Paying international contractors in cryptocurrency is becoming the new normal for global businesses.
While crypto payments offer speed and lower fees, they create unique tax challenges that catch many companies off guard.
Both employers and independent contractors must navigate complex regulations that vary by country.
The good news?
With the right approach, managing crypto payroll taxes doesn't have to be overwhelming.
At Rise, we've helped businesses process over $700M in international payments while staying fully compliant.
Here's everything you need to know about handling taxes for contractors paid in cryptocurrency.
Key Takeaways
- Rise automates tax compliance for international contractors and freelancers
- Our hybrid payroll system supports 90+ regular currencies and 100+ cryptocurrencies
- We provide complete EOR services in the US, UK, and Canada, expanding to 60+ countries
- Our platform creates all required IRS tax documents automatically
Understanding Cryptocurrency Payments for Contractors
What Are Crypto Payments?
Paying international contractors in cryptocurrency means using digital money like Bitcoin (BTC), Ethereum (ETH), or stablecoins like USDC and USDT instead of regular money.
- These digital payments move fast across borders, reaching contractors anywhere in the world within minutes instead of days.
At Rise, we support payments in over 100 cryptocurrencies and 90+ regular currencies, giving you the freedom to pay contractors however they want.
Our global contractor pay system lets you mix traditional and crypto payments easily.
How Crypto Taxes Differ from Regular Payments
The main difference between crypto and regular money is how the IRS and other tax authorities see them.
Most countries treat cryptocurrency as property, not currency.
This means every crypto payment to an independent contractor could be a taxable event that needs careful tracking.
- Over 60% of contractors paid in crypto prefer stablecoins like USDC because their value doesn't jump around as much.
That's why we made USDC and USDT main payment options on our platform.
Freelancers and contractors can enjoy crypto benefits without worrying about wild price swings.
For example, in Germany, if you hold crypto for less than a year, you pay capital gains tax on it.
Our platform tracks all these details automatically.
Tax Implications for Employers
What Employers Need to Know
When paying international contractors in cryptocurrency, employers have different tax duties than with regular payments.
Since crypto counts as property in most places, employers must figure out the crypto's dollar value when they pay it and report this amount.
- Example: A UK company paid a contractor in Ethereum and had to report how much that Ethereum was worth in British pounds at payment time, even though no pounds changed hands.
This shows why 55% of employers don't know about their crypto payment tax duties.
We built Rise to clear up this confusion.
Our platform automatically figures out the dollar value at payment time and creates all needed paperwork, keeping you compliant without the hassle.
Following Rules Across Countries
Employers must think about different countries rules when handling taxes for international contractors.
Some countries require withholding taxes based on where the contractor lives.
- Getting these payments wrong or breaking local tax laws can lead to big fines.
Through our Employer of Record (EOR) service, we handle all compliance work for you.
We manage employment duties, local labor laws, and tax filings in the US, UK, and Canada today, expanding to 60+ countries by EOY 2025.
This means you can hire globally without setting up local offices or worrying about compliance details.
We handle these employer tasks:
- Finding the dollar value at payment time
- Keeping detailed payment records
- Filing the right tax forms
- Understanding withholding rules
- Following local rules where contractors live
Tax Obligations for Contractors
Reporting Crypto Income
International contractors and freelancers getting cryptocurrency payments must report this income just like regular pay.
But crypto's changing value makes this harder.
Independent contractors need to find out what the crypto was worth when they got it and convert this to their local money for US taxes and other tax purposes.
- Example: A contractor in Canada who got paid in Bitcoin had to convert it to Canadian dollars for tax reporting.
About 70% of contractors find it hard to figure out cryptocurrency values when they receive payments because prices change so much.
The IRS requires accurate reporting of these values for US taxes.
We solve this problem by giving contractors detailed payment records showing exact values in both crypto and their local money at payment time.
Our platform makes tax reporting simple and stress-free.
Forms and Paperwork
Different countries need different tax forms.
In the United States, independent contractors must fill out Form 1099-NEC to report crypto earnings to the IRS.
Other countries need similar forms to report cryptocurrency income.
