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What is an international contractor?

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An international contractor—also referred to as a global contractor—is a worker who supplies a service for a business, while residing in a different country than where the business is based. International contractors are self-employed non-employees who have control over how, when, and where they get work done.

What is the difference between an employee and an international contractor?

Employees work directly for their employers, which means that they are entitled to employee benefits. Employers are responsible for dictating the terms and conditions of employees’ work, withholding taxes and social contributions (such as Social Security, healthcare, unemployment, and more), and abiding by labor laws such as providing paid sick and vacation leave. Employers can choose the terms of the employees’ workload, such as where, how, and when they complete assignments.

International contractors can work from anywhere and are not considered employees. They do not receive employee benefits and employers do not need to withhold taxes from their paychecks. Contractors must pay their own insurance and provide any equipment needed for the project. Finally, contractors must invoice clients (employers) per project before receiving payment.

Can a U.S. company hire an international contractor?

Any U.S. company can hire a foreign contractor as long as the contractor fills out IRS Form W-8BEN. This form confirms that the contractor is not a U.S. citizen or resident alien and does not need to withhold taxes from the U.S. government.

When businesses hire international contractors, they may want to consider:

  • The labor laws in the contractor’s country
  • What to include in the contractor agreement so it meets the legal requirements of all countries involved
  • Taxes for foreign independent contractors, noting whether the two countries have a tax treaty

How do businesses pay international contractors?

Businesses will need to pay contractors according to the contractor agreement signed by the company and contractor. The contract must stipulate when to pay contractors, how the process works, what’s needed, which currency to pay international contractors in, and how they’ll receive payment.

After receiving an invoice for the amount they’re owed, companies can pay contractors using a:

  • Global payroll and payments platform
  • Bank wire
  • Credit card
  • Freelance platform
  • Money transfer company
  • Cryptocurrency

Should employers send a 1099 to a foreign contractor?

Businesses do not need to issue a 1099 for foreign contractors. A foreign contractor will need to complete and file Form W-8BEN.

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