International Contractor Payments: A Checklist for Freelancer and Gig Platforms

If your platform pays freelancers or gig workers in other countries, the payout provider you choose decides how much each person actually receives, how fast they get paid, and which tax and compliance records you must keep. US companies can pay independent contractors abroad, but every provider should be checked on five things: currency terms, payout methods, fees, tax forms, and local compliance. This checklist covers each one.

International contractor payments checklist at a glance

1. Currency terms: Decide which currency each payout uses and who pays to convert it.
2. Payout methods: Match each contractor’s country to a method your provider supports, such as a local bank transfer, wallet, card, or wire.
3. Total cost: Add up transfer fees, intermediary bank fees, the currency markup, receiving bank fees, and platform fees.
4. Tax forms: Collect the right form (W-8BEN, W-8BEN-E, W-9, or 8233) before the first payout.
5. Compliance: Confirm worker classification, screen against sanctions lists, and check platform reporting rules such as DAC7.

New to paying contractors abroad? Start with our overview of how to pay contractors internationally. This checklist is for evaluating providers and building your payout process.

Who pays for currency conversion when you pay international contractors?

Cross-border payments usually involve a currency conversion, so decide up front which currency each payout uses and who pays to convert it. Whoever converts the money absorbs the fee or markup, which determines how much your contractors receive.

Say a freelancer in Germany earns $3,000 on your platform and you pay in US dollars. When you send those dollars, their bank will convert the money to euros at its own rate. A 3% markup on that conversion would cost them $90. If you pay in euros instead, you’re responsible for paying for that conversion before you send them the euros. At scale, small differences add up: on a platform sending 5,000 payouts a month that average $500, each percentage point of markup costs $25,000 a month, so compare margins as well as transfer fees.

What are the best ways to pay international freelancers and gig workers?

For platforms paying many contractors, local bank transfers are usually the best default because they combine local-currency payouts, low cost, and fast settlement. But contractors also expect to choose how they get paid, and what they prefer depends on where they live and how they already manage their money. One freelancer may want funds sent straight to a local bank account, while another relies on a digital wallet. Letting each contractor pick their own payout method during onboarding means they get paid the way that suits them, so check that your provider supports the methods your contractors use most in each country.

Each of these popular global payment methods balances speed and cost differently:

Method	Typical speed	Cost to watch	Works best for
International wire	One to several business days	Intermediary bank fees and the receiving bank’s conversion markup	Large, occasional payouts to established vendors
Digital wallet	Minutes to the wallet balance	Conversion and withdrawal fees	Contractors who already have an account with wallets like PayPal
Local bank transfer	Seconds to a few business days, depending on the country and bank network	Your provider’s conversion margin	Regular payouts in the contractor’s own currency
Card payout	Usually within 30 minutes	Per-payout fees, plus limits on which cards can receive funds	Small, frequent payouts in countries where card payouts are supported

Where wires and DIY setups fall short

An international wire travels over SWIFT, the network banks use to send payment instructions internationally. Each intermediary bank along the way can take a fee, so the contractor will likely receive less than what you sent. Your team also has to type each contractor’s SWIFT code and International Bank Account Number (IBAN) into the bank portal by hand. Just one wrong number can send the wire back.

Platforms that pay contractors abroad through their own bank and a spreadsheet have to do everything themselves. Someone has to track contractors in the spreadsheet, upload payouts to the bank portal, collect tax forms over email, and reconcile every payout against the bank statement. As volume grows, returned payments and “where is my payment?” support tickets pile up too. Your team may also find that the tools it uses for US contractors won’t work for international contractors. For example, you cannot use Zelle to pay international contractors since it only works between US bank accounts.

Where local payout methods fill the gap

Your provider sends a local payout through the bank network in the contractor’s own country and pays them in their own currency without intermediary banks. In some countries, real-time bank networks can also make near-instant payouts possible, though availability varies by country and provider. Your team no longer has to buy foreign currency before each batch if your cross-border payment solution converts it for you. Trolley, for example, supports payouts to local banks, wallets, and virtual accounts in 210 countries and territories; wire transfers are also available.

What fees do international contractor payments include?

International contractor payments typically carry five costs. Add them up for each payout before you compare cross-border payment platforms:

• Transfer fee: Your provider charges a flat or percentage fee to send each payout. For a bank wire, expect $15 to $50 per transfer.
• Intermediary bank fees: Each bank that relays a wire on its way to your contractor can deduct a fee.
• Currency conversion markup: Providers usually convert at a rate slightly worse than the market rate and keep the difference.
• Receiving bank fees: The contractor’s bank may charge them to accept an incoming international transfer.
• Platform fees: Some providers add a monthly subscription or a charge per recipient.

A provider with a low transfer fee can still cost more overall if it gives you an unfavorable exchange rate. Price a sample payout through each provider at your real average payout size and monthly volume, because flat per-payout fees weigh most on small payouts and percentage markups weigh most on large ones. You can also find ways to lower cross-border payment fees.

Which tax forms do you need for foreign independent contractors?

US companies can hire independent contractors based outside the US as long as each one completes the right tax form before their first payout. Whether you need to file a Form 1099-NEC for your international contractors depends on whether they’re a US person for tax purposes and where they do the work. A foreign independent contractor working outside the US doesn’t need one, but a US citizen living abroad does. If a foreign contractor does the work inside the US, the payment is generally US-source income, so you may need to withhold 30% (unless a tax treaty exemption applies) and report it on Form 1042-S instead.

