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International payroll guide

How to navigate the tricky waters of global payroll management.

As companies seek new markets to conquer, they’re more often setting up operations in countries outside the US. These expansion plans are often accompanied by the need to hire employees based in these new locales. It can be a complicated process, though, particularly if your company is venturing into global markets for the first time.

If you’re looking at overseas opportunities or already transitioning your operations to a country outside the US, this guide can help you navigate the often tricky waters of global payroll management.

What is international payroll?

International payroll is simply the process of paying employees based in other countries. These employees either work out of offices your company maintains or remotely as part of a distributed team of staff or contractors.

Where to start

While many international companies choose to outsource their international payroll, today’s online money specialists offer powerful tools you can easily integrate into your existing software, often at lower rates and fees than you’ll find with a bank or third-party vendor.

What to consider when managing international payroll

When setting up international payments for employees or contractors, you’ll want to think about:

  • Government regulations. Depending on where your employees live, you could be required to open an account at a local bank or sign legal contracts between your company and your staff.
  • Fees for third-party services. A company that provides payroll services at affordable rates could help jump-start your payments. You can choose to do it on your own after you’ve learned your way around.
  • Exchange rates. The stronger the rates you can get for your dollars — or the lower the spread on the mid-market rate — the more money you’ll save overall.
  • Compliance with tax and compensation laws. To avoid fines and minimize the impact of audits, learn what’s expected of you as far as taxation on foreign employees.
  • Local culture. Don’t let cultural differences slow down your business. Work to understand the values, communication styles and turnaround your distributed team might expect.

Foreign exchange rates

When you’re looking to save money on the exchange rate, look beyond the rate itself:

  • Weigh rates and fees. Depending on how much you’re paying out, a rate that’s close to the mid-market rate can make up for a higher fee. Fees can vary by amount, country and payment method.
  • Focus on borderless accounts. Increasingly, providers like Wise, OFX and WorldFirst are offering ways for businesses to streamline batch payments in multiple currencies through one account.

Learn more in our our comprehensive guide to international business transfers

Types of payroll service options

There are essentially three types of payroll solutions that companies can use: The DIY approach with payroll software, payroll services that handle the entire process for you and money transfer providers that actually send the money to your employees.

DIY payroll options

There are a couple of DIY solutions to your payroll needs, including payroll software as well as sites that allow you to pay freelancers through their own platform.

Payroll software can help unify your payroll process to maximize efficiency. When choosing payroll software, ensure that the software you use can handle international payments, that it’s compliant with financial reporting and record-keeping regulations and that it can offer in-country expertise.

If you’re looking to get out of having to handle payroll entirely, sites like Upwork offer access to a vast pool of freelancers that you can pay through the platform. Upwork arranges the contracts between your company and the freelancers you hire, and ensures your compliance with current regulations.

Payroll services

There are companies like ADP that you can use to process your entire payroll for you, which frees up your time so you can focus on bigger projects. These services simplify your payroll process into one automated solution so that it maximizes efficiency and there’s less room for manual errors.

They’ll also stay on top of the ever-changing rules and regulations of payroll policies in the countries your employees are working in to ensure you stay compliant. Many even have systems that sync your payroll data with other solutions, like time tracking and benefits.

Money transfer providers

Lastly, you’ll find money transfer providers like Payoneer and PayPal that help you transfer the money to your employees. Often, even if you use a payroll service, you still need a money transfer specialist to make the payment to the processor. Typically with these money transfer providers, you’ll sign up for an account that allows you to send and receive payments, which your recipients can then withdraw from their local bank.

Some of these providers have the option of setting up automated payments and batch payments to make the transfer process that much easier. For example, PayPal offers a full range of business services, including batch payments and immediate transfers, in more than 200 countries.

You can also consider local payment options, if available. For example, if you have employees in the Philippines, you can use the PayMaya mobile app. This allows you to send money from your bank account to your employees’ PayMaya accounts. A local bank account that supports PayMaya is a prerequisite in this case.

