These are the 3 types of contract to work remotely for a company in another country
3 min read

These are the 3 types of contract to work remotely for a company in another country

Find out the different types of contract possibilities to work remotely from a company in another country. Learn about Permanent Employment Contract, EOR, and Direct Freelance Contract now!
Person engaged in remote work
Photo by Yasmina H on Unsplash

The employment landscape is rapidly changing, and more and more people are getting into remote work. There are many benefits to working remotely, including the ability to set your own hours, work from anywhere in the world, and take advantage of flexible scheduling.

If you're thinking about making the switch to remote work, or if you're already working remotely, unaware of the contractual possibilities, there are a few things to keep in mind.

If you're working remotely, or plan to do so, then you must be aware of the different contract possibilities to work remotely for a company in another country.

Permanent employment contract

Two employees working together in an office
Photo by Gabrielle Henderson on Unsplash

In this case, you'd have a direct contractual relationship with your employer, with a permanent contract valid according to the local laws of your country.

To work remotely under a permanent employment contract, you'll need to have the right to live and work in the country where your employer is based. So the country you wish to work from should be the same as the company's headquarters or should have the company's subsidiaries.

In addition, you'll need to obtain a work permit from the authorities of that country.

Pros:

  • Direct relationship with the employer.
  • Benefits of local permanent employment contract.
  • No middlemen taking commissions and fees.
  • No hassle dealing with taxes.

Cons:

  • This option tends to pay the highest taxes.
  • Not flexible if you want to move to another country.

Contract through an agency or employer of record (EOR)

Employees working together in an office
Photo by Louise Viallesoubranne on Unsplash

In this contract, you and your employer will be connected through an agency, which acts as a middleman. You'll sign a local permanent contract with another company, which is the agency, which then signs a contract with your employer, while retaining a fee.

It's an intermediate relationship, where the contract is between you and the agency.

Pros:

  • No hassle dealing with taxes.
  • Benefits of a local permanent employment contract.

Cons:

  • No direct relationship with the employer.
  • Permanent contract tends to pay the highest taxes.

Direct freelance contract

Woman engaged in remote work
Photo by Paige Cody on Unsplash

This is where you'll sign a B2B service agreement between yourself (or through a personal company) and your employer.

It involves some bureaucratic overhead for you, but it's a direct relationship between you and your employer.

Direct freelance contracts offer more flexibility than any other option. Your country doesn't matter as much in freelance contracts, so you have better flexibility in moving to another country while still working. The ability to move can be a big advantage to earn and save more doing remote work.

However, you will be responsible for your own taxes, which can cause you headaches at times.

Pros:

  • Most flexibility in terms of incorporation and taxation.
  • Very flexible in case you want to move to another country.
  • Direct relationship with the employer in most cases.

Cons:

  • You need to take care of all taxes and bureaucracies yourself.

Conclusion

In conclusion, you should always be aware of the different contract possibilities to work remotely for a company in another country. Each type of contract has its own advantages and disadvantages, so choose the one that best suits your needs.

Follow us for more knowledge about remote work

We'll be publishing new articles every week, and new social media content every day. If you enjoyed this article, follow us on Twitter or Linkedin, and stay in the loop. Share our content and drop us a comment there. Let's help more people learn about remote work.