How to Hire Non-EU Employees Without a Sponsorship License in Europe

Hiring non-EU employees in Europe can be a complex process, especially for companies that do not have a sponsorship license. European immigration laws typically require businesses to obtain government approval before employing foreign workers. However, sponsorship licenses come with high costs, strict compliance requirements, and administrative burdens that many companies—especially small and mid-sized businesses—struggle to manage.

Fortunately, a sponsorship license is not the only way to legally hire non-EU talent in Europe. Several alternatives exist, including Employer of Record (EOR) services, contractor agreements, intra-company transfers, and remote work arrangements. This guide explores why some companies lack sponsorship licenses and outlines legal hiring solutions available across Europe.

Why some companies do not have a sponsorship license

A sponsorship license allows businesses to directly employ non-EU workers, but many companies choose not to obtain one due to the following challenges:

Strict eligibility criteria

Each European country has its own rules for issuing sponsorship licenses, and companies must meet specific conditions. Governments often prioritize hiring EU or local talent before approving sponsorship applications for non-EU employees. Some industries, such as healthcare and finance, have additional restrictions that further limit eligibility.

High administrative and financial burden

The process of obtaining and maintaining a sponsorship license requires:

• Government application fees, which vary by country and can be expensive.
• Demonstrating financial stability and compliance with labor laws.
• Completing regular audits and providing updated employee records.

Many small and mid-sized businesses find these ongoing requirements too complex and costly, leading them to explore alternative hiring models.

Industry-specific restrictions

Certain sectors face additional barriers when hiring non-EU employees. For example, legal and financial services may have strict licensing requirements, while public sector roles are often reserved for EU citizens. These restrictions make it difficult for some companies to justify the cost and effort of obtaining a sponsorship license.

SMBs and startups lack compliance infrastructure

Unlike large corporations with dedicated HR and legal teams, smaller businesses may lack the internal resources to manage immigration compliance effectively. The risk of penalties for non-compliance further discourages companies from pursuing a sponsorship license, making alternative hiring solutions more attractive.

Companies that do not have a sponsorship license must consider legal alternatives to hire non-EU employees while staying compliant with European labor laws. The next section explores these solutions in detail.

Legal ways to hire non-EU employees without a sponsorship license

For companies that do not have a sponsorship license, several legal alternatives allow them to hire non-EU employees while remaining compliant with European labor laws. The most effective options include Employer of Record (EOR) services, contractor agreements, intra-company transfers, and remote work arrangements.

A. Employer of Record (EOR) – the most effective solution

An Employer of Record (EOR) is a third-party organization that employs workers for a company. This system allows businesses to hire non-EU employees without needing a sponsorship license because the EOR manages all compliance requirements

How EOR works

• The EOR hires the non-EU employee under its legal entity in the country of employment.
• It manages employment contracts, payroll, taxes, and benefits while ensuring compliance with local labor laws.
• The company retains operational control over the employee’s daily responsibilities, while the EOR handles administrative and legal obligations.

Benefits of using an EOR

• No sponsorship license required: The EOR takes on the legal employer role, eliminating the need for a sponsorship license.
• Faster hiring process: Avoids delays associated with visa sponsorship applications.
• Compliance with European labor laws: Ensures adherence to local regulations, including tax and social security contributions.
• Lower administrative burden: Reduces the complexity of managing work permits and immigration paperwork.

With the global EOR market projected to reach USD 8.59 billion by 2032, companies are increasingly using this model to optimize international hiring and ensure compliance without establishing local entities.

B. Hiring through third-party contractor agreements

An alternative to direct employment is engaging non-EU workers as independent contractors. This approach allows businesses to access international talent without taking on employer responsibilities.

Key differences between contractors and employees

• Contractors work on a project basis and are responsible for their own taxes and social security contributions.
• Unlike full-time employees, contractors do not receive statutory employment benefits such as paid leave, pensions, or health insurance.

Legal considerations

Many European countries have strict worker classification laws to prevent companies from misusing contractor agreements to avoid employer obligations. Misclassification of a contractor as an employee can lead to fines, back payments for social security, and other legal penalties. To reduce risks:

• Clearly define the contractor’s scope of work in the contract.
• Ensure the worker maintains control over their schedule and work methods.
• Avoid setting performance metrics that mirror an employment relationship.

When this model works best

Hiring non-EU employees as contractors is most effective for:

• Short-term projects requiring specialized skills.
• Freelancers or consultants offering services on a per-project basis.
• Businesses that do not require long-term employment relationships.

While contractor agreements provide flexibility, they may not be a suitable long-term solution for businesses that need stable, full-time international employees.

