Global payroll explained: models, providers and how to choose

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Global payroll means paying employees and contractors in several countries, each with its own tax rules, social contributions, payslip requirements, currencies and deadlines. For a small company with its first international hires, it can feel overwhelming, but there are only a few models to choose from, and each suits a different stage. This guide explains how global payroll works, compares the main models and providers, covers costs and compliance, and gives a practical plan.

What global payroll involves

Running payroll in one country means calculating gross pay, deducting income tax and social contributions, paying net salaries, issuing payslips, paying taxes to the authorities and filing returns on time. Global payroll is all of that, multiplied by each country, with different rules, calendars, languages and currencies.

The complexity comes from the details. Some countries pay monthly, others twice a month. Some require a thirteenth-month salary. Tax tables change on different dates. Payslips must include specific information. Authorities expect filings in local formats. And money has to arrive in the local currency on payday. Getting any of these wrong can mean penalties, unhappy employees or both.

The four main models

1. Employer of record (EOR): a provider employs your staff in countries where you have no entity and runs their payroll. Best for a few people per country.
2. Your own entity with local payroll: you set up a company in the country and use a local payroll provider or software. Best for larger teams in one country.
3. Global payroll platform or aggregator: one platform coordinates payroll across your own entities in many countries, often through local partners, with one dashboard and consolidated reporting.
4. Contractor payments: for genuine independent contractors, a platform that handles agreements, invoices and payments, without payroll deductions.

Most growing companies use a mix: an EOR for some countries, their own entities in others, and contractor payments for freelancers.

Model 1: employer of record

With an EOR, payroll is part of the service. The provider calculates pay, deducts taxes and contributions, pays the employee and files with the authorities through its local entity. You see one monthly invoice per country or one consolidated invoice. It is the fastest way to start paying someone abroad properly, and it covers employment law compliance too.

The trade-off is cost per employee, which is higher than running payroll through your own entity once you have several people in a country. See what an employer of record is and employer of record cost. Compare providers in the EOR ranking; current entry prices: Deel From USD 599 per employee per month, Remote From USD 699 per employee per month, Oyster From USD 699 per employee per month, Multiplier From USD 499 per employee per month (monthly contract).

Model 2: own entity with local payroll

Once you have a company in a country, you are the employer and must run payroll yourself, usually with local payroll software or an outsourced local provider. This gives the lowest cost per employee at scale and full control, but requires local knowledge, someone to manage the provider, and accounting and compliance for the entity itself.

Local payroll software is often the best value in countries where it is mature. We compare options country by country, for example in Kenya, Nigeria, South Africa, India, the UK and Malaysia. For US entities, see the US payroll ranking.

Model 3: global payroll platforms

When a company has its own entities in several countries, managing a different payroll provider in each becomes hard to control. Global payroll platforms solve this by giving one system, one data model and consolidated reports, while local payroll is processed either by the platform itself or by in-country partners.

These platforms suit mid-sized companies with entities in many countries and an HR or finance team to manage them. For a small company with one or two entities, they are often more than needed. Many EOR providers also offer global payroll for your own entities, which makes moving from EOR to entity smoother.

Model 4: contractor payments

Independent contractors are not on payroll; they invoice you, and you pay them without deducting tax. Contractor platforms handle agreements, invoices, payments in many currencies and tax documents. They are simpler and cheaper than payroll, but only appropriate for genuine contractors.

See the contractor payroll ranking, how to pay international contractors and contractor misclassification before choosing this route for anyone who works like an employee.

Choosing the right model by stage

• First international hire: an EOR, or a contractor platform if the person is genuinely independent.
• A few people in several countries: EOR for employees, contractor platform for freelancers, ideally from the same provider for one dashboard.
• Growing team in one country: consider your own entity and local payroll once EOR fees exceed the entity's running costs.
• Entities in many countries: a global payroll platform to consolidate.

Revisit the choice each year as headcount by country changes.

The global payroll cycle

Whatever the model, a monthly cycle looks similar:

1. Collect changes: new joiners, leavers, salary changes, bonuses, overtime, leave and expenses.
2. Submit inputs to each country's payroll by its cut-off date.
3. Review draft payroll and approve.
4. Fund payroll in time for the provider to pay on payday, allowing for currency conversion and transfer time.
5. Payslips are issued and net pay arrives.
6. Taxes and contributions are paid to authorities, and returns filed.
7. Reconcile payroll costs in your accounts.

Different countries have different cut-offs and paydays, so keep a calendar.

Currencies and funding

Employees are usually paid in their local currency. You either send funds in each currency, or pay your provider in one currency and let it convert. Conversion margins can be a hidden cost, so ask which exchange rate is used. Holding balances in several currencies in a multi-currency business account can help you time conversions and reduce fees; see what a multi-currency account is.

