Business

Contractor or employee?

Hiring someone in another country as a contractor is quick, but if they work like an employee, the law can treat them as one. How the UK, the US and 16 other countries decide, what getting it wrong costs, and contractor platforms compared from their own price lists.

Checked on 17 October 2026. Employment status turns on how the work is actually done, not what the contract calls it, and the rules are changing in the US, the Netherlands, Poland, Brazil and the EU right now. Where we couldn't read an official source, we used copies of the law, legal publishers, law firms or trade bodies, listed under each table. This is general information, not legal or tax advice.

The short version

The label on the contract doesn't decide it. Control over the work, personal service and who carries the business risk do, in almost every country. Kodeks pracy art. 22 (copy), CRA, employee or self-employed, January 2026, Revenue, determining employment status, January 2026, Techniker Krankenkasse, employee or self-employed, January 2026
Several countries presume it's employment once certain signs are there. Spain, Portugal and Mexico do, Belgium does in some sectors, and the EU's platform work rules (due by 2 December 2026) will for platform work. Estatuto de los Trabajadores (copy), Doutor Finanças, August 2026, Mexico Federal Labour Law, May 2026, Belgian social security (ONSS), general rules, Directive (EU) 2024/2831 (copy)
Getting it wrong is mostly back-payments. Years of social contributions and tax, with interest, and sometimes fines or criminal charges: Germany can go back 4 years, or 30 if deliberate. SGB IV section 25, CRA, impact of employment status, December 2025, IRS Internal Revenue Manual 4.23.8
Some countries will give you an official answer. Germany (even before work starts), Ireland, Belgium and Canada have official status checks, and the UK's HMRC stands by its online tool's tax result if your answers are accurate. Deutsche Rentenversicherung, status check, May 2026, Department of Social Protection, Scope Section, June 2025, Belgian Commission on working relationships, CRA, how to ask for a ruling, December 2025, GOV.UK, check employment status for tax, April 2025
Platforms can carry some of the risk. Deel and Multiplier sell contractor of record services, and Remote and Oyster sell cover against misclassification claims, from about $78 to $400 or more a contractor a month. Deel, pricing, Multiplier, pricing, October 2026, Remote, Contractor Management Plus, Oyster, pricing

What almost every country looks at

Control: Who decides what is done, how, when and where. Canada, Ireland, the Philippines and the US all put control at the centre. CRA, employee or self-employed, January 2026, Revenue, determining employment status, January 2026, Philippine Supreme Court, January 2024, IRS, independent contractor or employee, May 2026
Personal service: Whether the person has to do the work themselves, or can send someone else. Revenue, determining employment status, January 2026, GOV.UK, employee
Being part of the business: Whether they're built into your organisation, like Germany's and Sweden's tests, or running their own business with its own risk. Techniker Krankenkasse, employee or self-employed, January 2026, Swedish government review Dir. 2017:108 (copy), GOV.UK, self-employed and contractor, October 2026
The reality, not the paperwork: Poland's Labour Code says the contract's name doesn't matter; Canada, and Australia under its Fair Work Act (not for tax or super), look at how the work is done in practice. Kodeks pracy art. 22 (copy), CRA, employee or self-employed, January 2026, Fair Work Ombudsman, whole of relationship test

