The Salary Is 60%–80% of What You’ll Actually Pay
When you tell someone “we’re hiring an engineer at $100K,” you’re quoting the gross salary. The real cost — what leaves your bank account — is $112K in Singapore, $128K in Germany, $147K in France, and $155K in Brazil. The difference: employer-mandated contributions, benefits, taxes, and the overhead of whichever hiring model you use.
Understanding total cost of employment (TCE) by country and by model is the difference between a realistic international hiring budget and a budget that blows up in Q2.
Total Cost by Country: The Employer Contribution Gap
Employer contributions are mandatory charges on top of gross salary — social security, pension, health insurance, unemployment insurance, workers’ compensation. The employer pays these directly to government authorities. The employee never sees them as income, but they’re real costs.
| Country | Employer Contributions (% of gross) | What’s Included | $100K Salary: Employer Cost |
|---|---|---|---|
| US | ~7.65% (FICA) + state taxes | Social Security, Medicare | ~$108K–$112K |
| UK | ~13.8% (Employer NIC) | National Insurance | ~$114K |
| Singapore | ~17% (CPF, capped at ~SGD 6,800/mo) | CPF (retirement, housing, health) | ~$112K–$117K |
| Australia | ~11.5% (super guarantee) | Superannuation | ~$112K |
| India | ~12% (PF + ESI, on basic) | Provident Fund, Employee State Insurance | ~$108K–$112K |
| Netherlands | ~18–22% (social premiums) | Pension, health, unemployment | ~$118K–$122K |
| Germany | ~20.7% (social insurance) | Health, pension, unemployment, nursing care | ~$121K |
| Japan | ~15–16% (social insurance) | Health, pension, employment insurance | ~$116K |
| Brazil | ~35% (INSS, FGTS, etc.) | Social security, severance fund, education tax | ~$135K |
| France | ~43–47% (charges patronales) | Health, pension, unemployment, family, transport | ~$143K–$147K |
The OECD’s Taxing Wages reports are the best independent source for comparing employer contribution rates across countries. The World Bank’s Business Enabling Environment data tracks broader employment costs.
France is the outlier. A $100K employee costs nearly $150K before any overhead. Brazil is second — $135K before overhead. The US and Singapore are the cheapest for employers, which is why those markets attract headquartering decisions.
Total Cost by Hiring Model
The employer contribution is fixed by country — it doesn’t change based on your hiring model. What changes is the overhead each model adds.
Model 1: EOR
Added costs:
- Platform fee: $400–$699/month ($4,800–$8,388/year)
- FX markup: 0.5%–2% of total payroll
- Deposit: 1–2 months gross salary (working capital impact, not a recurring cost)
- Supplemental benefits markup: 10%–20% on optional benefits
Total cost formula: Gross salary + Employer contributions + EOR fee + FX markup
Example — $100K engineer in Germany: $100,000 + $20,700 (contributions) + $7,188 (EOR at $599/mo) + $639 (0.5% FX) = ~$128,527/year
Model 2: Own Entity
Added costs:
- Entity setup: $15,000–$50,000 (one-time, amortize over 3 years)
- Annual maintenance: $36,000–$96,000 (accounting, legal, audit, admin)
- Local payroll provider: $150–$500/month per employee
- HR administration: internal time or outsourced ($100–$300/month per employee)
Total cost formula: Gross salary + Employer contributions + (Entity overhead ÷ Headcount)
Example — $100K engineer in Germany (10 employees sharing entity costs): $100,000 + $20,700 + $5,400 (entity overhead: $54K/yr ÷ 10) + $3,600 (payroll: $300/mo) = ~$129,700/year
At 10 employees, entity cost per head is comparable to EOR. Below 10, EOR wins. Above 10, entity wins — but only marginally until you hit 20+.
Model 3: Contractor
Added costs:
- None on paper. No employer contributions, no benefits, no fees.
- Real costs: Higher hourly rate (contractors charge 20%–40% premium), misclassification risk (3–5x annual savings if reclassified), no IP protection (legal costs if disputed)
Total cost formula: Contractor rate × hours worked. No employer overhead.
Example — contractor equivalent in Germany: A $100K-equivalent salary commands roughly €75–90/hour as a contractor ($85–$100/hour). At 2,080 hours/year: $176,800–$208,000/year in direct payments.
Contractors are more expensive than employees on a fully loaded basis, before considering risk. The savings from avoiding employer contributions ($20,700 in Germany) are consumed by the contractor premium.
Hidden Costs That Blow Budgets
FX Conversion
If you pay in USD and your employees are paid in local currency, every payroll cycle involves a currency conversion. The spread matters.