Exchange rate movements also affect budgets. A salary fixed in a local currency costs more in your currency if that currency strengthens. Some companies review international salaries annually partly for this reason.

Compliance: what can go wrong

• Wrong tax calculations from outdated tables or misunderstood rules.
• Late payments to tax authorities, triggering penalties and interest.
• Missing mandatory payments, such as a thirteenth-month salary.
• Incorrect payslips lacking required information.
• Year-end filing errors on employee tax certificates.
• Data breaches of sensitive payroll data.

Good providers keep tax tables current and file on time, but you still need to submit accurate inputs and fund payroll on time. Country payroll guides help you check the basics: PAYE in Kenya, PAYE in Nigeria, payroll in India and running payroll in the UK.

Data and reporting

Global payroll generates sensitive data: salaries, bank details, ID numbers and sometimes health information. Choose providers with strong security, clear data processing terms and appropriate data transfer safeguards, and limit internal access to people who need it.

For reporting, you want total employment cost by country and department, in one currency, so finance can budget and leaders can plan. Check that your provider can export payroll journals in a format your accounting software can import, which saves hours each month.

Costs of global payroll

Costs depend on the model. EORs charge a monthly fee per employee on top of salary and employer costs. Local payroll software in your own entity charges per employee or per company, usually much less. Global payroll platforms charge per employee per month, often with minimums and implementation fees. Contractor platforms charge per contractor per month or per payment.

Beyond fees, include currency conversion margins, bank transfer costs, the time your team spends on inputs and approvals, and the entity's own costs. Use the EOR cost calculator and contractor payroll cost calculator to compare options with real numbers.

Payslips and employee experience

Employees judge payroll by two things: being paid correctly and on time, and understanding their payslip. Make sure payslips are in a language they understand, explain deductions clearly, and give employees a way to ask questions. Self-service portals where employees can see payslips, tax documents and leave balances reduce questions for your team.

When a mistake happens, fix it quickly, explain what went wrong, and pay any shortfall off-cycle if needed. Trust in payroll is easy to lose.

Equity, bonuses and benefits across countries

Bonuses, commissions and equity are taxed differently in each country. Some must be paid through payroll with tax deducted; equity may be taxed at grant, vesting, exercise or sale depending on the country. Benefits such as health insurance or allowances may be taxable in one country and exempt in another.

Before launching a global bonus or equity plan, ask your provider or advisers how it will be taxed and reported in each country. A plan designed for one country can create unexpected tax for employees elsewhere.

Choosing a provider

1. List your countries now and planned in the next year.
2. Decide the model per country: EOR, entity payroll or contractor.
3. Check provider coverage and whether they own entities or use partners in your countries.
4. Compare total cost with real salaries.
5. Check integrations with your HR system and accounting software.
6. Test support quality before signing.
7. Review data security and contract terms.

Compare providers in the EOR ranking and on Deel vs Remote, Deel vs Oyster and Multiplier vs Oyster.

Moving from EOR to your own entity

When a country team grows, moving employees from an EOR to your own entity can cut costs. The move involves setting up the entity, registering as an employer, choosing local payroll, and transferring employees with new contracts that preserve their service and terms. Some countries have rules on how employment transfers between employers.

Many EOR providers support these transfers and can run payroll for your new entity, which keeps continuity for employees. Plan several months ahead and communicate clearly, since employees may worry about changes to their pay or benefits.

A practical starting plan

1. Map every person you pay outside your home country, and whether they are employees or genuine contractors.
2. Move any misclassified contractors to an EOR.
3. Put genuine contractors on one contractor platform.
4. Choose one provider for EOR and contractors if possible, for a single view.
5. Set a monthly payroll calendar with cut-offs and paydays.
6. Review costs by country every year and consider entities where teams grow.

Common mistakes

• Using contractors for roles that are really employment to avoid payroll.
• Missing country cut-off dates, delaying salaries.
• Ignoring currency conversion costs.
• Underestimating mandatory payments such as thirteenth-month salaries.
• Choosing a global platform before you need one.
• Poor access control on payroll data.

Example: a ten-person company across four countries

Consider a software company based in the UK with ten people: four employees in the UK, two developers in Kenya, two support staff in the Philippines and two freelance designers in South Africa and India. The UK employees are paid through the company's own UK payroll software. The Kenyan developers and Philippine support staff are employed through an employer of record, which runs local payroll and handles 13th month pay in the Philippines. The two designers genuinely freelance for several clients and are paid through a contractor platform against monthly invoices.

Finance sees three monthly bills: UK payroll, the EOR invoice and contractor payments, ideally exported into the accounting software. If the Kenyan team grows to six or seven, the company would compare EOR fees with the cost of a Kenyan entity and local payroll.

Questions