International hiring has become a standard strategy for many companies in Europe.
A startup in Berlin may discover a highly skilled software developer in Zagreb. A fintech company in Vienna might want to build an engineering team in Southeast Europe. A SaaS company in Stockholm could find that the perfect DevOps engineer lives in Croatia or Serbia.
However, after identifying the right candidate, companies often face a practical question.
How can you legally hire someone in another country if your company does not have a local entity there?
Opening a subsidiary abroad can take months, require significant legal work, and create administrative complexity. Companies must understand local employment law, set up payroll systems, and manage taxes and social contributions.
For this reason, many organizations rely on the Employer of Record (EOR) model to hire internationally in a compliant and efficient way.
What Is an Employer of Record
An Employer of Record is a company that legally employs workers on behalf of another organization in a specific country.
The EOR becomes the official employer responsible for employment contracts, payroll, taxes, and compliance with local labor laws. At the same time, the client company manages the employee’s daily work, responsibilities, and performance.
In practice, the structure looks like this:
- The client company selects the candidate
- The EOR signs the employment contract locally
- The employee works directly with the client company
- The EOR manages payroll, taxes, and employment compliance
This structure allows companies to hire talent abroad without establishing their own legal entity in the country.
Why Companies in Germany, Austria, and Scandinavia Use EOR
Companies across Northern and Central Europe increasingly rely on distributed teams.
However, expanding into another country traditionally requires several complex steps.
Companies usually need to:
- register a legal entity
- understand national employment laws
- establish payroll infrastructure
- manage taxes and social contributions locally
For organizations that want to hire only a few employees in a new market, this process can be slow and costly.
Employer of Record services simplify international hiring by providing the legal and administrative infrastructure needed to employ people in another country.
Key benefits include:
Faster international hiring
Companies can onboard employees in another country within weeks instead of waiting months to establish a subsidiary.
Reduced legal risk
Local employment laws vary widely. An experienced EOR partner ensures that contracts, payroll, and employment conditions follow national regulations.
Access to global talent
Organizations are no longer limited to hiring only within their home market.
Operational simplicity
Payroll administration, tax reporting, and employment documentation are handled by the EOR provider.
The Cost and Time Difference
One of the main advantages of the EOR model is the difference in speed and cost compared to opening a local company.
Traditional expansion can involve significant investment and preparation.
| Hiring model | Time to hire | Initial setup cost |
| Opening a subsidiary | 6 to 12 months | €50,000 to €150,000 |
| Employer of Record | 1 to 2 weeks | €0 to €5,000 |
In addition to setup costs, companies that open a subsidiary must manage accounting, HR operations, and regulatory compliance in the new country.
With the EOR model, most of these responsibilities are handled by the service provider.
Why Croatia and Serbia Has Become a Popular Hiring Destination
Croatia has gained significant attention in recent years as an attractive location for international hiring.
Several factors make the country appealing to companies in Germany, Austria, and Scandinavia.
Strong technical talent
Croatia has a well developed engineering education system and a growing community of experienced developers, DevOps specialists, and data engineers.
Many professionals have experience working with international companies and remote teams.
Competitive salary levels
Hiring costs are typically 30 to 40 percent lower than in Western Europe while maintaining a high level of technical expertise.
This cost advantage allows startups and scaleups to build strong engineering teams while managing budgets efficiently.
High English proficiency
English is widely spoken in professional environments, which allows seamless collaboration with international teams.
European Union market access
Croatia is part of the EU and operates in the Central European time zone. This makes collaboration with companies in Germany, Austria, and Scandinavia very practical.
Roles Often Hired Through EOR
Employer of Record services are used across many industries, but they are particularly common in technology.
Companies frequently hire roles such as:
- software engineers
- DevOps engineers
- QA specialists
- data engineers
- AI and machine learning specialists
These roles are often difficult to fill locally, which encourages companies to search internationally.
How the EOR Hiring Process Works
Once a company has selected a candidate, the onboarding process through an Employer of Record provider is usually straightforward.
A typical workflow includes several steps.
Step 1: Hiring preparation
The company and the EOR provider review the role, salary structure, and employment conditions.
Step 2: Local employment contract
The EOR prepares and signs a compliant employment contract with the employee.
Step 3: Payroll and tax setup
The employee is added to the local payroll system and taxes and contributions are arranged according to national regulations.
Step 4: Ongoing HR and compliance support
The EOR continues to manage payroll administration, employment documentation, and compliance with local labor laws.
In most situations this process can be completed within one to two weeks.
Example Scenario: Hiring Through an Employer of Record
Consider a common situation for many companies in Europe.
A technology company based in Germany identifies a talented developer in Croatia. The candidate has strong experience and fits the team perfectly.
However, the company does not have a Croatian legal entity.
Opening a subsidiary would require months of preparation and considerable administrative work.
Instead, the company partners with an Employer of Record provider that already has the legal and operational infrastructure in place.
Through this model, the developer can be hired locally, receive a compliant employment contract, and start working with the company within a short period of time.
