International Payroll: How to Pay Staff Abroad

What is international payroll and how is it paid?

International payroll means paying employees who work in a country where your company isn't registered. It's different from a simple supplier payment because you need to follow local requirements for pay dates, tax withholding and reporting. The payroll process includes much more than just a wire transfer.

You can pay staff overseas through a local entity, such as a subsidiary or branch, by using an employer of record that hires them on your behalf, or as contractors if they're not employees. In this article, we're only looking at how the payment itself works, not the legal structure. If you're paying non-employees, see our detailed guide on how to pay international contractors.

How to pay salaries in local currency and time the exchange

Most employees expect their wages in their own currency, which means you'll need to convert from your home currency every payroll cycle. This can be done by your main bank, specialist currency provider or even some payroll processors.

Timing makes a difference. If you convert funds ahead of payroll, the exchange rate you get on that day sets the final cost. If the rate shifts before payday, someone needs to cover any difference. Some companies choose a specific date each month to convert, so they know expenses in advance. Others convert at payout time. Make sure you document the rate and which party takes on the risk of movement.

Transfer funds to your payroll account early enough so they clear before payday.
Set out in writing which side covers any change in rates.
Check public holidays in your employee’s country, since those can shift payout dates and settlement timelines.

If you run several salaries at once, batch payment files let you submit everything in one process. For more detail, see our article on bulk international payments.

Example: a company paying staff in two currencies

Imagine a German company that pays one person in Poland in zloty and another in the US in dollars. Money is collected in a euro account each month by the 20th, then converted and paid out on a defined payday in both those currencies. If the euro falls against the dollar before salary is sent, paying the US employee will use up more euros, so the payroll budget needs to allow for currency movement each month.

How do payroll providers and banks compare?

There’s a difference in what payroll providers and banks deliver. Payroll platforms usually calculate pay and deductions according to the employee's country, and may prepare a file for bank upload. Banks handle the movement and conversion of the funds themselves. Often, businesses use both together, choosing the software that fits their needs and a bank or currency specialist for payments.

If you’re comparing services, don't just look at the fees. Check which currencies and countries are supported, how soon payments arrive, the true total cost (including any rate markup), the deadline for payroll files, and how fast errors are fixed. You can use our business FX provider guide as a checklist for these points.

Frequently asked questions

Can I pay employees abroad from my home-country bank account?

Sometimes you can. Most banks support international salary payments, but sending money alone doesn’t meet your obligations for local payroll tax or social security. Whether this is allowed depends on the countries involved and your own setup. Consult a payroll provider or local expert before starting regular cross-border salary payments.

Do I need a local entity to pay staff in another country?

Not every country requires you to open a branch or local entity. In some places, an employer of record can act for you; in others, direct registration is necessary. The rules depend on where your employee works and what kind of work they do. Always check with a legal or tax adviser in that country before committing to payroll there.