Getting Paid Across Borders: What Actually Happens to the Money

Getting paid by a company in another country is four separate problems wearing one coat: the contract you’re under, the invoice you send, the rail the money travels on, and the tax paperwork that has to exist before any of it moves. Most guides on this are written by platforms that solve exactly one of the four and describe the other three as an afterthought. This one is written from the receiving end — I’ve been the contractor on the other side of these arrangements for years, invoicing companies and platforms in other countries as an Italian sole trader.

That perspective matters more than it sounds. Almost every page you’ll find about international contracting is written for the company doing the hiring, because the company is the one with the budget. Very little is written for the person being hired, and the two sides worry about completely different things. Where it’s useful, I’ve written both.

One honest limit before anything else: I’m a practitioner, not an accountant or a lawyer. Everything here is how these mechanics work in practice, not advice about your situation. Cross-border tax rules change, and they vary enormously by country, by the kind of work, and by how you’re set up. Confirm your own specifics with a qualified professional before acting on any of it.

The four things that have to line up

Money moving between countries fails at one of four points, and it’s worth knowing which one you’re looking at when something goes wrong:

1. The contract — are you a contractor or, in the eyes of the other country’s law, actually an employee? This is the client’s exposure far more than yours, but it shapes everything else. (The contractor’s side of misclassification →)
2. The invoice — the document has to be right for your jurisdiction, including the VAT treatment, before you send it. Getting this wrong is the most common self-inflicted delay. (Invoicing foreign clients as an Italian sole trader →)
3. The rail — bank transfer, PayPal, Wise, or a platform’s own wallet. Each has a different cost, a different arrival time, and a different failure mode.
4. The paperwork — tax forms the payer needs on file before they’re allowed to send you the full amount. With US payers this is usually a W-8BEN, and without it they may be required to withhold a slice.

Nothing moves until all four are in place. A platform that promises to “handle payments” typically handles the third and part of the fourth. The first two stay yours.

Which problem does a platform actually solve?

There’s a whole category of software here and the marketing tends to blur it. Concretely:

What it is	What it actually does	Roughly what it costs
Contractor management (e.g. Deel, Remote)	Contract templates, compliance checks, invoicing and payout for people who stay self-employed	~$49 per contractor per month
Contractor of Record	The platform becomes the legal contracting party and absorbs the misclassification risk	~$325 per contractor per month
Employer of Record (EOR)	The platform legally employs someone in a country where you have no entity	~$599 per employee per month, plus local taxes and benefits
A multi-currency account (e.g. Airwallex, Wise)	Receiving and holding foreign currency; no contract or compliance layer at all	Per-transfer and FX spread
A plain invoice and bank transfer	Nothing. You do all four steps yourself	Bank fees only

The distinction that saves the most money: an EOR is for employing someone, not for paying a freelancer. If everyone you work with is genuinely self-employed, contractor management at ~$49 does the job and the $599 tier is not for you. Vendors are not always eager to draw that line, because the expensive product is the one they’d rather sell.

Prices above are the published list rates as of September 2026 and move around; check them before budgeting.

Choosing a rail: the part nobody itemises

Once you’re past the contract and the invoice, the money has to physically arrive. The three rails I actually receive on, and the honest trade-off in each:

• Direct bank transfer (SEPA within Europe, SWIFT beyond it). SEPA is cheap, quick and boring, which is exactly what you want. SWIFT is the one to watch: intermediary banks between the sender and you can each take a cut, so the amount that lands can be tens of dollars short of the amount that was sent, and nobody tells you in advance which banks were involved. If an invoice is settled by SWIFT and arrives light, that gap is usually where it went.
• PayPal. Still the default at a lot of smaller platforms, and the least good deal of the three once currency conversion is involved. The transaction fee is visible; the conversion margin, applied quietly on top of the mid-market rate, usually isn’t. If you can be paid in your own currency, take that option.
• Wise. A multi-currency account you can receive into, hold in the currency it arrived in, and convert when you want rather than when it lands. The reason to care isn’t a headline fee, it’s timing — being able to not convert on a bad day is worth more than a few basis points on the spread.

The general principle, and the one that took me longest to internalise: the fee you can see is rarely the expensive part. Currency conversion is charged as a margin on the exchange rate, so it doesn’t appear as a line item anywhere. Receiving USD into a USD balance and converting deliberately will beat being auto-converted on arrival almost every time.

There’s a bookkeeping argument too. Payments that arrive by different rails, in different currencies, on different dates, from platforms that each name the transaction differently, are genuinely tedious to reconcile against invoices at year end. Keeping the number of rails small has a real cost saving that has nothing to do with fees.