The Importance of Local Expertise
Although many global platforms offer Employer of Record services, local expertise remains extremely important.
Employment regulations vary significantly between countries, and compliance requires knowledge of national labor law, payroll requirements, and tax obligations.
Local EOR providers often play a crucial role in managing these operational details.
For companies hiring in Croatia, Serbia or the broader Southeast European region, working with a partner that understands the local employment environment can make the hiring process much smoother.
This is where Ambacia supports international companies.
Ambacia provides Employer of Record services that help organizations hire employees in the region while remaining fully compliant with local regulations. The company works with clients from Germany, Austria, and Scandinavian countries that want to expand their teams without opening a local entity.
With experience in international hiring, payroll administration, and employment compliance, Ambacia helps companies focus on building their teams while the legal and administrative framework is handled professionally.
When Employer of Record Is the Right Solution
EOR services are particularly useful in several situations.
Hiring the first employee in another country
Opening a legal entity for a small number of employees often does not make financial sense.
Testing a new market
Companies can explore new markets before committing to permanent expansion.
Building distributed teams
Remote work has made global hiring far more common.
Accessing specialized expertise
Certain technical skills may be easier to find in international markets.
In these situations, working with an experienced Employer of Record provider can significantly simplify the hiring process.
Contractor vs Employee: Understanding Compliance Risks
Some companies initially consider hiring international workers as contractors.
However, this approach can create legal risks if the contractor is effectively working as a full time employee.
This situation is known as worker misclassification and can lead to penalties, tax liabilities, and legal disputes.
Employer of Record services provide a compliant employment structure that protects both the company and the employee.
The Future of International Hiring
The trend toward distributed teams continues to grow.
Companies increasingly recruit talent internationally in order to remain competitive and access specialized skills.
Several factors are driving this change:
- remote first work models
- global competition for technical talent
- digital collaboration tools
- increasing workforce mobility
Employer of Record services are becoming an essential part of this global hiring infrastructure.
Final Thoughts
Companies in Germany, Austria, and Scandinavia are increasingly building international teams to access global talent and scale their businesses.
However, hiring employees abroad requires a strong legal and administrative framework.
Employer of Record services provide a practical and efficient solution by allowing companies to hire internationally without establishing a local entity.
For organizations that want to expand into Croatia or the broader region, working with an experienced partner such as Ambacia can make the process significantly easier.
With the right support structure in place, companies can focus on building great teams while staying fully compliant with local employment regulations.
FAQ
1. What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a service that allows companies to legally hire employees in another country without establishing a local legal entity. The EOR becomes the legal employer, handling contracts, payroll, taxes, and compliance, while the client company manages the employee’s day-to-day work.
2. Which countries does Ambacia support for EOR services?
Ambacia provides EOR services in Croatia and Serbia, enabling companies from Germany, Austria, and Scandinavia to hire talented professionals in the region quickly and legally, without the need to set up a local company.
3. What are the benefits of using an EOR in Croatia or Serbia?
Answer:
- Fast hiring (1-2 weeks)
- Minimal upfront costs (€0-5k)
- Full compliance with local labor laws and tax regulations
- Access to highly skilled IT and tech talent
Ambacia helps companies manage the entire process efficiently and legally.
4. When is it best to use an EOR?
EOR is particularly useful when:
- Hiring your first employee in a new country
- Testing a new market before establishing a legal entity
- Scaling distributed or remote teams
- Accessing specialized talent
For companies expanding to Croatia or Serbia, Ambacia’s EOR services provide a simple and compliant solution.
5. How long does it take to hire through an EOR?
With Ambacia, the typical hiring process takes 1-2 weeks from candidate selection to the employee’s first working day. This includes contract preparation, payroll setup, and compliance checks.
6. Can an EOR help with contractors as well?
Yes, EORs can legally manage contractors and employees, but there is an important distinction. Misclassifying an employee as a contractor can lead to legal penalties. Using an EOR like Ambacia ensures compliance, so your team is correctly classified under local labor laws in Croatia or Serbia.
7. What types of roles are commonly hired through an EOR?
Answer:
EOR services are most commonly used for:
- Software engineers
- DevOps engineers
- QA specialists
- Data engineers
- AI and machine learning professionals
Companies in Germany, Austria, and Scandinavia often use Ambacia to hire tech talent in Croatia and Serbia efficiently.
8. Is it legal to hire employees abroad through an EOR?
Yes. EORs act as the legal employer in the target country, ensuring compliance with employment law, tax regulations, and payroll requirements. Ambacia provides full legal and administrative support for companies hiring in Croatia and Serbia.
9. How does the EOR process work with Ambacia?
The typical process includes:
- Candidate selection by the client
- Employment contract preparation by Ambacia
- Payroll and tax setup in Croatia or Serbia
- Ongoing HR support and compliance management
This structure allows companies to focus on growth while Ambacia handles legal, payroll, and HR operations.
10. Why choose Ambacia over a global EOR platform?