The UK

Three statuses: Employee, worker or self-employed are the main ones. "Contractor" isn't a status of its own: a contractor can be self-employed, a worker, or an employee of an agency that places them with a client. Someone's status for tax can differ from their status in employment law, and courts and tribunals have the final say. GOV.UK, employment status, October 2026, GOV.UK, self-employed and contractor, October 2026
Off-payroll working (IR35): If the client is in the public sector, or is a medium or large private or voluntary sector organisation, the client decides the contractor's status, and must give a Status Determination Statement with its reasons. If it doesn't, the client becomes liable for the tax and National Insurance. With a small client, the contractor's own company decides. GOV.UK, off-payroll working for clients, August 2024, GOV.UK, understanding off-payroll working, February 2026, HMRC manual ESM10012
Small or not: Medium or large means meeting at least 2 of these 3: turnover over £10.2 million, balance sheet over £5.1 million, more than 50 employees. The limits rise to £15 million and £7.5 million for financial years starting on or after 6 April 2025, but HMRC says that won't affect off-payroll working until 6 April 2027 at the earliest. GOV.UK, off-payroll working for clients, August 2024, HMRC Employer Bulletin, April 2025, HMRC manual ESM10006A, October 2026
Clients abroad: A client that, just before the tax year starts, isn't UK resident and has no permanent establishment in the UK doesn't need to consider the off-payroll rules. The contractor's own company then has to check the older IR35 rules (Chapter 8) itself. HMRC manual ESM10006, October 2026
Working from the UK for a foreign company: A UK-resident contractor is usually taxed in the UK on all their earnings. For National Insurance, the off-payroll rules may not apply to work done outside the UK, with exceptions. HMRC manual ESM10025
Checking: HMRC's Check Employment Status for Tax (CEST) tool gives its view for tax, and HMRC says it will stand by the result if the information you give is accurate. GOV.UK, check employment status for tax, April 2025
If HMRC disagrees: Whoever is responsible (the client, or the contractor's own company) pays the tax and National Insurance due, plus interest, and may be charged a penalty worked out as a percentage of what HMRC would have lost, depending on behaviour. GOV.UK, IR35 enquiry by HMRC

The US

The IRS test: Everything that shows control or independence counts, grouped as behavioural control, financial control and the type of relationship (such as written contracts and benefits). Either side can ask the IRS to decide for federal employment tax on Form SS-8, which can take at least six months. IRS, independent contractor or employee, May 2026, IRS, Form SS-8, March 2026
The Department of Labor: Since 1 May 2025 it no longer applies its 2024 contractor rule in its own investigations, though the rule still applies in private lawsuits. It proposed rescinding it in February 2026, and a final rule has been under White House review since 28 September 2026. US DOL, Field Assistance Bulletin 2025-1, Federal Register, February 2026, reginfo.gov, rule under review
California: The ABC test assumes every worker is an employee unless they're free from your control, the work is outside your usual business, and they run an independent business of that kind. Some occupations use an older test instead. California DIR, independent contractors, June 2026
Contractors outside the US: Pay for work is generally sourced where the work is done, wherever the contract was signed or the payer is. If the work is done entirely outside the US and you hold a valid Form W-8 (W-8BEN for an individual, W-8BEN-E for a company) showing the contractor is foreign, you don't report the payment on a 1099 or apply backup withholding, as we read the IRS rules. Pay for work done in the US is US-source: it goes on Form 1042-S and may need withholding. IRS, source of personal service income, February 2026, IRS, instructions for requesters of Forms W-8, IRS, instructions for Forms 1099-MISC and 1099-NEC
If the IRS reclassifies: Reduced rates can apply: 1.5% of wages for income tax and 20% of the employee's share of Social Security and Medicare, plus the full employer share; 3% and 40% if you didn't file 1099s. They aren't available if you intentionally disregarded the rules. Section 530 relief can remove the federal employment tax liability, though not the worker's status, if you filed all required 1099s, treated similar workers the same way and had a reasonable basis. IRS Internal Revenue Manual 4.23.8, IRS, Section 530 relief, June 2026

Working abroad yourself? US taxes when you live abroad

How 16 other countries decide

Alphabetical. Several rows rely on copies of the law or on law firms and trade bodies, because the official page couldn't be read. The sources for every row are listed under the table.

