What to Ask Your Accountant Before Hiring Staff in Another Country

A UK company wants to hire its first employee abroad. The founder has agreed a salary in principle and hopes the candidate can start next month. The finance lead has a different set of questions. Which entity will employ the person? Who will run local payroll and pay employer charges? Will a home office or sales authority create a local business presence? The proposed salary is one line of the budget. The company needs to decide how the job will work before it can make a reliable offer.

Prepare a description of the role for your accountant and local employment adviser. Include where the person will usually work, where they will travel, whom they report to and whether they will negotiate or sign contracts. Say whether the arrangement is permanent or a temporary assignment. An answer for a UK employee sent abroad for a few weeks may not fit a person hired locally to work there indefinitely.

Identify who will employ and pay the person

Ask which options are available in the country. The business might be able to employ the person directly with local registration, use a local company or arrange employment through an external provider where the law permits it. Each arrangement changes who signs the contract, runs payroll, handles benefits and carries out reporting. Ask the adviser to describe each role in writing. A provider may perform administration while the business still has responsibilities of its own.

If you are considering a contractor agreement, ask the local employment adviser to assess the working arrangement as it will operate. Describe the level of supervision, working hours, equipment, ability to work for others and who carries commercial risk. The terms and practical facts matter when determining status under the applicable rules. Check the conclusion before using an invoice-based budget for a role that will be managed like an employee.

Ask for the total cost in the currency you will pay

Start with the gross salary, then ask the accountant to show employer social contributions, payroll fees and the cost of required benefits or insurance. Include any allowances, employer pension contributions, bonuses and costs of equipment or workspace. Ask which figures are estimates and how the cost changes if salary is paid in a different currency from company revenue. Put each cost on the date it will be paid rather than dividing a full year’s cost evenly across the months.

HMRC’s guidance for employees working abroad addresses PAYE and National Insurance based on circumstances including location and duration. Ask which deductions the UK payroll needs to make, whether the company has local payroll obligations and which rules determine social security. If an assignment involves a certificate or a social security agreement, ask who applies and which dates it covers. For an ongoing local hire, ask the local adviser how registration, withholding and employer contributions work in that country.

• Payroll timing. Ask when payroll must be registered, when salary must be paid and when deductions and contributions are due.
• Benefits and expenses. Check how equipment, insurance, travel, expenses and other benefits are recorded and taxed. Confirm who approves and reimburses them.
• Year-end reporting. Establish who prepares statements, tax forms and reconciliations. Ask how you will obtain the underlying records.
• Changes. Ask what happens if the person moves, works regularly in the UK, becomes a manager or starts negotiating contracts in the destination.

Compare how the arrangements handle responsibilities that sit outside routine payroll. You may need a local employment contract, a way to prove the person can work there and a process for confidential records. Ask what the business must maintain if it has no office in the country. Give the employment adviser the same description of working hours, reporting lines and benefits that appears in the budget. This gives them a chance to identify a cost or term the finance team has missed before the offer goes out.

Ask the accountant for a sample monthly reconciliation. It should show gross earnings, employee deductions, the net amount sent to the worker, employer costs and the payments due to each authority or provider. If you are billed in sterling but salary is paid in local currency, ask which exchange rate applies and how adjustments are shown. Check the cost of a bonus month or a month with expenses. A quote based on a standard month may give a different picture from the period when the company has to pay the highest bill. Add a named contact for correcting any discrepancy.

Review what the job means for the company

Give the corporate tax adviser the same job description. Explain where the person works, whether the company funds or controls their workspace and what authority they have with customers. Ask whether those activities create a taxable presence or other registration requirement. HMRC’s definition of permanent establishment for UK cases describes fixed places of business and certain agent arrangements. The answer for the destination depends on its rules and any treaty.

Imagine the company is choosing between a developer and a sales director. The developer will work from home with no contact with customers. The sales director will meet customers every week, agree commercial terms and prepare contracts for signature. Both cost the same salary on paper. The operating facts are different, which is why the finance lead needs a review of the actual role rather than a single answer covering every hire in the country.

Ask the accountant what changes if the company employs a second or third person there. A workspace, local management or a new line of activity can alter the position. If you are testing a market, agree a review point before hiring again or signing a lease. That lets you compare the ongoing cost of the current arrangement with the cost of a local entity using the volume of work you expect.

Decide who is responsible for the first month

1. Prepare the role and work-location brief. Record the proposed employer, salary, work pattern, authority and start date. Send the same brief to the accountant and local employment adviser.
2. Compare viable arrangements. Ask each adviser to identify registration, tax, employment and reporting requirements. Compare the full cost and timetable of each option.
3. Schedule the setup. Confirm which registrations, employment paperwork and accounts must be ready, who completes each one and how long it takes. Link those steps to a realistic start date.
4. Review the first payroll. Check the amounts paid, deducted and recorded, and that the employee receives the documents they need. Save the instructions for the next cycle.

Plan for a change or exit as part of choosing the arrangement. Ask who handles notice, final payroll, accrued benefits and equipment return. If a provider will be involved, ask how records can be retrieved after its contract ends and who owns the communication with the employee. Knowing how the arrangement can end helps you judge its cost and flexibility before entering it.

Return to the cash budget with the accountant’s figures. Put the setup fee, regular payroll, employer costs and first reporting obligations on the calendar. If the company can afford the salary but cannot meet the setup date, adjust the offer date rather than leaving the candidate to absorb the delay. That gives both sides a start date supported by an employer, a contract and a working payroll process.