Keep a signed agreement with each form and check your setup with a tax advisor before hiring foreign independent contractors. A common approach is to collect the form during onboarding and hold the first payout until a valid one is on file. Collect the form that matches each payee, including vendors that operate as companies:

Form	Who completes it	What it documents
Form W-8BEN	Foreign individuals	Their foreign status and any tax treaty benefits they claim
Form W-8BEN-E	Foreign businesses	The company’s foreign status and any treaty benefits it claims
Form W-9	US citizens and residents living abroad	The taxpayer identification number you’ll need for their Form 1099-NEC
Form 8233	Foreign individuals who do some of the work inside the US	Their claim that a tax treaty lets you pay them for that US work without withholding US tax

What compliance rules apply when you pay contractors overseas?

Labor authorities in each contractor’s country decide if the relationship counts as employment there. That means the same arrangement can count as contracting in one country and as employment in another. If it counts as employment, you may owe payroll taxes and employment benefits to your contractor. 

US sanctions rules also apply when you’re paying foreign independent contractors. For example, you can’t pay anyone on a sanctions list since the Treasury Department’s Office of Foreign Assets Control could fine you. Verify each contractor’s identity and screen them against those lists before their first payout. On a platform, run this check automatically during identity verification and onboarding, and again whenever a contractor changes their payout details.

Do digital platform reporting rules like DAC7 apply to your platform?

Platforms and marketplaces also have to report the sellers and service providers they pay under rules like the EU’s DAC7, which requires them to collect and report each seller’s identity and income. The UK and New Zealand have similar rules based on the OECD’s model for reporting seller income. Australia’s Sharing Economy Reporting Regime requires platforms to report sellers’ transactions to the Australian Taxation Office twice a year. These digital platform reporting requirements apply to platforms where independent sellers or service providers earn money from the platform’s users, like a freelance marketplace or a delivery app. A company that pays contractors to work on its own projects generally doesn’t fall under these rules.

What should you ask a payout provider before you choose one?

A provider that can answer yes to the following questions can pay contractors abroad the full amount they’re owed and get the right tax forms from them:

• Do you pay contractors in their local currency at a rate we can see before sending?
• Do you support the most popular payout methods in each country where our contractors live?
• Do you show the full cost of each payout, including the exchange rate markup?
• Do you collect each contractor’s tax form at signup and match the form to their status?
• Do you verify identities and screen every contractor against sanctions lists before their first payout? 

If you run a marketplace or gig platform, also ask:

• Can we embed or white-label contractor onboarding in our own product?
• Do you offer a payout API and webhooks so payout statuses and returned payments flow into our own systems?
• Do you handle year-end filings (Forms 1099 and 1042-S) and platform reporting such as DAC7, or do we have to export data to another tool?

Compare finalists on how quickly contractors get paid after signup and how long your team needs to go live. Self-serve contractor onboarding gets new contractors paid sooner, while accounting integrations cut the manual work your team has to do. Both factors matter even more for freelancer and gig worker payouts, especially when new contractors sign up every week. 

Pay freelancers and gig workers abroad without the manual work

Every item on this checklist is something Trolley was built to handle. Contractors can choose how they want to be paid, whether that’s a local bank transfer or a digital wallet, and Trolley delivers it in their own currency: 135+ currencies across 210 countries and territories. Tax forms are collected and validated at signup, before the first payout goes out. Identity checks and watchlist screening happen in the background, so a payout never leaves without them. Run it all from the Trolley dashboard, or build onboarding and payouts into your own product with the API.

Book a demo to see how your team can pay contractors abroad without buying currency or chasing tax forms by hand.

International contractor payments FAQ

Can a US company pay independent contractors in other countries?

Yes. A US company can pay independent contractors abroad if it collects the right tax form before the first payout, screens the contractor against sanctions lists, and confirms the arrangement counts as contracting under the contractor’s local labor rules. A tax advisor should review your setup for each country.

How do platforms pay international freelancers and gig workers?

Many platforms use a payout provider that sends funds through local bank transfers, digital wallets, or card payouts in each contractor’s own country and currency. International wires work for occasional, large payments, but intermediary fees and manual data entry make them hard to run at scale.

Do you need to send a Form 1099-NEC to a foreign contractor?

Usually not. For non-US contractors who do the work outside the US, collect a Form W-8BEN or W-8BEN-E instead. You do issue a Form 1099-NEC, after collecting a W-9, to US citizens and residents living abroad once payments reach the IRS filing threshold. If a foreign contractor does the work inside the US, you may need to withhold tax and file Form 1042-S.

Can you pay international contractors with PayPal or Zelle?

PayPal works for contractors who already have an account in a supported country, though conversion and withdrawal fees vary by wallet, country, and who bears them. Zelle doesn’t work because it only operates between US bank accounts.

How much does it cost to pay a contractor abroad?

The total includes the transfer fee, intermediary bank fees, the currency conversion markup, the receiving bank’s fees, and any platform fees. A 3% markup on a $3,000 payout costs $90, and bank wire fees commonly add $15 to $50 on top. Price a sample payout through each provider to compare.

How long do international contractor payments take?

It depends on the method. International wires take one to several business days, digital wallets can arrive in minutes, local bank transfers take seconds to a few business days, and card payouts usually arrive within 30 minutes where supported.

Do digital platform reporting rules like DAC7 apply to my platform?

Possibly. DAC7 and similar rules in the UK, New Zealand, and Australia apply to platforms where independent sellers or service providers earn money from the platform’s users, such as freelance marketplaces and delivery apps. A company that pays contractors only for work on its own projects generally isn’t covered. Confirm with a tax advisor.

This article is for educational purposes only and isn’t legal or tax advice. Consult a qualified advisor about your specific situation.