Key takeaways

• There are four practical ways to pay someone abroad without registering a foreign branch: a direct contract, a contractor platform, a Contractor of Record, and an Employer of Record. Each shifts a different slice of the paperwork onto someone else.
• None of them removes misclassification risk by itself. That depends on how much control the London company actually exercises over the person’s day-to-day work, not on which paper they’re engaged through.
• Every route still leaves the finance team holding some paperwork of its own: an invoice that satisfies the contractor’s own country’s rules, evidence the person is genuinely self-employed there, and a record of what was actually agreed.
• Which option makes sense changes with headcount. A handful of contractors, a growing team of five to twenty, and a team past twenty each tend to suit a different mix of these four options.

Talking to someone who isn’t in London

A London founder hiring a developer in Lisbon, or a marketer bringing on a designer in Warsaw, increasingly means talking to someone the company has no legal presence near at all. Setting up a subsidiary just to employ one or two people abroad is expensive and slow, and most SMEs never get there. The practical alternative is to engage that person as a contractor rather than an employee, and there is more than one way to do it. Some companies sign directly with the individual and handle everything themselves. Others route the relationship through a contractor platform such as 4dev.com, which contracts with the person abroad and hands the London side one agreement and one set of documents instead of a growing pile of local paperwork.

Which route makes sense depends on how many people are involved, what the work looks like, and how much the finance team is prepared to manage in-house. None of the options below settles the underlying question of whether the person is really a contractor or, in substance, an employee working under a different label. What they do change is who handles the paperwork and who is on the hook when a tax authority abroad asks for an explanation, and that’s where the real differences between them show up.

Four ways to engage someone abroad

Direct contract

The London company signs a service agreement directly with the individual, with no intermediary between them.

• What the finance team does: drafts or adapts a contract per contractor, collects an invoice that meets that contractor’s own country’s requirements, works out how VAT applies to a cross-border B2B service (most VAT systems put the liability on the buyer rather than the seller for this kind of service, under a reverse-charge mechanism — the paperwork exists either way, it just sits on a different desk), and pays by bank transfer.
• Where it starts to strain: every additional contractor is another contract to track, another invoice format to check, another country’s self-employment rules to learn. Nothing here is hard on its own; it’s the accumulation that costs time.
• Best fit: a small number of contractors doing clearly scoped, deliverable-based work, where the company is comfortable being the direct counterparty.

Contractor platform

A platform contracts with each contractor on the company’s behalf and sits between the London business and the people it engages, producing the documentation itself. 4dev.com works this way: the client signs one agreement with the platform that covers every contractor engaged through it, wherever they’re based, rather than a separate contract per person. Each contractor completes their own onboarding, and the platform checks their documents and status as they go, so the finance team can see who’s ready without chasing the details itself.

• What the finance team does: signs one agreement instead of one per contractor, reviews the invoices and closing documents the platform generates instead of producing its own template for each country, and pays the platform rather than tracking a growing list of separate bank details.
• Where judgement still matters: the platform manages the paperwork of the engagement. It doesn’t decide, on the company’s behalf, whether a given person should be treated as a contractor in the first place — that call still sits with whoever assigns and supervises the work.
• Best fit: a growing headcount of contractors spread across countries, where the paperwork itself, rather than the underlying employment question, is what’s consuming time.

Contractor of Record

Some providers describe themselves as a Contractor of Record: the provider is the contracting counterparty for someone who remains, legally, a contractor rather than an employee. 4dev.com uses this description for its own model.

• What the finance team does: much the same as with a contractor platform — one agreement, generated documents — plus whatever the provider’s own contract says about what happens if a tax authority abroad challenges the classification.
• The part worth reading carefully: an indemnity clause in that contract is a claim the company can bring against the provider afterwards. It is not a defence the company can raise directly with a foreign tax authority, which will still look at how the work was actually structured and managed, not at who signed which agreement.
• Best fit: similar scale to a contractor platform, for a company that wants the provider to also stand behind the classification on paper.

Employer of Record

An Employer of Record actually employs the person on the company’s behalf, in the person’s own country, usually through the provider’s own local entity. This is a different arrangement from the first three: the person becomes an employee, with whatever statutory protections and costs come with that status locally, rather than a contractor.

• What the finance team does: pays a single recurring invoice covering salary, statutory contributions and the provider’s own fee, and stops worrying about local payroll registration — that responsibility moves to the EOR.
• Where it fits: a role that should really be an employment relationship — ongoing, full-time, closely directed — rather than a contractor engagement kept that way mainly to avoid the paperwork of hiring properly.
• Not every contractor-facing provider offers this. 4dev.com, for instance, works with contractors rather than employees on staff; an Employer of Record option is planned for 2027 and isn’t part of what the platform does today. Worth checking directly with any provider before assuming employment is on the table.

