Welcome back to My Weird Prompts. I am Corn, and I am sitting here in our living room in Jerusalem with my brother, looking out at a surprisingly clear afternoon over the Judean Hills.
Herman Poppleberry, present and accounted for. It is a beautiful day outside, Corn, but we are tucked away inside because our housemate Daniel sent us a prompt that has been sparking some pretty intense kitchen table debates over the last twenty-four hours. It is one of those topics that feels like a personal affront to the modern professional dream.
It is a classic Daniel prompt. He has been looking at the landscape of remote work, especially as things have shifted so much over the last few years. We are sitting here in February of twenty-twenty-six, and you would think the borders would have dissolved by now. But Daniel is basically calling out the discrepancy between the marketing and the reality. You see these companies that shout from the rooftops about being remote-friendly or remote-first, but then you look at the fine print and it says you must be a resident of the United States or based in specific European Union countries. It is like being invited to a global party but finding out the guest list is restricted to three zip codes.
Right. It feels like a bait and switch to a lot of people. You hear work from anywhere and you think, great, I will go live in a beach house in Thailand or a cabin in the Swiss Alps. But for the vast majority of companies, that is a legal and accounting nightmare they are just not willing to touch. It is the difference between remote-capable and remote-compliant. And as we have seen in the last two years, the compliance side is winning the tug-of-war.
And that is exactly what Daniel wanted us to dig into today. Why is it so hard? If a company like Zapier or GitLab can hire in dozens of countries across the globe, why can’t a mid-sized tech firm in San Francisco or a boutique agency in London do the same? What are the actual pressure points that make a human resources department say, no, we are not hiring that brilliant engineer because they live in a country where we do not have an office? Is it just laziness, or is there a monster under the bed?
It is such a deep rabbit hole, Corn. I have been looking into the jurisdictional requirements, and honestly, once you see the machinery behind the scenes, you start to realize why so many companies are conservative. It is not just about time zones. I mean, time zones are a logistical hurdle, sure, but the legal and tax hurdles are more like a series of brick walls topped with barbed wire. We are talking about the intersection of sovereign tax law, labor protections, and intellectual property rights that were mostly written before the internet even existed.
Well, let’s start with the big one. I think most people assume it is just about where the person sits, but it is really about where the company exists in the eyes of the law. There is this concept of a permanent establishment, right? I remember you mentioning this during that marathon session we had on the Great Compromise of twenty-twenty-six.
Exactly. That is the foundational problem. In the world of international tax law, if a company has a permanent establishment—or a P-E—in a country, that country has the right to tax the company’s profits. Now, historically, that meant you had an office, a warehouse, or a factory. But as the world went digital, tax authorities started getting much more aggressive. They realized that if a company has a high-value employee in their jurisdiction, that employee is essentially a local branch of the business.
So, if I am a company in New York and I hire one person in France, does the French government suddenly decide that my entire New York company has a permanent establishment in Paris? That seems like a massive leap for just one person sitting in a cafe with a laptop.
Potentially, yes. It depends on the local laws and the tax treaties between the two countries. If that one employee is doing something substantial, like signing contracts, leading a sales team, or even just performing core engineering work that is central to the company's value, the French tax authorities might argue that you are doing business in France. This is what they call an Agency P-E. Suddenly, you are not just paying that employee’s salary. You are filing corporate tax returns in France, you are subject to French audits, and you might owe a percentage of your global profits to the French treasury. For a company with a few hundred employees, the risk of that for a single hire is just too high. It is a classic case of the tail wagging the dog. The Chief Financial Officer looks at the potential for a multi-million dollar tax audit and decides that the brilliant engineer in Lyon isn't worth the risk.
That is wild. You are basically saying that hiring one remote worker could accidentally trigger a massive tax bill for the entire organization. I can see why a C-F-O would look at that and say, absolutely not. But what about the companies that do it? How does Zapier avoid that? They have people in over thirty countries.
Well, companies that hire globally usually use one of two main strategies. The first is the hard way, which is setting up a local legal entity in every country where they have employees. This is what the giant multinationals like Google or IBM do. They have Google France, Google Germany, Google Japan. But that costs tens of thousands of dollars to set up and thousands more every year to maintain. You need local directors, local bank accounts, and local accountants who understand the specific nuances of that country's tax code.
Which is fine if you have a thousand people there, but not if you just want one person. It is a scale problem.
