How to pay international contractors (2026)

Contents

• Contractor or employee: the test in each country
• US: the W-8BEN, and why there's usually no 1099
• UK: IR35 and workers abroad
• Australia: ABN, withholding and super
• The worker's side (the Philippines as an example)
• When an employer of record makes sense
• Moving the money
• How StaffPick's two plans handle it
• General information, not legal advice
• Questions people ask
• Sources

Hiring someone abroad as a contractor is mostly paperwork you do once, then a payment you repeat. You check they really are a contractor, collect the right form, keep records and pick a low-cost way to send money. Here is how to pay international contractors from the US, UK or Australia, what the worker handles on their side, and when an employer of record is worth the cost.

Contractor or employee: the test in each country

Each country has its own test. For someone who works from home abroad, the worker's own country's rules matter too, because that's where the work happens.

• United States. The Department of Labor stopped applying its 2024 contractor rule in investigations on 1 May 2025, and proposed rescinding it on 26 February 2026. That proposal isn't final as of October 2026. The FLSA, the main federal wage law, doesn't cover work done in a foreign country.
• United Kingdom. Employment status (employee, worker or self-employed) sets rights and duties, and a person's status can differ between employment law and tax law. HMRC applies it for tax, and courts and tribunals make the final decision.
• Australia. Since 26 August 2024, the Fair Work Ombudsman's whole of relationship test looks at "the practical reality of the relationship", including the contract and how it's carried out in practice. Some businesses use a different test, and Fair Work's page shows which one applies.
• Philippines. The four-fold test asks who selected and engaged the person, who pays the wages, who can dismiss them, and who controls how the work is done. Control is the deciding factor.

Signs that point to a real contractor (our checklist, not a legal test): they choose how to do the work, use their own equipment, can work for other clients, invoice you for hours or projects, and get no employee benefits. Signs that point the other way: you set their hours and methods in detail, they work only for you, and you manage them like staff.

US: the W-8BEN, and why there's usually no 1099

If the contractor isn't a US person and does all the work outside the US:

• The income is foreign-source. The IRS sources pay for services to where the work is done.
• Collect a Form W-8BEN before you pay. It's for individuals; a foreign company uses Form W-8BEN-E. The IRS says foreign persons who give you a valid Form W-8 "are exempt from backup withholding and Form 1099 reporting", so you don't send them a 1099.
• Keep it on file. The form goes to you as the payer. The IRS instructions say: "Do not send Form W-8BEN to the IRS."
• It lasts about three years. It stays valid until the last day of the third calendar year after the year it's signed. A form signed in 2026 is good through 31 December 2029, unless the worker's situation changes.
• Days in the US change things. If the contractor does any of the work while in the US, ask your accountant how to treat that part.

For each contractor, keep the signed W-8BEN, your contract, their invoices and your payment records.

UK: IR35 and workers abroad

IR35, the off-payroll working rules, deals with contractors who work like employees through their own company. For workers abroad, HMRC's own manual says a non-UK-resident working outside the UK "is unlikely to fall within the charge to UK tax or NICs", and when that's the case, the off-payroll rules don't apply.

So for a contractor in Manila or Nairobi who never works in the UK, IR35 usually isn't the question. Keep a note of where they live and work, and look again if they move to the UK or start working there. GOV.UK's employment status pages cover the basics.

Australia: ABN, withholding and super

• ABN. The ATO says foreign resident suppliers "generally do not need to provide you with an ABN unless they are carrying on an enterprise in Australia", which includes having an agent or a branch office there. If you don't withhold, keep a record of the reason.
• Super. The ATO says you don't have to pay super for "non-resident employees who work outside Australia". It also says independent contractors "who are paid mainly for their labour are eligible for super guarantee". The page doesn't say how the two rules combine for an overseas contractor paid for their labour, so ask your accountant before you decide.
• Status. Fair Work's whole of relationship test looks at how the work is actually done, so calling someone a contractor in the contract isn't enough on its own.

The worker's side (the Philippines as an example)

Your contractor has paperwork of their own. In the Philippines:

• Tax registration. Freelancers register with the Bureau of Internal Revenue (Form 1901, or online through ORUS) and file their own returns. If their gross receipts are ₱3 million a year or less, they can choose 8% income tax on the amount above ₱250,000 (TRAIN law, Revenue Memorandum Order 23-2018).
• 13th-month pay. Philippine law requires employers to give rank-and-file employees who worked at least a month a 13th-month pay of at least one twelfth of the year's basic salary, by 24 December. It's an employer's duty to employees, so it generally doesn't apply to independent contractors.
• Control. If you control their hours and methods the way an employer would, the four-fold test could make them an employee under Philippine law, with an employer's duties.

Ask for an invoice every month. It helps them with their tax and gives you the record you need.

When an employer of record makes sense

An employer of record (EOR) is a company that legally employs the worker in their own country on your behalf. It runs local payroll, taxes and benefits, and you direct the day-to-day work. Published starting prices, as of October 2026:

Deel and Remote also list contractor plans, from $49 and $29 per contractor a month.

