How to hire and pay remote developers

The number of remote workers is growing and many companies start thinking of distributing their teams but don’t know how to handle it.

What you should do as a company

Once you found a remote developer you would like to hire, you should sign a subcontracting agreement with them and put in a fixed monthly retainer (salary) as remuneration. This way you won’t be liable to pay taxes for them. You can also add any benefits like annual leave allowance, stock options etc. in the agreement.

What the developer should do

The developer will be liable to pay tax in their country of residence on the payment they receive. They can pay it as an individual, freelancer, or they can register a legal entity such as an Individual Enterprise, which is likely to be more tax-efficient in most countries. If they register a legal entity, the agreement should be between the client and the legal entity rather than the individual. The developer will then need to send you the bank details so you can process the monthly payments.