Europe Remote Hiring Compliance 2025: Employer of Record vs Entity

Build a Compliant Remote Hiring Strategy Across Europe in 2025

Hiring remote employees in Europe requires navigating complex labour, tax, and social security rules. Compare establishing local entities with partnering through Employer of Record (EOR) solutions to scale safely.

Local Entity vs Employer of Record

• Entity: Offers full control, direct payroll, and brand presence but demands registration, corporate taxes, and ongoing compliance.
• EOR: Provides rapid market entry, manages payroll and contracts, yet may limit benefit customisation and cost more long-term.

Key Compliance Pillars

Ensure employment contracts reflect local labour laws (working hours, leave entitlements, termination notice). Manage payroll taxes, social security contributions, and mandatory benefits in each jurisdiction. Register remote workers with local authorities when required.

Cross-Border Social Security

EU Regulation 883/2004 dictates social security obligations. Employees working primarily in their home country remain covered there. For multi-country work, obtain A1 certificates to prevent double contributions.

Permanent Establishment Risks

Remote employees performing core revenue-generating activities may create taxable presence. Consult tax advisors to assess risks, especially when employees negotiate contracts or manage key accounts.

Data Protection and Security

Implement GDPR-compliant policies, secure data transmission, and ensure remote employees follow IT security protocols. Document consent and maintain records of processing activities.

Scaling Considerations

Blend talent strategy with compensation competitiveness. Use our calculators to benchmark salaries, offer localised benefits, and monitor costs. Reevaluate EOR vs entity models as headcount grows.

Final tip: Develop a remote hiring playbook outlining compliance steps, vendor selection criteria, and onboarding workflows to support distributed European teams.