Right. So the second strategy, and the one that has really exploded lately—especially with the rise of the E-O-R platforms—is using an Employer of Record. These are companies like Deel, Remote dot com, or Oyster. They already have the legal entities set up in those countries. So, technically, the worker is an employee of the E-O-R, and the E-O-R leases that worker back to the main company. It is a clever workaround, but it is not a magic wand.
I have heard of those. It sounds like a perfect solution, but I am guessing there is a catch. Otherwise, every company would be doing it. Is it just the cost?
The catch is cost and complexity. An E-O-R usually charges a flat fee per employee per month. We are talking five hundred to one thousand dollars on top of the salary and the benefits. If you are a startup trying to be lean, paying an extra twelve thousand dollars a year just for the right to employ someone in a different country adds up fast. But the bigger issue is the social burden. In many countries, employer-side taxes and mandatory benefits can add another thirty to forty percent to the base salary. If you hire someone in Brazil, you are not just paying their salary; you are paying into their pension, their health care, their thirteenth-month salary, and even a mandatory vacation bonus. By the time you add the E-O-R fee, that worker is fifty percent more expensive than a comparable worker in a more employer-friendly jurisdiction.
This is where I think it gets really interesting for the employees. We touched on the changing nature of work back in episode three hundred and forty-five when we talked about the rise of polycentric hubs. But even in a hub-based world, the local labor laws are a massive point of friction. It is not just about the money; it is about the control.
Oh, they are huge. In the United States, we are used to at-will employment. You can usually fire someone for any reason that isn’t discriminatory, and you can do it pretty much instantly. But try doing that in the European Union. In many countries, you have to have a documented reason, you have to go through a long performance improvement process, and if you do fire them, you might owe them months or even years of severance pay. In Germany, for example, if you have more than ten employees, you have to deal with Works Councils, which give employees a massive say in how the company is run. A mid-sized U-S tech firm is terrified of that level of shared governance.
I remember reading about the right to disconnect laws in places like France and Portugal. If you are a California company and your culture is all about late-night Slack messages and weekend pushes, you might find yourself in legal hot water if your employee in Lisbon is protected by a law that says they don't have to answer the phone after six p.m. It creates this cultural schism within the team.
Exactly. And it is not just about firing or working hours. It is the benefits. Every country has different requirements for what constitutes a legal benefit package. In some places, you have to provide a fourteen-month salary. In others, you have to contribute to a specific type of pension fund or provide a certain amount of paid vacation that might be double what your U-S employees get. If you are the H-R manager, how do you explain to your Seattle team that the guy in Spain gets six weeks of vacation while they only get three? It creates this internal tension that many companies would rather avoid by just saying, we only hire in the U-S. It is about maintaining a perceived sense of fairness, even if that fairness is just a byproduct of geographic restriction.
So, you have the corporate tax risk, you have the administrative cost of the E-O-R, and you have the headache of navigating vastly different labor laws. But Daniel also mentioned the logistics of things like time zones and culture. Is that just an excuse, or is there weight to it? Because I feel like we have the tools now—Slack, Zoom, Notion—to bridge those gaps.
I think it is a bit of both. From a technical perspective, time zones are a real productivity killer if you don't have a culture of asynchronous communication. If you are a team that relies on quick stand-ups and real-time collaboration, having someone eight hours ahead or behind means someone is always working in the middle of the night. It leads to burnout. But I think the deeper issue that people don't talk about enough is intellectual property. This is the silent killer of international hiring.
Intellectual property? How does that change based on where I'm sitting? Code is code, right?
You would think so, but the law disagrees. It is all about the work-for-hire doctrine. In the United States, if you are an employee and you write code for your company, the company automatically owns that code. It is very clean. But in other jurisdictions, like Germany or France, the laws around moral rights and intellectual property ownership are very different. Some countries require very specific language in a contract to ensure the transfer of rights, and in some cases, those rights can't even be fully transferred. The creator retains a moral right to be identified as the author, which can complicate things like white-labeling or selling the company.
That is a point most people never think about. You could be building the next unicorn, but if ten percent of your code was written by someone in a jurisdiction where the I-P transfer wasn't ironclad, your whole valuation could be at risk during due diligence. If I am an investor looking at a startup, and I see they have developers in five different countries with five different types of I-P law, I am going to be very nervous.
Precisely. And then you add in data privacy. We are in twenty-twenty-six, and the world has moved toward data sovereignty. If you are a company that handles sensitive user data, and you hire someone in a country with different data protection standards, you might be violating your own terms of service or international laws like G-D-P-R or the newer AI-specific data residency acts. If that employee is accessing a database from a country that hasn't been deemed to have adequate protections, you are suddenly in a compliance nightmare. You might need to set up localized data silos just to allow that one person to work. Again, for one hire, the math just doesn't work.
