How to Hire and Pay International Contractors Legally

Hiring international contractors can unlock global talent — but doing it legally requires careful attention to classification, contracts, tax documentation, and local labor laws.

Without the right systems in place, businesses risk misclassification penalties, IP exposure, and regulatory fines.

This guide explains how to hire and pay international contractors legally and shows how Deel centralizes compliance, payments, and contractor management in one platform.

What is an international contractor?

An international contractor is an independent worker based in a different country from the company they work for. While the defining characteristics of a contractor can vary depending on their country of tax residency, they generally:

• Work on a short-term or project basis
• Have autonomy over how and where they work
• Receive payment on a project or task basis
• Manage their own taxes and benefits
• Set their own schedule and work methods
• Can work with multiple clients at once

See also: When to Transition From Contractors to Full-Time Employees

What are the benefits of hiring international contractors?

Engaging international independent contractors offers significant advantages, particularly in:

• Access to global top talent: Businesses can hire the best professionals worldwide, unrestricted by location
• Cost savings: Independent contractors only get paid for work. There are no costs for benefits, payroll taxes, or long-term salaries
• Scalability: Companies can adjust their workforce quickly by hiring contractors as needed, without the constraints of permanent staff
• Specialized expertise: Contractors bring niche skills that may not be available in-house, delivering high-quality results
• Faster hiring: With fewer formalities than full-time employees, contractors can start work quickly. This makes them ideal for urgent or short-term projects
• Speedy market testing: Hiring international independent contractors lets companies test new markets without investing significant resources, reducing both financial and operational risk

See also: US Company Guide to Hiring Foreign Independent Contractors

How to hire international independent contractors compliantly

Hiring and paying international contractors requires attention to legal and financial details for a smooth, compliant working relationship.

Create locally compliant contractor agreements

A formal contract is essential to define the work arrangement between you and the international contractor. It serves as a clear reference for both parties, reducing confusion and disputes.

Create a detailed contractor agreement outlining:

• The nature of the work relationship
• The scope of work or project deliverables
• Project duration and terms
• Payment details
• Confidentiality, dispute resolution, and termination clauses

Check out this step-by-step guide to creating a compliant contractor agreement.

Deel’s platform features an intuitive contract workflow that helps you generate compliant contracts that include all required information and any country-specific details, so nothing goes amiss. We also have in-house legal experts who regularly review and update all contracts signed through the platform to ensure compliance.

Deel lets you create different types of contractor agreements, including:

• Fixed rate contracts
• Pay-as-you-go contracts
• Milestone contracts

Deel's platform offers the convenience of a built-in e-signature feature. This removes the need for manual paperwork. The result is a streamlined and efficient contractual process that is quick to implement and easy to use.

See also: Independent Contractor Agreements: Client Guide + Free Template

Classify contractors correctly

Know the legal criteria for classifying a worker as a contractor or employee to avoid misclassification. Misclassification can result in penalties and backdated taxes.

Understand the labor laws in the contractor’s country. Research their rights, tax obligations, and other laws that may impact the working relationship. In the US, for instance, the IRS 20 Factor Test lets you determine if a worker should be a contractor or an employee.

By using Deel Contractor of Record to hire contractors, you transfer all the burden of worker classification to us. Our legal experts will advise you if a worker qualifies as a contractor or employee.

We also ensure that every aspect of the contractual relationship, from agreements to onboarding, meets local legal standards.

Here are three tests you can use to classify contractors properly.

Conduct thorough background checks

When hiring international contractors, background checks help verify their credentials, ensure reliability, and reduce risks associated with fraud. Since remote work limits in-person interactions, due diligence is essential to protect your business.

You can automate the process with Deel’s Background Checks. In just 15 minutes, you get a real-time, AI-powered search of over 200,000 databases in 190 countries.

Protect intellectual property

Clarify that your company owns the rights to any intellectual property created by the international contractor. Have it in writing and include clauses stating that all work, inventions, or creative assets produced belong to your business.

The contract should also define how the contractor can (or cannot) use the work after project completion and include confidentiality terms to prevent the sharing of proprietary information.

Discover how Chirpy, a US-based company, used Deel to hire contractors from Europe. Through Deel’s support, the company successfully managed a special, urgent project worth over $500,000.

See also: Protecting Intellectual Property in Global Teams

Hiring international contractors without a local legal entity

One of the biggest advantages of working with international contractors is that companies can hire legally without opening a local entity.

Unlike full-time employment, compliant contractor engagement typically does not require:

• Local incorporation
• Payroll registration
• Statutory employment filings

Deel enables businesses to hire contractors in other countries without a legal entity by:

• Providing country-specific, compliant contracts
• Verifying contractor classification
• Centralizing tax documentation
• Managing payments and compliance alerts

This directly reduces risk while allowing companies to expand faster.

How to pay international independent contractors

Automate contractor payments

Late or inconsistent contractor payments can damage their trust and make you lose top talent. At the same time, timely payments can be difficult to achieve when dealing with globally dispersed contractors with different payment arrangements.

Processing international payments for contractors is an admin-heavy process that can slow you down.

With Deel, we automate payment processes and do all the heavy admin work for you, saving time. Contractors generate compliant invoices directly through the platform, reducing back-and-forth and minimizing the risk of manual errors. You can review, approve, and issue mass payments in just a few clicks.

