If you hired in a new country tomorrow, would you know exactly what to file, what to pay, and what proof to keep?
Most teams do not, because the rules shift by country and by deadline. A strong PEO or global EOR turns those rules into a process you can trust and verify.
What a PEO and a global EOR actually do
Let’s align on terms so your team can choose the right model without guesswork.
PEO vs Global EOR Comparison
| Model | Who is the legal employer | What they handle | When to use |
|---|---|---|---|
| PEO (U.S., often “CPEO”) | You, in a co-employment setup | Runs payroll and benefits, withholds and files U.S. employment taxes on a single aggregate Form 941, and attaches Schedule R to allocate wages and taxes to each client | You already have a U.S. entity and want clean filings, benefits administration, and an audit trail. |
| Global EOR | The provider in each country | Issues compliant contracts, runs local payroll and social security, applies local labor law while you direct the work | You want to hire where you do not yet have an entity. |
Pillar 1: Working time and paid leave
Time rules are the first place teams slip. In the EU, there are minimums you must encode into schedules and leave accruals.
- Weekly average work limit is 48 hours, daily rest is 11 hours, weekly rest applies, and workers get at least four weeks of paid annual leave. Build these into your rostering rules from day one.
Pillar 2: Payroll reporting and social insurance
Filings have names, formats, and hard cutoffs. Ask your provider to file in the right system and give you proof every run.
Payroll Compliance by Country
| Country | Required submissions | What “good” looks like |
|---|---|---|
| United Kingdom | Real Time Information. Send an FPS on or before payday, and EPS for adjustments. Auto enrolment minimum is 8 percent total with at least 3 percent from the employer. | FPS and EPS sent on time every run, pension defaults set to legal minimums. |
| France | Monthly DSN payroll file and PAS income tax withheld at source. | DSN filed via the official network, PAS remitted, and acknowledgements saved. |
| Germany | ELStAM electronic wage tax data pulled before first payroll. | ELStAM on file and evidence retained for audits. |
Pillar 3: Statutory “extra pay” and mandatory benefits
Some countries mandate a 13th-month salary or a statutory bonus. If it is not in the offer letter and calendar, you will have year-end surprises.
Mandatory Bonus / 13th-Month Pay by Country
| Country | What is required | Practical note |
|---|---|---|
| Brazil | 13th-month salary is mandatory by law. | Often split in two payments in November and December, plan cash flow early. |
| Mexico | Aguinaldo of at least 15 days’ pay, due by December 20. | Put it in offers and the payroll calendar from the start. |
| Philippines | 13th-month pay is required under Presidential Decree 851, due by December 24. | Keep DOLE guidance handy and file proof with year-end documents. |
Pillar 4: Posting people inside Europe
Short trips and secondments still trigger rules. When you “post” an employee to another EU country, you usually need to notify the host country and carry an A1 certificate that proves social security remains in the home state. Ask your provider to obtain the A1 and store it with travel records.
Pillar 5: Data protection and cross-border transfers
HR data moves between systems and countries. Use a lawful route and keep your paperwork straight.
- The EU-U.S. Data Privacy Framework has been in force since July 2023, and on September 3, 2025 the EU General Court upheld it. Certification gives a clearer legal basis for EU-to-U.S. HR data flows. Keep Standard Contractual Clauses for any flows outside the framework.
- China eased some cross-border data transfer requirements in March 2024. The CAC introduced exemptions and higher thresholds, which helps, but “important data” still needs careful review.
Pillar 6: Worker classification and contractors
Mislabeling contractors is costly. In the UK, use IR35 tests and HMRC tools. In the U.S., follow DOL and IRS guidance. If the role looks like employment and you lack an entity, hire through an EOR until you open one locally.
Pillar 7: Immigration and visa sponsorship
You can only sponsor visas where you or your provider hold the right licence. In the UK, a Skilled Worker sponsor licence comes with strict record-keeping and ongoing duties. Confirm licence status before you promise a start date.