Country	The test	Presumed to be employment?	Official way to check	If you get it wrong
Australia	For tax and super, the written contract decides (High Court, 2022). For the Fair Work Act since 26 August 2024, the whole relationship as it works in practice. Contractors earning over the high income threshold (A$183,100 from 1 July 2025, the latest figure we found; it changes each 1 July) can choose to opt out of that test	None found	None found	Sham contracting fines of up to A$19,800 per breach for an individual, A$99,000 for a business with fewer than 15 employees, or, for a business with 15 or more, the greater of A$495,000 or three times the underpayment (Fair Work Ombudsman). Contractors paid mainly for their labour, not for a result, and who must do the work themselves count as employees for super
Belgium	Four criteria: what the parties intended, freedom to organise working time, freedom to organise the work, and whether the client can exercise hierarchical control	Yes, but only in sectors listed by royal decree, and it can be rebutted	An administrative commission (CRT), whose decisions bind the social security institutions (for 3 years if only one party asked)	Employer social security contributions back-dated up to 3 years (7 for fraud), plus interest and a 10% charge, an SME association says
Brazil	An individual providing non-occasional services, dependent on the employer, for a wage (CLT art. 3). Arrangements meant to get round labour law are void	None found	The labour courts	Unsettled: the Supreme Federal Court suspended all cases on contracting through a company (pejotização) nationwide on 14 April 2025, and, an industry federation reported, hadn't ruled on the merits by August 2026
Canada	Whether the worker is under the payer's direction and control, judged on all the facts, not only what the parties intended	None found	A CRA ruling, through My Business Account or Form CPT1	The employer pays both its own and the worker's share of CPP and EI, plus penalties and interest
France	Permanent legal subordination to the client	The reverse: registered self-employed people are presumed not to be employees, unless subordination is proved	None found	Undeclared work: up to 3 years in prison and a €45,000 fine (€225,000 for a company). When the relationship ends, the worker is owed a lump sum of 6 months' pay on top of other termination payments
Germany	Working under instructions and built into the client's organisation points to employment; carrying your own business risk points the other way	None found	The pension insurer's status check (Statusfeststellungsverfahren): free, about 3 months on average, and can be asked for before work starts	Both employer and employee social contributions back-paid for up to 4 years, or 30 if withheld deliberately; only 3 months of the employee share can be taken back from pay. Deliberate cases can be a crime
India	The Supreme Court uses control, integration and multifactor tests. New Labour Codes, with definitions of gig and platform workers, have been in force since 21 November 2025	None found	None found	Not found
Ireland	Five questions from the Supreme Court's Domino's (Karshan) judgment in 2023: pay for work, personal service, control, the true nature of the relationship, and any legislation that changes the answer	No	The Department of Social Protection's Scope Section decides PRSI status; appeal within 21 days. The official Code of Practice was revised in November 2024	Reclassified workers go on PAYE; Revenue suggests making a qualifying disclosure. We didn't find the interest and penalty rates
Italy	Work that is mainly personal, continuing, and organised by the client (etero-organizzata)	No, but employee rules apply to that kind of work	None found	Employee pay minimums from the collective agreement, employee-rate social contributions and the full accident insurance premium
Mexico	Personal, subordinated work for a wage	Yes	None found for individuals; specialised service firms must register (REPSE)	Supplying staff through another company is banned since 2021: fines of 2,000 to 50,000 times the UMA unit, and the payments can't be deducted for tax. We found no fine aimed at single contractors
Netherlands	An overall look at all the facts, including whether there's authority over the work	Not yet: one for people paid €38 an hour or less is planned, "likely" from 1 January 2027	The tax office's online check, and approved model agreements (usable to the end of 2029, and only if the work really follows them)	Enforcement restarted on 1 January 2025: wage tax can be charged back to that date (further if in bad faith). No fines for 2025; in 2026 only for wilful or grossly negligent cases
Philippines	The four-fold test: who selects the worker, pays them, can dismiss them and controls the work (control matters most)	No	None found for individuals	In a 2024 Supreme Court case: full back wages, separation pay, pro-rata 13th-month pay and legal fees
Poland	Work under the employer's direction, at a place and time it sets. The contract's name doesn't matter, and an employment contract can't be swapped for a civil-law (B2B) one on the same terms	None found	The labour inspectorate (PIP), which can challenge B2B contracts and have them converted since 8 July 2026	A fine of up to PLN 60,000. A legal site reports an amnesty from the fine, not from unpaid social security (ZUS) contributions or tax, until 8 July 2027 for employers who switch people to employment contracts voluntarily
Portugal	Signs such as working at the client's premises or with its equipment, hours set by the client, a fixed regular payment or a management role	Yes, when some of those signs apply; a separate one for digital platforms since 1 May 2023. Both can be rebutted	The labour inspectorate (ACT) can refer a case to the public prosecutor, who asks a court to recognise the contract	A very serious offence, with fines scaled by turnover and fault; a court upheld a €9,384 fine in 2025
Spain	Paid work for someone else, within their organisation and direction	Yes	None found. Contractors earning at least 75% of their income from one client (TRADE) must register their contract with SEPE; if they don't, the client must	Fines of €3,750 to €12,000 per worker, a legal publisher says, plus unpaid social security
Sweden	How far the contractor is built into, and dependent on, the client's business	No	None found. Under the rules described in a 2017 government review, an F-tax approval normally protects the payer, but if it's obvious the person is really an employee, the payer must tell the Tax Agency in writing	The payer can become liable for the tax and employer contributions