An employer of record makes sense when:

• You want the person as an employee, with local benefits and protections, rather than as a contractor.
• You manage the work the way an employer would, so a contractor setup looks risky.
• You're hiring several people in one country, or the worker wants an employment contract.

For one contractor on a modest salary, the fee can be as much as their pay: beginner Filipino VAs report $480 to $900 a month in OnlineJobs.ph's April 2026 salary guide. So an EOR is usually worth it when you need employment, not just a way to pay someone.

Moving the money

• Ask the worker how they want to be paid. The best route is the one that lands the most in their local currency.
• Compare the total cost: the transfer fee, the exchange-rate margin and any fee to receive the money. Two services with the same fee can land very different amounts.
• Agree the currency in the contract. If you pay in US dollars, the worker carries the exchange-rate risk. If you pay in their currency, you do.
• Pay on a fixed day, send a short note with each payment, and keep the receipt.
• Keep one folder per contractor: the contract, the tax form (a W-8BEN for US businesses), invoices and payment receipts.

How StaffPick's two plans handle it

On StaffPick, browsing tested people and getting an AI shortlist are free. When you hire, you choose a plan:

• Hire Direct, $79 a month. You request intros, then hire and pay the person directly. You handle the contract, the tax form and payments, as this guide describes.
• Done For You, the worker's pay plus $399 a month. We pay them for you and handle the paperwork, and if it doesn't work out, the replacement is free.

To compare routes and costs, see where to hire a virtual assistant and how to hire a virtual assistant.

General information, not legal advice

This guide summarises the rules as the IRS, HMRC, the ATO, the Fair Work Ombudsman, the US Department of Labor and the Philippine BIR publish them, checked in October 2026. Before your first payment, ask your accountant four questions:

1. Is this person a contractor under my country's rules, and under theirs?
2. Which tax form do I collect, and how long is it valid?
3. Do I need to withhold anything, or pay super or pension contributions?
4. Which records should I keep, and for how long?

Questions people ask

Do I need to send a 1099 to a foreign contractor?

Usually not. If a non-US contractor works entirely outside the US and gives you a valid Form W-8BEN, the IRS says they are exempt from backup withholding and Form 1099 reporting. Keep the form on file, and don't send it to the IRS.

How long is a W-8BEN valid?

Until the last day of the third calendar year after the year it's signed, unless the worker's situation changes. A form signed in 2026 is valid through 31 December 2029.

What is an employer of record?

A company that legally employs a worker in the worker's own country on your behalf and runs local payroll, taxes and benefits, while you direct the work. Published starting prices range from $459 to $699 per employee a month (Multiplier, Deel, Remote and Oyster, October 2026).

Does IR35 apply to contractors outside the UK?

HMRC says a non-UK-resident working outside the UK is unlikely to fall within the charge to UK tax or National Insurance, and in that case the off-payroll (IR35) rules don't apply. Check again if they move to the UK or start working there.

Do I have to pay super for an overseas contractor?

The ATO says you don't pay super for non-resident employees who work outside Australia, and also that contractors paid mainly for their labour are eligible for super guarantee. It doesn't say how the two combine for a contractor overseas, so ask your accountant.

Sources

Each figure in this guide comes from one of these pages, checked on 27 Oct 2026. Prices and rules change, so open the source before you rely on a number.

1. 1IRS Publication 515: withholding of tax on nonresident aliens and foreign entitiesirs.gov
2. 2IRS: instructions for Form W-8BENirs.gov
3. 3US Department of Labor: independent contractor rulemaking (2026)dol.gov
4. 4US Department of Labor elaws: FLSA coverage of work in foreign countrieswebapps.dol.gov
5. 5HMRC Employment Status Manual ESM10025: workers outside the UK and the off-payroll rulesgov.uk
6. 6GOV.UK: employment statusgov.uk
7. 7ATO: documents quoting a supplier's ABN (foreign resident suppliers)ato.gov.au
8. 8ATO: work out if you have to pay superato.gov.au
9. 9Fair Work Ombudsman: independent contractorsfairwork.gov.au
10. 10Bureau of Internal Revenue: Revenue Memorandum Order 23-2018 (8% income tax option)bir-cdn.bir.gov.ph
11. 11Supreme Court of the Philippines e-Library: the four-fold test of employmentelibrary.judiciary.gov.ph
12. 12Philippines: Presidential Decree 851 (13th-month pay)lawphil.net
13. 13Philippines: Memorandum Order 28 (13th-month pay for all rank-and-file employees)lawphil.net
14. 14OnlineJobs.ph: virtual assistant salaries in the Philippines (salary guide, last updated April 2026)blog.onlinejobs.ph
15. 15Deel: pricingdeel.com
16. 16Remote: pricingremote.com
17. 17Multiplier: pricingusemultiplier.com
18. 18Oyster: pricingoysterhr.com