- Best case: 0.5% above mid-market (Deel, Remote for major currencies)
- Typical: 1%–1.5%
- Worst case: 2%+ (smaller providers, exotic currencies)
On $1M annual payroll, the FX cost ranges from $5,000 to $20,000. For a 50-person international team with $5M in annual payroll, that’s $25K–$100K in FX costs annually. Ask every provider for their exact markup in writing.
Deposits
Most EOR providers require 1–2 months of gross salary as a deposit per employee. For a team of 20 at $7K average monthly gross, that’s $140K–$280K in working capital tied up. This isn’t a cost (you get it back when the employee offboards), but it’s a cash flow impact that affects runway calculations — particularly for startups.
Termination Costs
Every international employee carries a termination liability. In at-will markets (US), it’s near zero. In protected markets (Germany, France, Brazil), it’s 1–6 months of salary in severance, notice pay, and accrued benefits.
Budget for it. Set aside 2–3 months’ salary per employee in protected markets as a termination reserve. See our termination guide for country-specific numbers.
Compliance Overhead
Your team’s time managing international employment isn’t free. Someone reviews EOR invoices, coordinates with providers, answers employee questions about benefits, handles termination decisions, and manages the work-from-anywhere policy.
At 5 international employees, this is 3–5 hours/week. At 20, it’s a part-time job. At 50, it’s a full-time international operations role ($80K–$120K/year fully loaded).
Benefits Beyond Statutory
Statutory benefits are included in the employer contribution numbers above. But competitive hiring often requires supplemental benefits:
- US: Health insurance ($500–$1,500/month employer share), 401(k) match (3%–6% of salary)
- UK: Enhanced pension (5%–10% employer contribution), private medical
- India: Group mediclaim (₹5K–₹15K/month premium), meal vouchers
- Brazil: Private health (R$500–$1,500/month), meal vouchers (R$600–$1,000/month)
These add 5%–15% to total cost in most markets.
Country Cost Comparison: $100K Role, EOR Model
| Country | Gross Salary | Employer Contributions | EOR Fee | FX Est. | Total Annual Cost |
|---|---|---|---|---|---|
| US | $100,000 | $7,650 | $7,188 | $0 (same currency) | ~$114,838 |
| UK | $100,000 | $13,800 | $7,188 | $639 | ~$121,627 |
| Singapore | $100,000 | $12,000 (est., capped) | $7,188 | $639 | ~$119,827 |
| Australia | $100,000 | $11,500 | $7,188 | $639 | ~$119,327 |
| India | $100,000 | $12,000 | $5,988 ($499/mo) | $639 | ~$118,627 |
| Netherlands | $100,000 | $20,000 | $7,188 | $639 | ~$127,827 |
| Germany | $100,000 | $20,700 | $7,188 | $639 | ~$128,527 |
| Japan | $100,000 | $15,500 | $7,188 | $639 | ~$123,327 |
| Brazil | $100,000 | $35,000 | $7,188 | $639 | ~$142,827 |
| France | $100,000 | $45,000 | $7,188 | $639 | ~$152,827 |
How to Build an International Hiring Budget
Step 1: Define the role and market salary. Research local market rates. A “senior engineer” at $100K is competitive in Poland, below market in the UK, and above market in India. Use tools like Glassdoor, Levels.fyi, or provider salary benchmarks.
Step 2: Add employer contributions. Use the country-specific rates above. This is the largest non-salary cost.
Step 3: Add the hiring model overhead. EOR fee ($400–$699/mo), or entity cost per employee (entity overhead ÷ headcount).
Step 4: Add FX cost. 0.5%–2% of total payroll if paying in a different currency.
Step 5: Add supplemental benefits. Health insurance, enhanced pension, meal vouchers — whatever you’re offering beyond statutory.
Step 6: Add a contingency. 5% for statutory rate changes, FX volatility, one-off costs (contract amendments, offboarding fees), and benefits premium increases.
Step 7: Add termination reserve. 2–3 months’ salary per employee in protected markets.
The formula: Total budget = (Gross salary × 1.12–1.55 depending on country) + EOR fee + FX + supplemental benefits + 5% contingency + termination reserve
For a $100K employee in Germany through EOR, the realistic annual budget is $128K base + $5K supplemental + $6.4K contingency + $17K termination reserve = ~$156K all-in budgeted cost.
That’s 56% above the headline salary. Finance teams that budget at 1.2x gross salary in Germany will overshoot.
