Using an Employer of Record to hire digital nomads: legal and compliance tips

Don’t risk costly compliance mistakes. Learn how an Employer of Record (EOR) can help you legally hire digital nomads in 150+ countries worldwide. Get in touch with our specialists today.

• An Employer of Record (EOR) allows companies to legally and efficiently hire digital nomads without setting up local entities, managing complex tax rules, or navigating local employment laws.
• Legal and compliance considerations, including visa status, tax residency, social security, and data protection, must be managed carefully when hiring internationally.
• Partnering with a reputable EOR helps ensure full compliance, reduces legal risk, and allows businesses to access global talent quickly and securely.

The rise of remote work has given rise to a new class of global workers: digital nomads. These individuals combine work with travel, moving between countries while maintaining full-time employment.

In 2025, the digital nomad trend continues, with an estimated 40 to 80 million people worldwide working remotely while travelling. The lifestyle appeals to people across many backgrounds, though over 60% are from the U.S. 26% travel with families in tow, and most are highly educated with 52% holding a bachelor's degree, 35% a master's degree, and 3% a PhD.

For companies seeking to tap into this agile, educated, tech-savvy workforce, navigating international employment laws can be a significant hurdle.

This is where an Employer of Record (EOR) becomes an invaluable solution. Let’s explore how businesses can use an EOR to compliantly hire digital nomads, the legal and tax implications to consider, and practical compliance tips to ensure smooth and lawful operations.

What is an Employer of Record (EOR)?

An Employer of Record is a third-party organisation that legally employs workers on behalf of another company. The EOR handles all employment-related responsibilities, including payroll, taxes, benefits, employment contracts, and compliance with local labour laws. Meanwhile, the day-to-day management of employees and running of the business remains overseen by the client company.

For digital nomads, who may reside and work in different countries each week, or each month, an EOR helps to streamline the hiring process and ensure legal compliance in each location.

For more information, read our Ultimate guide to Employer of Record.

Why hire digital nomads through an EOR?

Hiring digital nomads directly can pose a complex legal undertaking. Most countries have strict rules around employee classification, immigration, taxation, and employment rights. Non-compliance can result in fines, reputational damage, or legal action.

Using an EOR to hire digital nomads offers several key advantages.

Legal employment

The EOR ensures the individual is employed in accordance with local laws. This means that the employer and employee can rest assured that the employment agreement is completely compliant.

Compliance management

An EOR will ensure that employment contracts, tax filings, and social security contributions are handled professionally. As these differ greatly between regions, engaging the local expertise of an EOR is vital.

Faster onboarding

By using an EOR, companies can avoid setting up local entities – an undertaking which is often time-consuming and expensive.

Reduced risk

The EOR assumes much of the legal liability, shielding the hiring company from potential compliance pitfalls.

All of these advantages mean EORs are particularly valuable when hiring digital nomads who move across jurisdictions or work from countries where the employer has no legal presence.

Key legal considerations when hiring digital nomads

When choosing to hire remote employees across borders, business leaders must take into account several legal and regulatory considerations. Here are the most important factors to keep in mind:

Right to work and visas

Digital nomads may be working from countries where they do not have the legal right to be employed. While many work on tourist visas, this often violates local employment laws.

Employers must ensure that their remote staff are permitted to work in their host country under local visa regulations. Upwards of 68 countries now offer specific digital nomad visas, which allow legal remote work for foreign employers.

Tax residency and payroll obligations

Taxation is one of the most complex issues in hiring digital nomads. Where a digital nomad lives and works can affect their tax residency status, and in turn, create obligations for the employer. For example:

• The individual may become subject to local income tax in their host country.
• The company might trigger permanent establishment risk, meaning it could be liable to pay corporate taxes in that country.
• Social security contributions may also be due, depending on local laws.

An EOR can ensure payroll taxes are correctly withheld and reported in the appropriate jurisdiction, helping avoid costly surprises.

Employment law and workers’ rights

Each country has its own employment regulations, covering areas like annual leave, sick pay, maternity and paternity rights, notice periods, and termination rules. Digital nomads may be entitled to these protections even if they work for a foreign company.

A reputable EOR will draft localised employment contracts that reflect the host country’s employment laws, ensuring compliance and protecting both the employer and the employee.

Data protection and cybersecurity

Remote work across multiple countries introduces data security and privacy concerns. Employers must ensure their digital infrastructure complies with international data protection laws, such as the GDPR in Europe.

This includes secure access to company systems, encrypted communication channels, and robust IT policies. EORs often offer support in developing compliant remote working protocols and contracts with relevant data protection clauses.

Compliance tips for hiring digital nomads through an EOR

In order to make the most of an EOR partnership, businesses should follow these compliance tips when hiring digital nomads.

Choose a reputable EOR provider

Look for an EOR with a global presence, experience in the markets where your digital nomads reside, and strong legal expertise. Check for accreditations, client testimonials, and transparent service terms. Mauve Group has almost thirty years of experience, and hundreds of satisfied clients, as you can see from our Trustpilot and Success Stories.

Clarify roles and responsibilities

Clearly define the roles of your business and the EOR. While the EOR is the legal employer, you retain control over the employee’s day-to-day tasks, performance reviews, and work output. Make sure this division of responsibility is formalised in the service agreement.

Maintain visibility of employee locations

Encourage digital nomads to report their current working location to avoid legal risks. This helps the EOR stay compliant with local employment laws and ensures tax and immigration obligations are properly managed.

Review contract terms regularly

Since digital nomads often relocate, it's wise to periodically review employment contracts to ensure they remain compliant with the laws of the country where the individual is residing.

Stay updated on international regulations

Immigration, tax, and employment laws can change quickly. Partnering with an EOR that provides ongoing legal updates and advisory services helps keep your global hiring strategy aligned with regulatory developments.

For more on what to look for when evaluating an EOR – read this comprehensive guide.

When not to use an EOR

While an EOR is an excellent solution for hiring digital nomads, it may not be suitable in every case. For example, you may wish to avoid using an EOR if…

• the digital nomad is working in a country with very strict employment laws or no EOR presence.
• the individual is classified as a contractor and prefers freelance work over employment.
• your company is establishing a long-term presence in a country and setting up a local entity makes more sense strategically.

Understanding the limitations of an EOR ensures you use the model in the right scenarios and avoid potential misuse.

Empowering remote teams with compliant solutions

As the global workforce evolves, so too must hiring strategies. Digital nomads bring innovation, flexibility, and a diverse skill set to organisations willing to adapt. However, employing them legally and compliantly is no small task. Partnering with an Employer of Record offers a practical and efficient solution, minimising risk and simplifying international hiring.

With the right EOR, businesses can focus on talent and growth—without the legal headaches.

How Mauve Group can hep

Mauve Group is a leading global workforce solutions provider with almost 30 experience in international employment, payroll, and compliance services. A trailblazer of EOR, and operating in over 150 countries, Mauve helps organisations hire and manage global talent through its trusted Employer of Record services.

Whether you're expanding into new markets or hiring digital nomads across the world, Mauve Group offers expert guidance, bespoke solutions, and a people-first approach to international employment.

Learn more about how Mauve Group can support your remote hiring needs by contacting our team today.