When to make your first European hire

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.

Most startups ask this backwards. The board approved the req, recruiting came back with a number the budget does not reach, someone prices a European entity, hears what it costs, and the idea dies there. The entity is the wrong question. Ask whether one role, one you already need, costs less and covers more from Valencia than it does from San Francisco.

Test one, does the money work

Take the req you cannot fill at the US price. Put the San Francisco number next to the European one for the same job, then load both with employer contributions, because the salary is not the cost.

Base salaries, Built In 2026 tech data. The European base takes 50, 49 and 45% off the San Francisco figure by role, then carries Spanish employer contributions of 21%. US loading of 14% covers single medical; family cover runs nearer 23% and widens every row. Dollar figures at the 26 August 2026 rate.

Employer contributions differ by country and they move the answer. Spain charges about 21% at a €95,000 salary, because contributions stop at a €61,214 ceiling. Portugal charges about 25% and does not cap, and pays fourteen salary instalments a year rather than twelve, so a budget built on twelve runs two months short. Italy charges about 38%. Below roughly €50,000 Portugal costs least. Above €95,000 Spain does. Run your own figure on the calculator.

Three routes carry one hire, and they price differently.

An employer of record

The provider employs the person, you direct the work. Deel lists $599 per employee per month and Remote $699, both read on 1 September 2026. Employer contributions sit on top at the rates above. A year of either provider costs between two and three weeks of the San Francisco salary it replaces, which makes it the smallest line in the decision and the one buyers spend the first call on.

A contractor who invoices you

No employer contributions, no provider fee, you pay the invoice and nothing else. It fits project-shaped work where the person sets their own hours, uses their own equipment and carries other clients. A full-time role wearing a contractor agreement is the version your accountant should look at before you sign it, not after.

Your own entity

Registration, local payroll, an accountant and filings, all before anyone starts work. Nobody opens one for hire number one. We priced the alternatives in hiring in Europe without an entity.

Test one passes if the loaded European cost sits below your budget and the loaded US cost sits above it.

Test two, do the hours work

Count the hours your customers work after your team stops. A US East Coast team finishing at 18:00 leaves the European working day finished hours ago. Run it the other way and one hire in Lisbon holds the entire US day inside a single shift.

Lisbon runs five hours ahead of New York, Madrid six, for most of the year. Rest requirement: EU working time directive, Article 3.

Europe requires 11 hours off between shifts. A Lisbon shift ending at 02:00 cannot start again before 13:00, so Pacific coverage takes the European day with it. East Coast coverage leaves the morning intact. Decide which one the role is for before you write the job description.

The clocks also drift apart. Europe moved to summer time on 29 March 2026 and leaves it on 25 October. The United States moved on 8 March and leaves on 1 November. For about four weeks a year Lisbon sits four hours ahead of New York instead of five, and Madrid five instead of six. Every recurring meeting shifts by an hour, twice, in the windows where the two calendars disagree.

Test two passes if your customers work more than three hours past your team's day, or your team already holds evening calls to reach them.

Test three, does the role already run remote

Look at the role as it exists today, before you move it six time zones.

It runs remote already if decisions arrive in writing, if the work leaves artefacts a reader can pick up cold, and if the person who will manage it has managed someone they never see. It does not if the role depends on being asked a question at a desk, if the manager measures presence, or if the scope lives in one person's head.

Test three passes if the role would survive its owner taking three weeks off.

Sources