It sounds like the more we talk about this, the more it seems like a miracle that anyone hires internationally at all. But companies like Zapier or GitLab or Automattic have been doing this for years. They are the poster children for global remote work. What are they doing differently? Is it just that they started that way, or have they found a secret sauce?
That is a huge part of it. If you build your company from day one with the infrastructure to handle global hiring, it becomes part of your D-N-A. You build the legal processes, you bake the E-O-R costs into your hiring budget, and most importantly, you build a culture that doesn't rely on being in the same room. These companies often have a handbook-first approach. Everything is documented. Every decision is made in a way that someone in a different time zone can read and understand it. Companies that try to pivot to global remote work often fail because they are trying to layer international complexity on top of a local mindset. They still want to have that three p.m. meeting where everyone is present, and that just doesn't work when your team spans twelve time zones.
It is also worth noting that those companies often have very sophisticated legal and operations teams. They aren't just hiring people and hoping for the best. They are spending a lot of money on compliance. I think that is the pressure point Daniel was asking about. For a mid-sized company, the return on investment for one international hire often doesn't outweigh the compliance cost. If you have to spend twenty thousand dollars on legal fees just to vet a contract for a new hire in Poland, that person has to be twenty thousand dollars better than the candidate in Ohio.
Right. And in twenty-twenty-six, we are seeing a bit of a contraction. After the massive remote work expansion of the early twenties, many companies are realizing that the overhead of global management is eating into their margins. They are consolidating into what we call regional clusters. They might hire anywhere in the U-S and Canada, or anywhere in the E-U, because the legal frameworks are more harmonized within those blocks. But crossing the Atlantic or the Pacific? That is where the friction spikes.
Which is a shame, because it really limits the talent pool. It also feels like it reinforces the wealth gap between regions. If all the high-paying tech jobs are restricted to the U-S and the E-U, the rest of the world misses out on that capital infusion. It feels like a new kind of digital colonialism where the high-value work stays in the Global North because the legal systems are too rigid to let it out.
It does. But there is a counter-trend happening. We are seeing the rise of what I call the contractor loophole, though it is getting smaller every day. A lot of companies that say they don't hire in certain countries will actually hire you as an independent contractor. From their perspective, it is much easier. They just send you a wire transfer once a month. No payroll taxes, no benefits, no labor law headaches. They treat you like a vendor, not an employee.
But that is a double-edged sword for the worker, right? You don't get health insurance, you don't get a pension, and you have to handle all your own taxes. You are essentially running a one-person business, which is a lot of overhead for an individual.
Exactly. And here is where it gets dangerous for the company. Governments are not stupid. They want their tax money. There is a concept called misclassification. If you hire someone as a contractor, but you treat them like an employee—meaning you tell them exactly when to work, you provide their equipment, and they only work for you—many governments will step in and say, no, this is an employee. We saw this with the E-U Platform Work Directive that was fully implemented earlier this year. It created a legal presumption of employment for millions of workers.
And then the company owes back taxes, social security contributions, and huge fines. I imagine that is a terrifying prospect for a startup that is trying to get through a Series B funding round.
It is a deal-breaker. We are seeing a massive crackdown on this globally. Countries like the U-K with their I-R-thirty-five rules and various European countries are making it much harder to hide employees behind contractor agreements. This is actually making companies even more conservative. They are realizing that the contractor loophole is closing, and the E-O-R route is expensive, so they just retreat back to their home borders. They would rather have a smaller talent pool than a massive legal liability.
It feels like we are in this awkward middle phase of globalization. We have the technology to work together perfectly from anywhere, but our legal and tax systems are still stuck in the nineteenth century, built around the idea of physical borders and local jurisdictions. We have global fiber optics but local tax forms.
That is exactly it. The software moved faster than the law. We are trying to run a global economy on top of a fragmented legal operating system. Until we have more international standardization of labor laws or tax treaties that specifically account for remote work—something like a global remote work visa or a standardized international employment contract—we are going to see these restrictions. There have been talks at the O-E-C-D level about a digital permanent establishment framework, but these things move at the speed of glaciers.
So, if you are someone like Daniel, or one of our listeners who is looking for a remote job in twenty-twenty-six, what is the takeaway here? Is it hopeless to look for those global roles? Should we all just move to Delaware or Dublin?
