Can a US company hire an employee in Europe without opening an entity?
We are recruiters, not tax attorneys. Nothing on this page is tax or legal advice. The rules below are real and sourced, and every decision they touch belongs with your own lawyer or tax adviser.
Yes. An employer of record hires them on your behalf: Deel and Remote.com both publish $599 per employee per month, and you open nothing, register nothing, change nothing in US payroll. Two things belong on your list before the offer goes out: what the hire costs loaded, country by country, and a short conversation with your tax adviser about how the setup should look.
The question arrives the same way every time: the company finds the right person, the person lives in Porto or Valencia, and someone in finance asks what it takes to put them on payroll. You can hire them this month, without a European subsidiary, and the paperwork is the easy part. Two things deserve more attention than the paperwork: what the hire costs once contributions land on top of salary, and a setup question your tax adviser should answer before the contract is signed.
The three routes, priced
An employer of record is the default for a first hire, and for a reason. A licensed local company employs the person on your behalf, holds the contract, runs payroll and contributions, and sends you an invoice. You direct the work as if they were yours, because for every purpose except the legal one, they are. Deel and Remote.com both publish $599 per employee per month for the service, which sounds like a real cost until you set it against the contributions it administers.
The contractor route looks cheaper, and for a while it is. It holds when the person has real independence: their own clients, their own hours, their own tools. Treat a full-time team member as a contractor and most countries will eventually disagree with the label, at your cost. Where that line sits is a question for a local adviser, not for this page.
Opening your own entity is the answer for a team, not for a first hire. Registration, a local accountant, annual filings, and a wind-down bill if the experiment fails. The table is the short version of all three.
| Route | What happens | Cost | Where the risk sits |
|---|---|---|---|
| Employer of record | A licensed local employer hires them, runs payroll and contributions, and invoices you. You direct the work. | $599/mo published by Deel and Remote.com |
The EOR carries employment compliance. Permanent establishment risk stays with you. More on that below. |
| Independent contractor | They invoice you through their own registration or company. | Their rate, nothing else | Misclassification. A contractor who works like an employee risks being treated as one, with back costs. Where the line sits is a question for a local adviser. |
| Your own entity | You register a local company or branch and run local payroll. | Setup, then accounting, legal and filings that dwarf an EOR fee | All of it, and you wanted none of it. Justified for a team, not for a first hire. |
The setup question for your tax adviser
Hiring across a border can carry tax consequences for the company, and how much depends on the country, the role and the structure you pick. We are not the people to interpret any of that, and this page will not try. What we can tell you from watching these hires happen: companies that put the setup question to a tax adviser before the offer letter spend twenty minutes on it. Companies that ask after the fact tend to spend more.
Give your adviser the whole picture in one sentence: the country, the role, the structure you have in mind, and whether the person will sign anything on your behalf. Some countries carry specific rules advisers check, Portugal among them, and a deal-signing role tends to raise more questions than a delivery role. Which of it applies to you is their call, not ours.
The salary is not the cost
Employer contributions land on top of gross salary, and the spread between countries is wider than most US buyers expect. At a €95,000 hire:
| Country | Employer loading | On €95,000 | The detail that moves it |
|---|---|---|---|
| Spain | ~21% | ≈ €114,950 loaded | The nominal rate is near 32%, but contributions stop at a €61,214 base. The effective rate falls as salary rises. |
| Portugal | ~25% | ≈ €118,750 loaded | No cap. And salary is paid in fourteen instalments a year. Budget twelve and you are two months short. |
| Italy | ~38% | ≈ €131,100 loaded | Includes TFR severance accruing at 7.41%, payable even when the employee resigns. |
| US, for comparison | ~14–23% | ≈ €108,300–116,850 | Health insurance is the swing item: single cover near the low end, family cover near the high end. |
Rates verified against national social security schedules, August 2026. Loaded figures are the stated rate applied to €95,000.
The ranking moves with salary. Around €50,000, Portugal's flat rate beats Spain's, because the Spanish cap has no work to do at that level. From about €95,000, Spain wins. Run your own numbers in the salary calculator.
Who does what, so nothing falls between chairs
Four parties make a first European hire work, and the failures we see come from a job nobody owned rather than from any single bad decision.
| Who | Owns |
|---|---|
| Your EOR | The employment contract, payroll, contributions and local compliance. |
| Your tax adviser | Whether the setup creates tax obligations for the company, and which structure fits. |
| Your employment lawyer | Contract terms, and the exit if one ever comes. |
| Us | The person: sourcing, vetting, and comp guidance for this pool. |
The first three bill by the hour and are good at what they do. Our part is the one with no hourly version: an American in Europe who grew up in your buyers' market, writes their English, holds their hours, and joins on a European contract at 45 to 50% below the San Francisco number. That part is the job, and it is the only part we claim.
Questions employers ask
What does an employer of record cost in Europe?
Deel and Remote.com both publish $599 per employee per month. Quotes from smaller providers vary by country. Against the contributions themselves the fee is noise: at a €95,000 salary in Portugal you pay about €23,750 a year in employer contributions and about €7,200 to the EOR.
Can we pay them as a contractor instead?
For project work with real independence, yes. For a full-time team member, most countries will eventually disagree with the label, and unwinding that costs more than an EOR ever would. Where the line sits in a given country is an adviser question.
Which European country costs least for the employer?
It moves with salary. Around €50,000, Portugal wins. From about €95,000, Spain wins, because Spanish employer contributions stop at a €61,214 base while Portugal's have no cap.
Does one employee create a taxable presence?
It can, depending on the country, the role and the structure. It is cheapest answered by your tax adviser before the offer letter goes out. Some countries carry specific rules advisers check, Portugal among them.
Sources
The disclaimer at the top holds all the way down: the rules are sourced, the decisions belong with your adviser.
- Convention between the United States and the Portuguese Republic for the avoidance of double taxation, Article 5(4). IRS treaty documents.
- Deel, employer of record pricing, $599 per employee per month. deel.com/pricing, checked 31 August 2026.
- Remote.com, employer of record pricing, $599 per employee per month. remote.com/pricing, checked 31 August 2026.
- Spanish Social Security, maximum contribution base €61,214 per year, 2026 schedule. seg-social.es.
- Italian Civil Code, art. 2120 (trattamento di fine rapporto): accrual at one year's salary divided by 13.5, near 7.41%.
- Portuguese Labour Code: holiday and Christmas allowances, the two instalments that make fourteen.
Tell us the role.
We'll tell you if this pool fits it.
Twenty minutes, no deck. If the honest answer is "hire in the US" or "hire local," that's what you'll hear.
If this pool can't fill the role, we say so and charge nothing.