Sources: ATO, employee or contractor, December 2024, Fair Work Ombudsman, whole of relationship test, Fair Work Commission, contractor high income threshold, April 2026, Fair Work Ombudsman, sham contracting, March 2026, ATO, super for contractors, September 2026, Belgian social security (ONSS), general rules, Belgian Commission on working relationships, UCM (SME association), CLT (FAOLEX copy), TRT-11 labour court, April 2025, FINDES, August 2026, CRA, employee or self-employed, January 2026, CRA, how to ask for a ruling, December 2025, CRA, impact of employment status, December 2025, Code du travail L8221-6 (copy), MSA, undeclared work, Cour de cassation 2013, via Legisocial, Deutsche Rentenversicherung, status check, May 2026, Techniker Krankenkasse, employee or self-employed, January 2026, SGB IV section 25, IHK Nürnberg, February 2021, LiveLaw, October 2025, Indian Ministry of Labour, December 2025, Revenue, determining employment status, January 2026, Revenue, Domino's judgment, October 2023, Revenue TDM 04-01-17, July 2025, Department of Social Protection, Scope Section, June 2025, Italian labour inspectorate, circular 7/2020, Mexico Federal Labour Law, May 2026, Mexico decree of 23 April 2021 (IMSS copy), business.gov.nl, avoid false self-employment, Dutch parliament answers, February 2025, Philippine Supreme Court, January 2024, Kodeks pracy art. 22 (copy), Polish labour inspectorate (PIP), Podatki.biz, August 2026, Doutor Finanças, August 2026, Coimbra Court of Appeal, July 2026, Lisbon Court of Appeal, February 2025, Estatuto de los Trabajadores (copy), BOE, Real Decreto 197/2009, Iberley, July 2021, Grupo2000, August 2025, Swedish government review Dir. 2017:108 (copy)

Platform work in the EU: The Platform Work Directive presumes employment where there are facts showing direction and control under national law, and the platform has to prove otherwise. EU countries must bring it into their law by 2 December 2026. Directive (EU) 2024/2831 (copy)

Hiring them as employees instead, through an employer of record: Australia, Belgium, Brazil, Canada, France, Germany, India, Ireland, Italy, Mexico, Netherlands, Philippines, Poland, Portugal, Spain, Sweden

Three ways to hire abroad

Contract them directly: You sign the contract and pay them, or use a platform to draft local contracts and handle payments. The classification risk stays with you.
Agent or contractor of record: A platform stands between you and the contractor. Deel says its contractor of record lets you "shift liability to Deel"; Atlas, Payoneer, Skuad and Toptal sell agent of record services that help reduce the risk (Atlas's includes some cover), and Remote and Oyster sell cover against claims. Read what's covered: amounts, conditions and whether you must use their contract unedited. Deel, pricing, Atlas HXM, pricing, August 2026, Payoneer, Contractor Management, July 2026, Skuad, pricing, Toptal HireGlobal, pricing, Remote, Contractor Management Plus, Oyster, pricing
Employ them through an employer of record: If the job looks like employment, an employer of record employs them for you in their country, with local payroll, contributions and contract.

Employers of record compared

Contractor platforms compared

Prices in US dollars from each platform's own pages, alphabetical. "From" means the page says "starting at". We couldn't read Omnipresent's pricing, and Velocity Global (now Pebl) only offers contractor software to its employer of record customers.

