For Turkish companies, sending personnel abroad, employing remote workers, or building teams in different countries is no longer an exception, but the new normal. However, the most challenging part of the job is often not the “people” but payroll and tax compliance. As we approach 2026, tax rules and payroll technologies are rapidly changing globally, creating a significant risk area for CFOs, HR teams, and global mobility managers.
What Does Payroll Service Mean for Foreign Employees?
When a Turkish company starts employing its employee in Germany, the Netherlands, or the USA, it becomes obligated as an “employer” according to the tax and social security legislation of that country. However, most of the time, the company does not have a presence or accounting infrastructure in the relevant country. This is where global payroll providers and Employer of Record (EOR) / PEO models come into play.
Generally, “payroll service for foreign employees” includes:
- Local payroll calculation and payslip production in the currency and language of the country where the work is performed
- Calculation and payment of income tax withholding and social security contributions (employee + employer share) in accordance with local legislation
- Making mandatory notifications and declarations to tax offices and social security institutions
- In the EOR model, the payroll provider assumes the role of legal employer; while the Turkish company continues to manage daily operations and performance
International sources emphasize that each country has very different tax codes, social security rules, and reporting obligations. Trying to manage this complexity internally is both costly and carries serious penalty risks. Global payroll providers take on this burden with local expert networks and systems that are updated as legislation changes.
From the perspective of a Turkish company, “payroll service” fundamentally means: Outsourcing the payroll and tax obligations in the country where the employee is located to reduce legal risk and streamline accounting/HR processes.
Tax Liability for Foreign Employees: Key Concepts
Tax Residency
Two basic principles apply in almost every country:
- Tax residents: Generally taxed on all worldwide income in that country.
- Non-residents: Usually taxed only on income sourced from that country (income earned there).
For example; if your employee is still considered a tax resident in Turkey, Turkey theoretically has the right to tax their worldwide salary income. However, if the employee is actually working in Germany, Germany also wants to tax this income. Here, double taxation treaties come into play.
Source of Income and the Principle of “Tax Where Work is Performed”
The basic rule in international practice is: Salary income is considered to be sourced in the country where the work is actually performed. Therefore;
- If your employee is working remotely from Germany, Germany will usually claim tax on this income.
- Even if your company does not have an office in Germany, you may need to register for tax and social security as an employer due to this employee.
- The same logic applies in multi-state US payroll: Wherever the employee is actually working, payroll registration and withholding must be done in that state.
On an international scale, these obligations are generally managed as follows:
- By establishing a local company in the relevant country to manage payroll internally
- Or by executing local payroll externally through a global payroll/EOR provider
Double Taxation Treaties and the 183-Day Rule
Double Taxation Treaties (DTTs) signed between many countries aim to prevent employees from paying tax on the same income twice. Common topics encountered in practice include:
- 183-day rule: If an employee travels to a specific country for less than 183 days within a calendar year and meets certain additional conditions (e.g., salary paid by an employer in another country), that country may sometimes waive its right to tax.
- Tax credit or exemption: The country of residence may allow a credit for taxes paid in a foreign country or exempt the relevant income.
- Additional document management: On the payroll side, it is generally necessary to collect residency certificates, apply treaty rates, and use the correct treaty codes in declarations.
For companies receiving global payroll services, this means: It is not enough to just calculate gross and net salaries; tax withholding must be done at the correct rate for the correct country according to DTT provisions, and correct declarations must be prepared on behalf of the employee when necessary.
Employer Obligations for Foreign Employees
While details vary by country, global payroll resources point to some recurring obligations almost everywhere:
- Registering as an employer in every country where the employee is actually working
- In accordance with local legislation:
- Making and paying income tax withholding
- Calculating and paying social security contributions (employee and employer share)
- Submitting tax and insurance declarations at regular intervals (monthly, quarterly, annually)
- Keeping payroll and personnel records in most countries for at least 5–7 years and maintaining them ready for audit
You can manage these tasks in two ways:
- In-house payroll: You set up your own payroll software, accounting, and human resources team in each country. This may make sense for high-volume, large-scale companies; however, you need to keep track of legislative changes and manage all risks internally.
