Doing Business in Germany with a PEO & Employer of Record
The Federal Republic of Germany, with a population of 83 million (International Monetary Fund, 2019), remains to be an economic powerhouse and is one of the most attractive countries for foreign investment on the European continent. Europe’s largest economy continues to offer an excellent infrastructure, a highly-developed corporate and services sector, its system of higher education, and, most importantly, its capacity to deliver technological innovations.
For international companies looking to expanding their business in Germany, a professional employer organization (PEO), also referred to an employer of record (EOR) provider, could be a convenient way to test the German market and establish a core executive or professional team onsite.
The following article will detail on to discover the benefits of using a PEO in Germany, and get rankings of the best local German PEOs/EORs.
Why use a PEO in Germany?
Using a PEO in Germany can support foreign companies to overcome many of the legal and regulatory challenges of doing business in Germany. Instead of setting up an entity in Germany in form of a GmbH (Germany’s well-known form of a Limited Liability Company), foreign investors can look to partner with a PEO that already has a registered entity in Germany, enabling them to hire, onboard, manage, pay, and renew or terminate contracts compliantly all under one roof without the expense of setting up themselves.
PEOs are especially attractive solutions for temporary business activity in Germany or for those wishing to prove the viability of business expansion without making a more significant commitment.
Best Germany PEOs & Employer of Record
1. Universal Hires: www.universalhires.com
The employment agency Universal Hires stands out as the leading established PEO organization in Germany, as well as the only PEO with actual headquarters in Germany. Companies from all over the world trust Berlin-based Universal Hires with their employment services in Germany. The company has been continuously delivering its Employer of Record solutions to enable foreign corporations to hire staff within days, as opposed to the usual months when going through a lengthy and costly GmbH-setup procedure.
Universal Hires offers a full variety of services – from contract drafting in German and English and employee onboarding to setting up social security and paying income taxes. Unlike other companies in this business, Universal Hires has a local German team taking care of its clients’ German staff. When foreign businesses let UH hire staff on their behalf, their AÜG-licensed German entity will absorb all local employment liabilities – making it a straightforward and easy process for foreign companies looking for a true ‘one stop shop’ for Employer of Record services in Germany.
2. Global PEO: www.globalpeo.com
Global PEO offers a comprehensive suite of services for businesses looking to do business in Germany. With a local offices in Berlin and Munich, the company might be the perfect fit when hiring employees without having to set up a German subsidiary.
In addition, the company is well-known for maintaining strong relations to the German Chamber of Commerce offices around the globe.
3. NN Road: www.nnroad.com
NN Road, similarly to other PEO/EOR companies in Germany, offers employment setup, payroll and HR management services. In offering global PEO solutions for business, there is less of a local feel with this company, although they appear to have a solid client base with companies that do not necessarily require to know about the local business practices and expectations in countries in which they operate. For the sake of simplicity, a company like PEO Worldwide may prove a preferable option, although companies with complex operations or greater sensitivity to culture and etiquette should consider a company with a local office.
It’s important to keep in mind that similar to other global PEO providers such as Velocity Global, Globalization Partners, PEO Worldwide, and Papaya Global, NN Road is likely to subcontract the employment contract, hiring procedure and monthly payroll administration to a local third-party payroll provider in Germany. Therefore, your company might end-up hiring staff through Universal Hires even though you’re contracting with a global PEO.