The Multi-Country Team: A Worked Example
You’re hiring a 10-person team across 5 countries. All through EOR.
| Role | Country | Gross Salary | Est. TCE (EOR) |
|---|---|---|---|
| Senior Engineer | Poland | $70,000 | ~$94,000 |
| Senior Engineer | India | $50,000 | ~$63,000 |
| Product Manager | UK | $90,000 | ~$111,000 |
| Designer | Brazil | $55,000 | ~$81,000 |
| Designer | Philippines | $35,000 | ~$45,000 |
| Sales Lead | Germany | $95,000 | ~$125,000 |
| Engineer | India | $45,000 | ~$57,000 |
| Engineer | Poland | $65,000 | ~$88,000 |
| Support Lead | Philippines | $30,000 | ~$39,000 |
| Marketing Manager | UK | $80,000 | ~$99,000 |
| Total | $615,000 | ~$802,000 |
Total salary: $615K. Total cost: $802K. That’s a 30% overhead — driven by employer contributions (biggest chunk), EOR fees ($65K/year), and FX. Add supplemental benefits and contingency, and the realistic budget is $850K–$870K.
The EOR fees ($65K/year for 10 employees) are 8% of total cost. Employer contributions are 20%+. The EOR fee is not the expensive part — the country’s statutory costs are.
When Not to Use This Approach
You’re hiring for roles where local market expertise or relationships matter. Sales, business development, government affairs, and enterprise account management roles need to be in the right market, not the cheapest one. The cost analysis is irrelevant if the geography is wrong.
You’re in a market-entry phase where headcount quality outweighs cost optimization. Your first 2–3 employees in a new market will define how that market goes for you. Hiring the cheapest available candidate in the name of cost efficiency is the wrong trade-off.
Your team is under 5 employees internationally. Running a formal cost modeling exercise — total cost of employment by market, EOR vs. entity breakeven — before you’ve made your first hire is premature. Pick a model, hire someone, and revisit the cost framework when you have actual data.
You’re comparing gross salary without factoring employer contributions. Employer social contributions range from 5% in Singapore to 45%+ in France. A comparison that ignores this will rank markets incorrectly and drive hiring toward places that look cheap on salary alone but cost significantly more in total employment cost.
Frequently Asked Questions
Which country is cheapest to hire in through EOR?
For raw cost, countries with low salaries and low employer contributions win: Philippines, India, and some LatAm markets (Colombia, Argentina). A senior engineer at $40K–$50K in India with 12% employer contributions costs $50K–$60K total. The same seniority in France costs $150K+.
Is it cheaper to hire contractors to avoid employer contributions?
Only if the relationship is genuinely independent. Contractor rates are typically 20%–40% higher than employee salary equivalents (the contractor prices in their own taxes, insurance, and business costs). And misclassification risk can cost 3–5x the savings. For full-time, integrated roles, EOR employment is cheaper than contracting on a risk-adjusted basis.
How do I handle salary benchmarking across countries?
Don’t pay the same salary in every country. Pay competitive local rates. A $100K salary in San Francisco is average. In Bangalore, it’s top 1%. Use local market data (Glassdoor, Payscale, or EOR provider benchmarks) and adjust for cost of living and local competition. Most companies pay 60%–80% of headquarters-market rates for equivalent roles in lower-cost countries.
Do EOR costs go down as I scale?
EOR platform fees are negotiable at volume. At 10 employees: $500–$550/month. At 25+: $350–$450/month. At 50+: $300–$400/month. But employer contributions don’t decrease — they’re set by law. The EOR fee is a small percentage of total cost, so even aggressive fee negotiation only moves the needle 2%–5% on TCE.
To connect this guidance with live hiring demand, see hiring your first international employee and remote jobs by country.
Further Reading
- EOR vs. Setting Up Your Own Entity — Breakeven analysis
- EOR vs. Independent Contractor — Cost comparison including risk
- 5 Ways to Hire Internationally — All models compared
- Hiring in Europe Guide — European cost specifics
- Compare EOR providers
- Top EOR reviews
- Hiring your first international employee
Further Reading
- Top BPO Companies 2026: Business Process Outsourcing Providers Ranked
- Professional Employer Organization (PEO)
- Top HR Outsourcing Companies 2026: HRO Providers Ranked
- Top RPO Companies 2026: Recruitment Process Outsourcing Providers
- Contractor vs Employee: How Classification Works Across Countries
- How Much Does RPO Cost? Recruitment Process Outsourcing Pricing Guide
- How Much Does BPO Cost? Business Process Outsourcing Pricing Breakdown
- How Much Does HRO Cost? HR Outsourcing Pricing Breakdown
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