- Outsourcing global payroll/EOR: The calculation of payroll, tax and social security payments, and official notifications largely become the responsibility of the provider. The company focuses on payroll funding, internal control, and employee management.
In both models, data security, internal control processes, and employee communication remain with the company. Therefore, partner selection and contract structure become critical.
Looking Ahead to 2026: What Changes are Happening in Global Payroll and Taxation?
2026 stands out as a turning point for the global payroll world. New regulations and a wave of technology to be implemented in different countries will also have implications for Turkish companies with foreign employees.
US-Sourced Reporting and Tax Changes (OBBBA)
The “One Big Beautiful Bill Act (OBBBA)”, which has been accepted in the USA and will be gradually implemented starting in 2026, anticipates significant changes in information reporting and payroll forms. These regulations may indirectly affect Turkish companies with employees, contractors, or subsidiaries in the USA.
Key points include:
- Increase in thresholds for information forms: The reporting threshold for forms such as 1099-MISC and 1099-NEC will rise from 600 USD to 2,000 USD starting in 2026. This reduces the reporting burden for small payments while necessitating updates to thresholds in payroll and accounting software.
- Additional fields in Form W-2 and similar forms: For example, more detailed reporting lines for overtime, tips, or certain fringe benefits are coming. This also requires up-to-date software and internal controls for the year-end payroll closing in 2026.
- 1% excise tax on certain transfers to foreign individuals: Starting in 2026, additional tax costs may arise in certain foreign fund transfers.
If your Turkish company employs workers in the USA or runs payroll through a subsidiary there, you need to plan system updates before 2026 in collaboration with your global payroll provider.
Changes to Salary Certificates in Switzerland 2026: An Example
The Swiss Federal Tax Administration is updating its guidance on salary certificates effective January 1, 2026. For example, the flat rate for travel expenses for business trips using private vehicles will increase to 0.75 CHF per kilometer, and the way some fringe benefits are exempted from tax or declared will change. For details, you can refer to the analysis of changes to salary certificates in 2026 by the Swiss Federal Tax Administration.
Such country-specific updates highlight how critical the automatic update capability of global payroll software is, not only for companies with employees in that country.
Increase in Social Security Bases and Cost Impact
Particularly in systems like the USA, increases in maximum salary amounts subject to social security contributions are expected in 2026. This means for foreign personnel subject to payroll in that country:
- Increased employer social security costs
- Changes in the employee’s net salary planning
- Revisions in expat budgets and TCO (total cost of ownership) calculations
Similar dynamics occur in many European countries in the form of annual updates to contribution and tax brackets.
Payroll Confidentiality and Data Protection Rules Tightening
International sources indicate that by 2026, requirements for confidentiality and data security around payroll and HR data will become even stricter. In particular:
- Expansion of GDPR-like regimes
- New data minimization and access control rules at the state and country level
- Payroll providers’ obligation to comply with “privacy by design” and “privacy by default” principles
When selecting a global payroll provider, it has become essential to consider not only tax and payroll expertise but also compliance with KVKK / GDPR, encryption infrastructure, and the location of data centers.
Towards 2026: Payroll Technology, AI, and Real-Time Compliance
Many international reports predict that by 2026, global payroll operations will be shaped around three main technology axes: artificial intelligence, cloud-based systems, and real-time payroll.
AI-Powered Payroll and “Continuous Compliance”
Next-generation global payroll platforms automatically pull in country-specific tax and labor law changes; the AI layer creates value in the following areas:
- Scanning legislative changes and proposing automatic rule updates
- Detecting unusual activities in payroll to provide early warning and error catching
- Simulating costs in different countries to produce predictive analysis for expat packages and remote work policies
The goal from a 2026 perspective is to provide continuous, up-to-date, and audit-ready payroll data rather than just producing payroll at the end of each month.
Cloud-Based Global Payroll Platforms
The cloud is becoming the fundamental infrastructure of modern payroll. On a global scale:
- Employees in multiple countries are managed from a single central platform.
