This is general information, not tax or legal advice. The rules for self-employed people differ a lot between countries, so before you sign, a short conversation with a local accountant is money well spent.
Three ways a company abroad can hire you
- As an employee of its own business in your country, if it has one.
- As an employee through an employer of record, a company that employs you locally on its behalf. See employer of record, explained.
- As an independent contractor. You stay self-employed, and you invoice the company for your work.
The first two make you an employee. The third changes quite a lot.
What changes when you are a contractor
- Tax is yours to pay. Nothing is deducted from what you are paid. You usually need to register as self-employed in your country and pay tax on your income yourself.
- So is social security, or your country’s pension and health contributions, where they apply to self-employed people.
- No paid leave or sick pay unless the contract says otherwise. A week off is a week unpaid.
- Benefits are not included. No employer pension or health insurance, unless you negotiate an allowance.
- Less security. Contracts can often be ended on short notice, with no severance.
- Money arrives as payments you invoice for, often in another currency, so exchange rates and transfer fees come out of your side unless agreed otherwise.
- More freedom, if the contract allows it: other clients, more say over how and when you work.
How to set a fair rate
A contractor rate should not be the same number as a salary. Start from the salary you would want as an employee, then add what an employer would otherwise have paid for:
- your social security and pension contributions;
- health insurance;
- paid holidays and public holidays, and some sick days;
- your equipment, internet and software;
- an accountant, and bank or transfer fees;
- gaps between contracts, when you earn nothing.
Add those up for your own situation. If, say, they come to a quarter of the salary you want, a contract worth the same to you is a quarter higher than that salary. Work out your own figure; the point is that the two numbers should differ, and by a meaningful amount.
What to check in the contract
- The rate and the currency, and who pays transfer fees.
- Payment terms: how soon after an invoice you are paid.
- Notice: how much warning either side must give to end it.
- Scope and hours: what you are expected to deliver, and whether set hours are required.
- Ownership of your work, confidentiality, and any clause stopping you working for others.
- Which country’s law applies if there is a dispute.
A contractor in name only?
The label on a contract does not decide what you are. If you work fixed hours, for one company, under its direction, with its equipment, much like an employee, the law in some countries may treat you as one. That is mostly the company’s risk, but it also means you may be missing protections you would otherwise have. If the arrangement looks like a full-time job in everything but name, it is worth asking an adviser.
When each one makes sense
Contracting can pay more and give you freedom, and for many people outside a company’s home country it is the only route in. Employment, directly or through an employer of record, gives you stability, benefits and a payslip, which can matter for things like loans and rental applications. Neither is better in general. What matters is that the rate fits the arrangement.
How Draftloop helps
- It knows how you want to work. Your profile has an employment-type preference, and Draftloop uses it for questions about employment type or working arrangement.
- It reads the posting too. When you press Autofill, wording such as “employer of record” counts as a sign the role is open where you live, and wording that limits it to one country is flagged in the results, so you can decide whether to carry on.
- The free job tracker checks each job’s location and working arrangement against your rules before adding it to your list. It runs with Claude Code on a paid Claude plan.