Not at all. It just means you have to be strategic. You need to look for companies that have already made the leap. If a company has employees in ten countries, they probably have the infrastructure to add an eleventh. If they only have employees in three states in the U-S, you are going to have a hard time convincing them to hire you in another country. You also need to look for companies that are specifically targeting your region. We are seeing the rise of regional-first companies—firms that might be based in the U-S but focus their hiring in Latin America to stay in the same time zones while navigating the legal side through a single regional E-O-R.
You also have to be your own advocate. If you are an international candidate, you should know about E-O-R services. You should be able to say to a hiring manager, look, I know the legal side is a headache, but I have already looked into how I can be hired through a platform like Deel, and I have factored that into my salary expectations. You have to prove that your value exceeds the compliance cost. You are not just selling your skills; you are selling a solution to a regulatory problem.
And for the companies listening, I think the takeaway is that the first international hire is the hardest. Once you set up the process, whether it is through an E-O-R or your own entity, the marginal cost of the second and third hire goes down. You gain access to a global talent pool that your competitors are too afraid to touch. In a world where talent is the primary differentiator, that is a massive competitive advantage. If you can figure out how to hire in Brazil or Nigeria or Vietnam, you are fishing in a pond that is full of trophy fish while everyone else is fighting over the same few fish in San Francisco.
I also think we need to keep an eye on the countries that are making themselves remote-friendly. You see places like Estonia or Barbados, and more recently Japan and South Korea, creating digital nomad visas and special tax categories for remote workers. They are trying to solve the permanent establishment problem from the other side. They are saying, if you come here and work for a U-S company, we promise not to tax your U-S company as long as you meet certain criteria.
Those are the early adopters. They realize that attracting high-income remote workers is a great way to boost their local economy without needing to build a whole industrial base. If a country can offer a clear, simple legal framework for remote work, they become a magnet for the best talent in the world. We are seeing a competition for residents. If your jurisdiction is too difficult to work in, the talent will just move to one that isn't. It is the ultimate vote with your feet.
It is a fascinating shift. It is almost like countries are competing for residents the way companies compete for customers. And the product they are selling is a frictionless legal environment. If I can live in a beautiful place and my employer doesn't have to worry about a tax audit, everyone wins.
Exactly. And for the brothers and sisters out there who are frustrated by these job postings, just remember that this is a technical problem, not a personal one. The H-R person isn't rejecting you because they don't like your country; they are rejecting the five hundred pages of tax code that come with you. You are a bundle of regulatory requirements, and right now, those requirements are very heavy.
That is a very Herman way of putting it. You are not a person; you are a bundle of regulatory requirements. It is a bit bleak, but it is also empowering because it means the problem is solvable. It is not about your worth; it is about the plumbing of the global economy.
Guilty as charged. But honestly, understanding that makes it easier to navigate. You stop taking the rejection personally and start looking for the companies that have already solved the puzzle. You look for the GitLabs of the world, or you look for the startups that are bold enough to build the plumbing from day one.
Well, I think we have thoroughly dismantled the reasons behind those annoying job restrictions. It is a mix of ancient tax laws, complex labor protections, intellectual property risks, and the very real threat of corporate exposure. It is not just a lack of imagination on the part of the companies; it is a lack of infrastructure in the world at large. We are building the future on top of a very old foundation.
Perfectly summarized. And hey, if you are listening to this and you have found a way to navigate these waters—maybe you have a unique setup as a contractor or you work for a company that has a brilliant way of handling global equity—we want to hear about it. This is one of those topics that is evolving every single day. We are all learning how to be global citizens in a bordered world.
Absolutely. You can get in touch with us through the contact form at myweirdprompts dot com. We love hearing your stories and your perspectives on how the world of work is changing. Especially if you have found a way to make the Swiss Alps cabin dream a reality without getting sued by your employer.
And if you found this deep dive helpful, please consider leaving us a review on your podcast app. Whether you are on Spotify or Apple Podcasts, those ratings really help more people find the show and join our little community here. It helps us keep the lights on and the research going.
It genuinely makes a difference. We are episode four hundred and fifty-five now, which is a bit of a milestone, and we couldn't have gotten here without you guys. We have come a long way from our first episode in that tiny apartment in Tel Aviv.
So, thank you to Daniel for sending this in. It was a great excuse to dive into the nitty-gritty of international tax law, which you know I love more than is probably healthy.
And thank you all for listening. You can find all our past episodes and our R-S-S feed at myweirdprompts dot com.
Until next time, keep asking those weird questions. The answers are usually hidden in the fine print.
This has been My Weird Prompts. We will see you in the next one.