- Updates to tax and social security rules are automatically reflected in the system by the platform provider.
- HR, finance, and accounting systems (ERP, HRIS, etc.) work integrated, reducing manual errors.
This structure brings significant transparency and efficiency advantages, especially for companies with employees in 10+ countries.
Real-Time Payroll and Transparency Expectations
Expectations are also rising on the employee side. By 2026, in many markets:
- Employees will be able to see payroll data in real-time from mobile applications
- Tax, contribution, and fringe benefit deductions will be presented in a transparent and understandable format
- New models such as on-demand pay will become widespread
This requires rethinking payroll processes in terms of both technology investment and user experience (UX).
Tax Cost and Risk Management with Payroll Services
Improperly structured payroll processes for foreign employees create three main cost items:
- Direct costs: Incorrectly applied tax rates, underpaid social security contributions, incorrectly structured fringe benefits.
- Penalty and interest risk: Varying from country to country, high penalties and late fees may apply for under-withholding and declarations.
- Reputation risk: Non-compliance in tightly regulated markets (EU, USA, Switzerland, etc.) can damage brand reputation and lead to loss of licenses/projects.
The cost of receiving global payroll / EOR services generally consists of the following elements:
- Monthly payroll fee per person (a certain percentage of the salary in some models)
- Setup fees for establishment and country-specific registration processes
- Optionally; additional consultancy fees for expat tax consultancy, immigration, and visa processes
A well-designed structure offers a much more efficient and predictable solution, especially for Turkish companies with a small number of employees in multiple countries, compared to the cost of establishing a local company.
How Corpenza Can Help? (Payroll, EOR, and Tax Optimization)
Corpenza is an organization specialized in company establishment, residence permits, golden visas, international accounting, payroll (EOR), and personnel leasing with posted worker models on a European and global scale. You can utilize this expertise in a three-dimensional way during the taxation of foreign employees and the preparation process for 2026:
- Strategy and structuring: Analyzes which country is more advantageous for establishing a local company and which country to proceed with EOR / global payroll; creates a roadmap considering tax residency, DTTs, and social security agreements.
- Operational payroll management: Ensures the establishment of local payroll, opening of employer registrations, and correct execution of tax and social security declarations according to the chosen model. This allows your HR and finance teams to focus on strategic issues.
- Tax and cost optimization: Balances total employer costs, employee net salary, and compliance risk across different scenarios from posted worker to EOR. Helps keep your model up to date by tracking legislative and technological changes that will arise for 2026 and beyond.
For Turkish companies with employees in 5–10 different countries but not wanting to establish separate companies in each, Corpenza’s global mobility perspective and payroll/EOR experience can become an important risk mitigation and cost control tool.
Conclusion: What Should Be Done While Preparing for 2026?
For Turkish companies with employees abroad or planning to build teams globally in the near future, 2026 presents both a year of risk and an opportunity to modernize processes. In summary:
- Clarify your employees’ tax residency, where they actually work, and which countries require employer registration.
- Select the appropriate payroll model (local company, EOR, posted worker) considering double taxation and social security agreements.
- Keep an eye on major changes coming into effect in 2026 (e.g., OBBBA, Swiss salary certificate updates, data protection requirements) and adapt your payroll software and processes now.
- Aim to establish a transparent, scalable, and audit-ready structure by evaluating AI and cloud-based global payroll solutions.
- Consider working with an expert partner like Corpenza in international mobility and payroll to reduce legal, financial, and operational risks.
A well-planned global payroll architecture not only helps you avoid penalties but also enhances your talent attraction power and builds a competitive employer brand in different countries.
Disclaimer
This article is prepared for general informational purposes. The information here does not constitute legal, financial, or tax advice. Countries’ tax, social security, and labor law regulations can change frequently; moreover, each company’s and employee’s situation is unique. It is important to check the current official legislation and announcements of the relevant country before making any decisions and to seek professional support from a qualified lawyer, financial advisor, or tax consultant when necessary. Corpenza cannot be held responsible for any consequences arising from decisions made based on the information in this text.
