostly about permanence and control. Contractors are fast and cheap but carry classification risk. EORs cost more per head but make a long-term remote hire fully legal and low-hassle. Local entities win at scale. Tax and employment rules differ by country and change over time, so confirm the specifics with a CPA or employment attorney and check the official sources (IRS, USCIS, and the labor and tax authorities in the worker's country) before you sign anything.