Platform	Contractor management	Misclassification cover	Paying contractors	Worth knowing
Atlas HXM	Agent of record: $199 a contractor a month	Included: 12 months' classification protection up to $100,000 ($1 million per client); its page is unclear whether that's per contractor or per contractor per month	Not stated	Says it offers agent of record, not contractor of record. Cancel any time	Go to Atlas HXM
Deel	$49 a contractor a month	Contractor of record: $325 a month ("shift liability to Deel")	120+ currencies. Contractors' withdrawal fees: free to a local bank; Payoneer 1%, PayPal 2.5%	Month to month	Go to Deel
Gusto	No monthly fee per contractor; per payment: $5 to a US bank, 1.5% to 2% to a local bank in local currency, 0.75% to 1.5% in US dollars ($15 minimum, $100 maximum)	Not stated	About 45 currencies; contractors fill in a W-8BEN or W-8BEN-E when they join	You need a Gusto plan with a US employee or contractor first	Go to Gusto
Multiplier	$40 a contractor a month, billed annually	Contractor of record from $400 a month, billed annually, plus add-ons and any set-up fee	120+ currencies; bank, crypto, PayPal or Payoneer	Only annual billing shown	Go to Multiplier
Oyster	$29 a contractor a month after a 30-day free trial	"Oyster Shell" add-on, $49 a month: reimburses claims up to $50,000 each and $500,000 per customer, if you use its contract unchanged, the contractor passes its risk check and is outside your home country	120+ currencies	Charged only for active team members	Go to Oyster
Papaya Global	From $2 a contractor a month (headline price; what's included isn't clear)	Not stated	100+ currencies	A 60-day opt-out clause even on signed agreements	Go to Papaya Global
Payoneer	Contractor Management: $19 a contractor a month. Or pay per payment: free to UK and EU banks, up to 1% by US ACH, 3% to 3.99% by card	An agent of record model it says "helps mitigate" risk; no price or cover amount	70+ currencies. Contractors may pay withdrawal fees, and $29.95 a year if they receive under $6,000 (fees vary by country)		Go to Payoneer
Plane (formerly Pilot)	$39 per active contractor a month	None found: classification guidance only	Straight to a bank account; it says it never charges contractors to receive, though banks in between may take a fee on SWIFT payments	Collects W-8 and W-9 forms and files 1099s	Go to Plane (formerly Pilot)
Remote	From $29 a contractor a month	Contractor Management Plus, from $99 a month: indemnity against third-party claims up to $100,000 per contractor and $1 million per company, if you use its contract unedited	Guaranteed payouts in 12 currencies; no fee to the contractor on a same-currency local payment	You pay only for contractors you work with that month	Go to Remote
Rippling	Not published	Not stated	50+ local currencies		Go to Rippling
Skuad	From $19 a contractor a month	Agent of record from $99 a month; no cover amount stated	70+ currencies		Go to Skuad
Toptal HireGlobal	$19 a worker a month	Agent of record: $49 a month. Its $1 million indemnity is for its virtual employer of record ($199), not this	50+ currencies in 180+ countries		Go to Toptal HireGlobal
Upwork	Business Plus: 10% of what you pay freelancers (8% for eligible US clients paying from a bank account)	Enterprise only: freelancers classed as contractors are engaged through Upwork as agent of record; price set contract by contract	Bank, PayPal, Payoneer or M-Pesa, depending on the country	Freelancers also pay a fee of 0% to 15%	Go to Upwork
Wise Business	No fee per contractor; sending fees from 0.23%, plus a $31 set-up fee (US)	None: payments only	Up to 1,000 payments in one batch; recipients pay no fee to receive		Go to Wise Business

Sources: Atlas HXM, pricing, August 2026, Deel, pricing, Deel, withdrawal options, July 2026, Gusto, global contractor payments, Gusto, international contractor fees, Multiplier, pricing, October 2026, Multiplier, contractor management, February 2026, Oyster, pricing, Oyster, global contractors, Oyster, Oyster Shell help article, Papaya Global, pricing, Payoneer, paying contractors, Payoneer, Contractor Management, July 2026, Payoneer, pricing (India), Plane, pricing, Plane, contractors, Remote, pricing, Remote, Contractor Management Plus, Remote, contractor payouts, June 2026, Rippling, global contractors, Skuad, pricing, Toptal HireGlobal, pricing, Upwork, Business Plus, Upwork, is Upwork free, Upwork help, compliance, Upwork help, Upwork Payroll, Upwork help, agent of record, Wise, business payouts, Wise, business pricing (US)

Work & Legal Essentials

Money & Operations

Work Setup & Tools

Lifestyle & Mobility