The contractor’s country has its own rules

Almost every classification test used abroad asks a version of the same questions:

• who controls the hours and the method of work
• whose equipment and systems are used
• how integrated the person is into the business
• whether they work exclusively for one client
• how economically dependent they are on that one relationship
• how long the arrangement has run

Courts and tax authorities weigh the substance of the relationship over the wording of the contract, and no engagement model changes that on its own.

Enforcement is also moving in a specific direction in several jurisdictions a London company might be sending work to. In the Netherlands, a long enforcement pause on the Wet DBA self-employment rules ended at the start of 2025, and penalties for intentional or grossly negligent misclassification became available from the start of 2026. In Poland, a district labour inspector will be able to reclassify a B2B contract as employment by administrative decision from July 2026, rather than only through a court case, though the decision can still be appealed to a labour court. Some countries go further still and name whoever benefits from the work as the employer by statute where the arrangement amounts to personnel supply in disguise: German law, for example, treats the client as the employer where staff were effectively leased without the licence that kind of arrangement requires.

There’s a related question that has nothing to do with classification: whether engaging someone abroad creates a taxable presence for the London company in their country at all. That turns on what the person actually does — a fixed place of business, or someone who routinely concludes contracts on the company’s behalf — not on which of the four engagement models was chosen to pay them. Picking a contractor platform or a Contractor of Record doesn’t answer this question either way; it’s a separate check, worth running before assuming any of these routes has already settled whether the company is exposed there.

Paperwork a London company keeps on file

Whichever route a company takes, some documents end up on the finance team’s own desk rather than a provider’s:

• A contract or service agreement setting out what was actually agreed with the person, or with the platform standing between the company and the contractor.
• An invoice that satisfies the contractor’s own country’s rules. A generic UK-style invoice usually won’t do: Brazil’s nota fiscal, for instance, has no direct English equivalent, and a template built for one country rarely passes muster in another.
• Evidence the person is genuinely registered as self-employed where they live. A Romanian contractor typically operates as a PFA, a Serbian one as a paušalac, a Brazilian one as a PJ — the specific label varies by country, but some form of local self-employment registration usually sits behind a valid invoice.
• A record of how the work was actually assigned and supervised, since that’s exactly what a foreign classification test, or a permanent-establishment question, would look at if either were ever raised.
• A note on how VAT was treated for the payment. Cross-border B2B services are commonly handled under a reverse charge, where the liability moves to the buyer rather than disappearing — worth having on file even where no tax is actually collected.

Choosing by team size

1 to 5 people abroad. A direct contract per person is manageable by hand at this scale: a handful of agreements, a handful of invoice formats to check, one bank transfer each. The administrative case for anything more structured is weak until the headcount starts climbing.

5 to 20 people. This is roughly where the manual overhead of direct contracts starts compounding faster than the team grows, and the one-agreement structure of a contractor platform or Contractor of Record begins to pay for itself: fewer contracts to draft from scratch, one place to check document status, one counterparty in the accounting system instead of a dozen.

20 or more people. Few companies at this scale run on a single model. A mix is common: some contractors through a platform or Contractor of Record, some roles moved to an Employer of Record where the work has in practice become an employment relationship, and occasionally a local entity where volume in one country justifies the cost of setting one up directly. Integrations and reporting tend to matter more here too, since finance is reconciling activity across several countries at once rather than checking invoices one at a time.

FAQ

Do we need to register a company abroad just to pay a contractor there? No. Paying someone as a contractor doesn’t require a local entity; that requirement only arises if the company sets up its own branch or subsidiary, or if the person’s role turns out, in substance, to be employment rather than a genuine contractor engagement.

Can we just wire the money and skip the paperwork? Practically, no. Even a straightforward direct contract needs an invoice that meets the contractor’s own country’s rules, some record of what was agreed, and a VAT treatment decided in advance. Skipping this doesn’t remove the requirement; it just means the company hasn’t got the answer ready if anyone ever asks for it.

What’s the actual difference between a Contractor of Record and an Employer of Record? A Contractor of Record engages someone who remains a contractor, legally, with the provider as the contracting counterparty. An Employer of Record actually employs the person locally on the company’s behalf, with the statutory obligations that come with genuine employment. They solve different problems, and using one where the other is what the role actually needs doesn’t fix the underlying classification question.