The paperwork that gates the money

Two documents cause most of the delays.

Tax forms the payer needs on file. US companies and platforms are generally required to withhold tax on payments to non-US people unless a valid form establishes foreign status — for an individual that’s usually a W-8BEN, and it’s typically valid for three years. Nothing goes out until it’s signed. The failure mode is silent: your payout sits pending and the reason is buried in an account settings page you’ve never opened.

Your own invoice, in the right shape. For a European sole trader invoicing a business in another EU country, that means the client’s VAT number, validated in VIES before you invoice, plus the reverse-charge wording. For a business outside the EU, the supply is generally outside the scope of your domestic VAT — a different treatment with different wording. Get the mechanics wrong and your own tax authority can treat the invoice as a domestic sale and expect the VAT from you, which is a bill you never collected from anyone.

I’ve written the Italian version of this in detail, because it’s the one I actually live: invoicing foreign clients with an Italian partita IVA.

If you’re the one paying

Most readers of this site are a one-person business, and at some point that means paying a writer, a designer or a developer in another country. The short version: for a handful of genuinely self-employed people, a contractor-management platform at roughly $49 a head buys you compliant contracts, a paper trail and a payout rail you don’t have to babysit — and for a very small number of long-standing relationships, a plain invoice and a bank transfer is still a perfectly respectable answer.

The full version, including when not to buy software: hiring your first international contractor.

See how Deel handles contractor payments→

What I’d tell someone starting out

• Fix the invoice before you shop for tools. A correct invoice solves more late payments than any platform does.
• Fill in the tax form the day you sign up, not the day you try to withdraw.
• Reduce the number of rails. Two is fine. Five is a reconciliation problem you’ve bought for no benefit.
• Watch the conversion, not the fee. The spread is where the money goes.
• Don’t buy an EOR to pay a freelancer. It’s twelve times the price of the product you need.
• Ask a professional about your own position. Especially anything touching residency, thresholds or which regime you’re on — that part genuinely does not generalise, and I’m not going to pretend otherwise.

Frequently asked questions

How do freelancers get paid by foreign clients?

Through four steps that all have to be in place: a contract that correctly describes you as self-employed, an invoice that is valid in your own jurisdiction including its VAT treatment, a payment rail such as SEPA or SWIFT bank transfer, PayPal or a multi-currency account, and any tax form the payer needs on file before they are permitted to pay you in full. Payment platforms typically solve the rail and part of the paperwork; the contract and the invoice stay your responsibility.

What is the cheapest way to receive international payments?

Within Europe, a SEPA bank transfer in your own currency is usually cheapest and simplest. Across currencies the deciding factor is rarely the visible fee but the exchange-rate margin, which is charged as a spread rather than shown as a line item. Receiving into an account that holds the foreign currency, then converting when you choose, generally beats being converted automatically on arrival. SWIFT transfers deserve caution because intermediary banks can each deduct a fee in transit.

Do I charge VAT when invoicing a client in another country?

Usually not, but the reason differs and the wording matters. For business-to-business services to another EU country the reverse charge normally applies: you invoice without VAT, state that the reverse charge applies, and include the client’s VAT number after validating it in VIES. For a business outside the EU the supply is generally outside the scope of your domestic VAT entirely. Both need to be stated correctly on the invoice, because if the treatment cannot be substantiated your own tax authority may treat the sale as domestic and expect the VAT from you. Confirm your specific case with an accountant.

What is a W-8BEN and do I need one?

It is the form a non-US individual gives a US payer to certify foreign status, so the payer is not required to withhold US tax on the payment. If you are outside the US and being paid by a US company or platform you will almost certainly be asked for one, and it is typically valid for three years. The practical point is that payouts are often held until it is on file, and the notification that it is missing is easy to overlook inside a platform’s settings.

Do I need an Employer of Record to pay a freelancer abroad?

No, and it is an expensive mistake. An EOR exists to legally employ someone in a country where you have no legal entity, at roughly $599 per person per month plus local employment taxes and benefits. Paying genuinely self-employed contractors needs contractor management instead, at roughly $49 per contractor per month, or in simple long-standing cases just an invoice and a bank transfer. Buy the employment product only if you are actually employing someone.

Related reading

• Deel from the contractor’s side — what it’s like being paid through it, rather than paying through it.
• Invoicing foreign clients with an Italian partita IVA — reverse charge, VIES and the mistakes that cost you.
• How affiliate networks actually pay you — thresholds, holds and the calendar nobody publishes.
• Contractor or employee? — the misclassification question from the contractor’s seat.
• Hiring your first international contractor — when software is worth it and when it isn’t.