Country overview: six markets most teams hit first
Use this cheat sheet to plan your first hires and your first payroll.
Global Payroll Compliance Snapshot
| Country | Payroll reporting | Statutory extra pay | Social security notes | One practical watch-out |
|---|---|---|---|---|
| United Kingdom | RTI submissions: FPS each payday, EPS for adjustments | None by law | Auto enrolment minimum 8% total, employer at least 3% | Register PAYE early, your first payroll depends on it. |
| United States | CPEOs file aggregate returns under their EIN and must attach Schedule R | None by federal law | CPEO handles withholdings and deposits per IRS rules, and provides client allocations | Ask for CPEO status and a redacted Schedule R page. |
| France | Monthly DSN and PAS withholding | No national 13th-month mandate | DSN via net-entreprises, PAS per tax authority | Make DSN part of the monthly close checklist. |
| Germany | ELStAM data used for wage tax | No national 13th-month mandate | Pull ELStAM before first run | Pull early to avoid wrong tax classes on first payslip. |
| Brazil | Monthly filings plus year-end obligations | 13th-month salary required | Treat 13th-month in cash forecasts | Split payments in November and December to smooth cash. |
| Mexico | Standard payroll filings to labor and tax agencies | Aguinaldo minimum 15 days due by Dec 20 | Include Aguinaldo in offers and accruals | Set a calendar reminder for the legal deadline. |
Tip for EU teams: if you post staff across borders, carry an A1 certificate and make any host-country notifications before work begins. Inspectors ask for this.
How to run multi-country compliance without drama
The best teams use one intake checklist for every new country, then let the provider fill the local details.
- Entity status and headcount plan.
- Working time, rest, holidays.
- Extra pay and allowances.
- Payroll filings and cut-offs.
- Data transfer route and vendor list.
- Visa sponsorship needs and licence status.
- Evidence to keep: UK RTI receipts, French DSN acknowledgements, German ELStAM logs, EU A1s, and, for U.S. PEOs, your page from Schedule R.
Role-based guidance you can act on this week
A little structure helps each leader focus on their part.
Role-Based Compliance Actions
| Role | What to care about | Three quick actions |
|---|---|---|
| Founder | Speed with guardrails |
Use an EOR where you lack an entity Ask vendors for real filing receipts Plan entity setup only once hiring is stable. |
| HRBP | Offers that match law and norms |
Add 13th-month or Aguinaldo where required Map EU working time rules to your HRIS Store proof of every filing. |
| COO | Evidence and repeatability |
Require monthly evidence packs: UK RTI, FR DSN, DE ELStAM, A1s for postings, and the U.S. Schedule R page. That is how you pass audits. |
FAQs
Is a “global PEO” the same as an EOR
Outside the U.S., services marketed as “global PEO” usually operate as an Employer of Record, where the provider is the legal employer in country and handles payroll, benefits, and local law while you manage the work. Use this when you do not have a local entity.
How does a U.S. CPEO reduce payroll risk
A CPEO files an aggregate Form 941 using its own EIN and must attach Schedule R to allocate wages and taxes to each customer. That clarifies who withholds, who files, and gives you a clean audit trail each quarter.
Can we send HR data from the EU to the U.S. safely
Yes, if the U.S. recipient is certified under the EU-U.S. Data Privacy Framework. The European Commission adopted the adequacy decision on July 10, 2023, and the EU General Court upheld it on September 3, 2025. Keep SCCs for flows outside DPF.
What proof do we need for short EU assignments
Carry an A1 certificate to show where social security is paid, and complete any host-country posting notices that apply. Keep copies with travel records.
Do we need to budget extra cash for year-end in some countries
Yes. Brazil requires a 13th-month salary, Mexico mandates Aguinaldo of at least 15 days by December 20, and the Philippines requires 13th-month pay by December 24. Add these to offers, calendars, and accruals.
CTA
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