C. Intra-company transfer (ICT) visas for multinational companies

For multinational companies with operations in multiple countries, an Intra-Company Transfer (ICT) visa allows them to relocate employees from non-EU offices to their European branches without needing a sponsorship license. In 2023, EU member states issued over 3.7 million first residence permits to non-EU citizens, with employment being the primary reason for issuance, accounting for 33.8% of all permits.

This approach is commonly used by global organizations to move skilled employees across borders while maintaining compliance with immigration laws.

How ICT visas work

• The employee must have worked for the company outside the EU for a minimum period (typically 6–12 months).
• The company must have a registered entity in the destination country.
• The employee is transferred to a European branch under the ICT visa scheme, which grants them a temporary work authorization.

Limitations of ICT visas

• ICT visas are not a permanent solution, as they often have time limits (usually up to 3–5 years).
• Employees transferred under an ICT visa cannot switch employers during their stay.
• Some EU countries impose salary thresholds and job role restrictions, limiting eligibility.

Best for:

• Multinational corporations with offices in Europe.
• Companies needing to relocate existing employees rather than hire new talent.
• Temporary assignments where a non-EU employee needs to work in Europe for a set period.

While ICT visas provide a structured path for moving employees across borders, they are only viable for companies with an established European presence. Businesses without a local office may need to consider Employer of Record (EOR) services as a more flexible alternative.

D. Remote work – hiring without relocation

A growing number of businesses are hiring non-EU employees as remote workers instead of relocating them to Europe. This model allows companies to access global talent without the need for work visas or sponsorship licenses.

How remote work arrangements function

• The employee remains in their home country and works remotely for the European company.
• The employer can either engage them as an independent contractor or use an Employer of Record (EOR) to ensure compliance with local labor laws.
• Work arrangements are typically defined by contractual agreements, specifying job responsibilities, compensation, and working conditions.

Benefits of hiring remote non-EU Employees

• No visa requirements – Employees do not need a work permit to operate remotely from their home country.
• Lower costs – Eliminates the need for relocation, office space, and additional administrative costs.
• Access to a broader talent pool – Companies can hire skilled professionals from around the world without geographical limitations.

Challenges of remote hiring

• Tax compliance – Employers must navigate international tax laws to ensure proper payroll and benefits administration.
• Labor law complexities – Some countries have strict worker protection laws that may classify long-term remote workers as de facto employees, requiring companies to comply with local labor regulations.
• Time zone management – Coordinating teams across different time zones can impact productivity and collaboration.

Best for:

• Companies that operate globally and do not require employees to be physically present in Europe.
• Businesses looking to reduce visa and sponsorship-related costs.
• Roles that can be performed remotely without legal restrictions.

Remote work is a flexible and cost-effective hiring solution, but companies must ensure they comply with labor laws in the employee’s home country. In many cases, working with an Employer of Record (EOR) is the safest way to manage remote employees while avoiding legal risks.

Choosing the right hiring model for your business

When deciding on an alternative hiring solution for non-EU employees, businesses must evaluate multiple factors, including compliance requirements, operational needs, and long-term sustainability. The right hiring model depends on the company's growth strategy, risk tolerance, and the type of work being performed.

Assessing your business needs

Before selecting a hiring approach, businesses should consider:

• Employment duration – Is the need for short-term or long-term employment?
• Level of control – Does the business require direct oversight, or is a flexible contractor model acceptable?
• Legal risks – What are the potential compliance risks associated with each hiring option?
• Scalability – Is the company expanding into multiple countries where different labor laws apply?

Comparing alternative hiring solutions

Companies expanding into Europe may benefit most from an EOR model, while those needing temporary or project-based hires may opt for contractor agreements. Each model has trade-offs that businesses must evaluate before making a decision.

Success story: How a Chinese EV manufacturer expanded in Europe without a sponsorship license

When a leading Chinese EV manufacturer planned to establish production facilities in Germany and Hungary, they faced an immediate challenge: hiring specialized non-EU talent without a sponsorship license.

Without a local entity or legal hiring structure, they risked delays in securing the workforce required to launch operations. They needed a solution that could legally employ non-EU workers, manage payroll across multiple countries, and ensure compliance with European labor laws.

The solution:

By partnering with our Employer of Record (EOR) services, the company was able to:

• Hire non-EU employees legally in Germany and Hungary without sponsorship licenses.
• Implement a centralized payroll system for seamless salary payments, tax compliance, and benefits administration.
• Develop market-specific retention strategies, reducing talent turnover in a competitive hiring landscape.

The results:

• Two fully operational production facilities launched within nine months—without regulatory delays.
• Full compliance with local labor, tax, and social security laws.
• Employee turnover reduced by 18%, stabilizing workforce operations and lowering hiring costs.