Beyond payments, Deel helps you stay audit-ready by storing tax forms, contracts, and payment records in one place. It gives you complete visibility into payment status, contractor details, and historical data.

See also: Paying Your Contingent Workforce: Optimizing Payroll and Payment Methods

Offer flexible payment options

Working with an international team of non-US contractors can get complicated, especially when determining the best payment methods for a dispersed team. Deel easily manages payments across different countries and currencies, considering various exchange rates and payment method options.

A contractor’s country of origin may influence their choice of payment method or currency. For example, contractors from France or Spain may prefer euros, while contractors from Canada may prefer Canadian dollars. With 15 payment methods and over 200 currencies, Deel allows you to honor these preferences.

Deel's platform makes it easy for both clients and contractors to agree on the most convenient payment terms. Popular options for sending payments to contractors abroad include:

• International bank transfers
• Local bank transfers
• Coinbase account transfer
• Wire transfer to local bank accounts
• Binance
• PayPal
• Revolut
• Deel card
• Deel instant card transfer
• Payoneer

See also: Owning Equity as an Independent Contractor: Equity Possibilities with Deel

How to manage international independent contractors

Maintain compliant paperwork and working relationships

It is important to know the required employment paperwork and tax reporting in your country and the contractor’s country. For instance, in the US, companies hiring international contractors may need to file the IRS form W-8BEN, which certifies the contractor’s foreign status.

Some countries also require employers to withhold taxes on payments to international contractors, depending on tax treaties.

You don’t need to be familiar with labor laws in every country you hire from. Deel Contractor of Record helps you stay compliant at every stage, from onboarding to offboarding. It reduces the risk of misclassification, ensures you collect all required country-specific documents, and keeps you aligned with the latest local labor laws.

Deel's Compliance Hub provides three key features that help you maintain continuous compliance:

• Monthly Workforce Insights: A monthly report providing a clear view of your workforce, including potential misclassification risks and changes in local regulations that may affect compliance.
• Compliance Monitor: A summary of the latest, global regulatory changes in taxes and labor laws, and how they impact your business.
• AI-based worker classifier: An AI tool that assesses whether a worker qualifies as a contractor or should be classified as an employee, based on local legal standards

When working with a contractor, there’s a risk that the relationship could begin resembling employment, resulting in misclassification. Deel alerts you if this happens. You’ll have the option to switch to our Employer of Record (EOR) services, where Deel legally employs the contractor on your behalf and ensures compliance.

Discover how Pixis hires contractors across APAC, MENA, the US, and Europe with Deel. The company saves over $150,000 by mitigating compliance risks through Deel.

See also: The Enterprise Guide to Global Compliance Management in 2025

Centralize and automate contractor admin

When managing multiple contractors, it’s important to ensure all documents are signed and up to date. You must also keep accurate records of invoices, personal details, and compliance documents. These admin tasks are essential but often time-consuming and prone to errors.

It gets more complicated when hiring international contractors across different languages and legal systems.

Deel centralizes and automates these admin tasks in one platform. You can manage payments, agreements, and contractual responsibilities without switching between tools.

You can customize each contractor’s agreement to include their specific terms—like pay rate, payment schedule, and scope of work. All of these details are saved in their Deel profile, so everything stays organized and easy to manage.

Deel also automates complex tasks that would otherwise take hours, such as onboarding, amending and terminating contracts, and creating workforce reports. Removing manual admin work allows you to focus on maximizing your contractual relationships.

See also: Best Contractor Management Software for Global Businesses

Prioritize contractor experience

Working with a contractor is a partnership. So, it’s important to create a positive experience for both sides. As experts in global hiring, we offer multiple functionalities that benefit both contractors and organizations.

These talent attraction strategies create an elevated experience for the customer and improve the working relationship and job satisfaction.

Consider the following features, which play a pivotal role in improving the contractor experience:

• Deel Advance provides early access to a paycheck for eligible individuals with no credit checks, interest rates, or applications
• Deel Card is a physical card for personal spending. It offers contractors global purchasing power and the flexibility to spend funds as needed
• Contractor Perks, including discounts and vouchers to optimize a contractor’s work and lifestyle. It helps contractors boost fitness, optimize work efficiency, enhance personal growth, and navigate the world of remote work
• Bookkeeping tools that include an expense tracker, professional tax advice (available in select countries), and an invoice generator, to help them manage their finances better

By offering these advantages and features, Deel improves the contractor experience, making the working arrangement more productive and positive.

Get the Complete Guide to Contractor Management for Global Businesses. You'll discover the key to managing contractors efficiently to stay compliant and protect your business from critical legal and financial issues.

Hire, pay, and manage international contractors with Deel

Working with international contractors and clients means dealing with local laws, tax rules, and compliance requirements. Getting it wrong can put your business at risk.

Deel simplifies contractor management, helping you stay compliant while tapping into top international talent.

Whether you’re engaging independent contractors or partnering with our Employer of Record (EOR) service, we handle compliance, contracts, payments, and the admin work. Deel gives you the structure and support you need to grow across borders.

Book a 30-minute demo with one of our experts to discover how Deel works.