Best international payroll services

NameIdeal company sizeList of servicesPrices starting at
PayoneerSmall to large companies, with a $20 minimum transfer amountReceive payments, make payments, send mass payments, set up automated payments, make secure B2B transactions with escrow payments
  • Opening an account and making payments are free
  • Fee for credit card payments: 3%
  • Fee for eCheck payments: 1%
  • Withdrawals to a bank account in a different currency: Up to 2% of the mid-market rate
  • Withdrawals to a bank account in the same currency: $1.50 per transaction
  • High earners might have lower fees
TransferMateMedium to large companies, since the minimum transfer amount is EUR 1,000 and there’s no maximum transfer amountMake payments, request payments, send batch payments
  • EUR 5 fee on transfers up to EUR 5,000
  • $0 for transfers of EUR 5,000+
Halo FinancialSmall to large companies, with a $250 minimum transfer amount and no fees for transfers over EUR 5,000Regular payments, one-off payments
  • EUR 15 fee for transfers up to EUR 5,000
  • $0 for transfers of EUR 5,000+
PayseraSmall to large companiesMake payments, receive payments, sell event tickets
  • No fees for sending money to another Paysera account
  • Fee for sending funds to a bank account or e-wallet depends on the currency and transfer speed
PayPalSmall to large companiesMake payments, receive payments, request payments, one-off payments, bulk paymentsBecause PayPal tailors its tools to your needs, you’ll need to speak to a representative to learn more about its fees for merchant services
CloudPayCompanies with operations in at least two countries and 50 employeesManaged payroll services that can integrate with human capital management (HCM) and enterprise resource planning (ERP) software, payroll data analytics, compliance servicesContact sales for more information on its services
ADPFrom single-employee companies to multinational corporations with thousands of employeesOnline payroll solutions with automatic tax filing and computation of health benefits and retirement contributions, seamless integration with time and attendance tracking as well as all major accounting programs, offers a combined payroll service with human resources (HR) packageContact sales for a free quote

How to choose a payment service

When narrowing down your international payment options, compare the suite of business services against:

  • Transfer fees. Some providers charge a fixed fee for each payment, while others charge a fee that’s equal to a percentage of your total amount. Still others offer fee-free payments on large batch transfers.
  • Exchange rate. You’ll find online providers that claim to match the mid-market rate, though many charge a minimal spread on that rate.
  • Support options. Look for multiple ways to get help when you need it — like by email, phone, live chat or through an app.
  • Customer reviews. Read up on what others say about the service. Reviews are a good gauge of how the provider stacks up against the competition.
  • Transfer options. While many providers focus on bank-to-bank transfers, you could find business providers willing to allow the flexibility of credit or debit payments.
  • Turnaround. Faster payments make for satisfied, motivated employees. Weigh how long your workers will need to wait to see what they’ve earned.
  • Track record. With so much riding on your international payments, a long company history is a plus.

How to save on your money transfers

When you’re running an international business, every opportunity to save matters. Many online companies allow you to lock in exchange rates and otherwise protect your payments through specialized services that include:

  • Forward contracts. Lock in today’s rate for a future payment — from 30 days to up to 24 months later.
  • Limit orders. Specify your desired exchange rate, and your money’s automatically transferred when the market reaches that rate.
  • Best rate guarantees. You’ll find providers willing to guarantee their strong rates, matching a better deal you find elsewhere.

How to set up international payroll

Whether you decide to use a payroll service like ADP or go the DIY approach with payroll software, you may still need to use a money transfer specialist to actually make the payment to the processor. Check with the payroll service or software you’re using to see if you should set up an account with an international money transfer provider.

What to consider when choosing your payroll approach

When deciding which payroll solution is best for your business, you should ensure that you know about the following:

  • Employment regulations. Make sure that you comply with local employment laws. For example, in many Middle Eastern countries, you can’t take on staff unless you maintain a local office. Also consider employment contracts, minimum wage, overtime pay, rest days and termination practices.
  • Holiday schedules. Each country has its own set of national holidays. If you need your local employees to work on a holiday, let them know how much you’re willing to pay them. Often, holiday pay rates are set forth in local laws.

Other areas to work out before employing staff in other countries:

  • Sick leave. Indicate to your employees how many paid sick days they’re eligible for each year.
  • Company benefits. Make sure your employees understand healthcare benefits, bonuses and other incentives you’re willing — or not willing — to pay.

How to send money to employees internationally

The process of international payments varies across software, providers and whether you’ve integrated these transfers into your in-house system.

Most online money transfer specialists follow general steps:

  1. Log in to your online provider account.
  2. Enter your employee’s bank name, routing number and account number.
  3. Specify how much you’re paying your employee.
  4. Confirm the details of your money transfer.
  5. Wait for confirmation of completion — or tracking details.

How do bulk payments work?

With bulk payments, you send individual payments to multiple employees in one transaction.

