Most US teams get to Latin America for the talent and get stuck on the paperwork. The engineer is ready, the offer is agreed, and then somebody asks how exactly this person gets paid in Colombia — and the process stalls for three weeks.
Here is how it actually works, without the sales layer.
The three problems hiding inside "payroll"
When people say payroll in this context, they are usually bundling three distinct problems:
- The contract. A legally valid agreement with a person in a country where you have no entity.
- The payment. Getting money to them, in the right currency, on time, every month.
- The paper trail. Invoices, receipts and documentation your finance team can actually book.
Vendors solve these in different combinations, which is why quotes are so hard to compare. Ask which of the three each one covers.
Who signs what
This is the structural question, and everything else follows from it.
Under a staffing model, the contractual relationship with the professional belongs to the vendor, not to you:
- Your company ↔ the vendor: one master services agreement.
- The vendor ↔ the professional: a services contract signed in the professional's own country, with an NDA and IP assignment in your company's favor.
Your company is buying a service. It does not register anywhere abroad, does not run local payroll and does not become anyone's employer.
Under an EOR model, the EOR becomes the formal employer instead — real local employment, with local benefits and protections. More robust for certain roles, and slower and more expensive to set up.
Under direct contracting, you sign with each person yourself. Cheapest on paper, and the one that carries the classification risk we cover below.
What your finance team actually receives
The practical test of any of these setups is what lands in your accounting inbox each month.
Under staffing, it is one consolidated invoice with the detail per person, plus receipts on file. Not one transfer per country, not chasing individual invoices, not reconciling five currencies.
That matters more than it sounds. A finance person spending a day a month on international contractor reconciliation is a real cost that never shows up in the vendor comparison.
Permanent establishment: where the risk actually is
Permanent establishment is when a tax authority decides your company operates in their country on a stable basis and therefore owes tax there. It is not something you file for — it is a determination made by looking at the facts.
It typically triggers when your company holds a fixed place of business in the country, when someone habitually concludes contracts on its behalf, or when your company directly employs people there and exercises employer-like control over them.
That third one is where direct contractor arrangements get uncomfortable. If a contractor works exclusively for you, on your hours, with your tools, following your instructions, the relationship looks like employment. And if it looks like employment, an auditor may treat it that way.
Under staffing, the exposure is structurally lower because you are buying a service from a company, not employing an individual. That said — and this matters — it is not an automatic shield. It depends on how your company operates and on the applicable tax treaty. Have your tax advisor review the agreement. Any serious vendor will hand it over without friction.
Country by country: what changes
Latin America is not one market. Rules on contractor status, invoicing requirements, currency controls and mandatory benefits differ meaningfully between Colombia, Mexico, Argentina, Chile and Brazil.
What this means in practice: ask your vendor to confirm, country by country, that they can operate where your person actually lives — before you sign anything. "We cover LATAM" is not an answer. The list of countries is.
Intellectual property
The most commonly overlooked clause, and the one that matters most if things go wrong.
In a properly structured setup, IP assignment to your company appears in both contracts: the one between the vendor and the professional, and the master agreement with you. If it only appears in one, there is a gap.
Concrete ask: "send me the IP clauses from both contracts." How fast that arrives tells you a lot.
Scaling without opening entities
The point of the model is that adding the sixth person is the same amount of work as adding the first. New people come in under the same master agreement regardless of which country they are in, and they come off with the agreed notice period. No entity opened, none closed.
Frequently asked questions
Does hiring this way create permanent establishment?
Under staffing, your company buys a service from the vendor rather than employing the individual, and the contract is signed in the professional's country. Each case still depends on how your company operates and on the applicable tax treaty, so have your tax advisor review it.
Which countries can you run this in?
We cover the main markets across Latin America. In the initial mapping we confirm country by country whether we can operate where your people are, before you sign anything.
Who owns the IP?
Your company. It is covered both in the contract between Interfell and the professional and in the master agreement with you.
What if I need to offboard someone?
It is handled as a scope change to the master agreement, with the agreed notice. No reopening contracts, no legal process in that country.
Can I hire the person directly later?
Yes, and it is a common outcome once a company opens an entity in the region. We support the transition.
What about time zones?
Latin America overlaps the full US workday, between the same hour and three hours of difference depending on the country. People join your standups rather than handing off work at midnight.
If you want this checked against your actual situation — your countries, your roles, your structure — book 20 minutes. If you would rather see what talent is available first, the search is free and needs no signup.
More detail on the model: hiring in LATAM without a local entity.