You can either input the details into a system manually or, for more convenient payments, upload a spreadsheet or other data source containing the names of the employees and the amount owed to each.

PayPal, Wise and many other online providers will allow you to integrate APIs that can streamline bulk payments through your existing accounting software.

What are the benefits and drawbacks of international payroll?


  • Potentially lower costs. A distributed team can help you leverage cheaper labor or even time zone differences to get work done more efficiently.
  • Local connections. If you’re looking to move your business into an overseas market, a local workforce can help you easily navigate the language and culture.


  • Legal and compliance risks. If you don’t fully understand the country’s requirements, you run the risk of breaking the law.
  • Hidden costs. Depending on where your employees live, payroll taxes or required deductions could add to overall payroll costs.
  • Currency fluctuations. Exchange rates constantly fluctuate, which means you could end up paying your employees more than you intended.


Each country has its own laws that govern business and protect employees — some more nuanced than others. For instance, although the EU recommends no more than 48 hours in a workweek, France adopted a measure that enforces no more than 35 hours a week. And in Australia, employees are required to report large money transfers to the government or face a penalty.

Make sure that you understand the laws that govern payroll taxes and employment specifically, even if you don’t plan to open an office overseas. If you don’t comply with the law, you could be subject to steep fines and criminal penalties.

Top 5 countries that the US outsources work to:

  • China
  • The Philippines
  • Taiwan
  • Mexico
  • Vietnam

    International payroll tax

    It’s easy for a company to think that it’s OK to avoid taxes and other deductions if they operate solely out of the US. But if you’re paying employees or contractors who live in other countries, you run this risk of criminal liability if you choose to look the other way.

    One of the biggest deductions to consider for your overseas employees are taxes. Typically, companies deduct required taxes from an employee’s wages at the time of payment, with employers filing other taxes directly to their home country’s government annually.

    Like other legal requirements, each country enacts its own laws that govern payroll taxes. Take time to understand the payroll tax regulations of each country an employee lives in, or hire a professional who does.

    Before signing on with a third-party service or provider, ask how it helps you stay compliant with local taxes. Doing so can help you avoid the hefty fines that come with failing to comply with local regulations.

    Bottom line

    If you’re looking to expand your business into other countries, you’ll need to contend with how you’ll pay the employees or contractors who work for you.

    Understand the employment and tax regulations within each country your employees live in to avoid fines and other penalties that come with failing to comply with the law.

    Look for an international payroll system or money transfer specialist with the expertise to work with businesses like yours. They’re your best bet for the strongest exchange rates and lowest transaction fees you’re eligible for, keeping more of your hard-earned cash with your business.

    Frequently asked questions

    Where can I find information about employment and tax laws in other countries?

    Start with official sites run by the governments of those countries. If you don’t speak with the language, rely on professionals with the expertise to know which laws and regulations you’re required to comply with.

    How long will my international employees have to wait to be paid?

    It depends on the service or provider you use. Transfers through your local bank can take up to a week for delivery, whereas many online service providers can get your money to employees by the next business day.

    How you’re paying your employees can affect timing too. Generally, bank-to-bank transfers take one to two days to process, while you might find a provider willing to process same-day transfers with a debit or credit card.

    How can I set up regular payments?

    Most business payment providers allow you to set up recurring transfers either online or through an API integrated into your existing accounting software.

    What are some issues when paying employees overseas?

    If you follow the law and submit any documentation on time, you shouldn’t experience issues with the IRS.

    Still, any hassle is better than the alternative — stiff penalties, even jail time, if you choose not to follow the law.

    Whether products shown are available to you is subject to individual provider sole approval and discretion in accordance with the eligibility criteria and T&Cs on the provider website.

    Name Product Filter Values Fastest Transfer Speed Fees (Pay by Bank Transfer)
    OFX International Money Transfers (Business)
    24 hours
    Business customers: Send safe, no-limit transfers with no fees and competitive exchange rates.
    Within minutes
    From $0
    Xe has fast transfers with low fees and a range of foreign currency tools.
    Within minutes
    From $0
    MoneyGram has fast cash pick-up transfers to more than 350,000 agent locations worldwide.
    24 hours
    From 0%
    New Instarem customers will get a special FX rate and zero-fees on their first transfer.
    Instarem offers offers rewards on every transaction.
    Xe Money Transfer for Business
    24 hours
    Save your time and money with Xe Money Transfer for business.