Our system automatically creates and sends all needed tax forms:
- W9 forms for US contractors
- Form W-8BEN for international individual contractors
- Form W-8BEN-E for foreign companies acting as contractors
- Form 1099-NEC at year-end for reporting to the IRS
- Detailed payment reports showing all deductions
We make sure contractors get everything they need for taxes, delivered right through our platform.
Country-Specific Regulations
Rules Around the World
Cryptocurrency rules for taxes for international contractors are different everywhere.
A recent report showed that 48% of countries have made specific rules about crypto payments for contractors, creating a complex mix of requirements.
Our compliance team keeps up with rules in all countries where we work, making sure your payments always follow local requirements.
- We've processed over $700M in payments across 190 countries, giving us deep knowledge of international tax laws.
Rules in Major Countries
- United States: The IRS treats crypto payments as property, requiring detailed reports of dollar values at payment time.
Independent contractors must track these for potential deductions.
Through our Direct Payroll service, we handle all US payroll, tax filings, and compliance automatically in all 50 states.
- United Kingdom: Contractors must follow HMRC rules, tracking gains and losses for tax reporting.
Our UK entity ensures we follow all HMRC requirements.
- India: Rules from 2022 require reporting all crypto transactions.
We handle these reports automatically for contractors in India.
- Germany: You pay capital gains tax on cryptocurrency held for less than a year.
Our platform tracks holding periods to help German contractors manage their taxes better.
- Australia: The ATO treats crypto payments like trading one thing for another.
We give Australian contractors AUD values at payment time for accurate reporting.
How We Handle Taxes for International Contractors
Step 1: Join Rise
Getting started with Rise is easy.
Create your business account by giving us basic company information.
Our security check keeps things safe while making setup quick and simple.
You'll get into your dashboard right away to manage all parts of international payroll.
Step 2: Onboard Your Contractors
We've automated the whole onboarding process.
When you invite independent contractors to join Rise, our system:
- Collects all needed tax information
- Creates the right tax forms (W9 for US, Form W-8BEN for international contractors, Form W-8BEN-E for foreign companies)
- Checks contractor identity through Rise ID and tax status
- Sets up payment terms according to your contractor agreement
- Creates compliant contractor agreements
This automation removes manual paperwork and cuts onboarding time from weeks to days.
Step 3: Set Up Payment Preferences
Our global contractor payment system offers amazing flexibility.
Contractors can choose to get paid in:
- Local money (90+ options)
- Major cryptocurrencies (100+ options)
- Stablecoins (USDC, USDT)
- Any mix of the above
You fund payroll in US dollars or stablecoins, and we handle all conversions and payments based on what each contractor wants.
Step 4: Manage Crypto Payments and Tax Compliance
When processing crypto payments, our platform:
- Calculates dollar values at the exact payment moment
- Records all payment details for taxes
- Creates real-time reports for everyone
- Tracks cost basis for contractors
- Watches for rule changes and adjusts as needed
We built our system to handle the hard parts of taxes for international contractors automatically, so you can focus on growing your business.
Step 5: Simplify Tax Filing
When tax season comes, Rise puts together all needed documents automatically.
Contractors get their completed tax forms through the platform, while employers can access complete payroll records.
Our system creates:
- Annual tax summaries
- Payment histories
- Dollar value reports
- Form 1099s and international versions
- Detailed audit trails
Our Complete Solution
Direct Payroll Services
Our Direct Payroll service handles all US payroll needs:
- Automatic tax filings in all 50 states
- Flexible payment schedules (daily or twice a month)
- Access to benefits and healthcare
- Custom pay schedules to attract great talent
- Complete compliance management
Employer of Record (EOR) Services
Through our EOR service, you can:
- Hire full-time employees without local offices
- Stay compliant with local laws
- Offer competitive benefits
- Manage both regular and crypto payroll
- Handle all tax and regulatory filings
Starting at just $399 per employee per month for our EOR service, we make it affordable to stay compliant while offering competitive pay packages.
We currently work in the US, UK, and Canada, with plans to expand to 60+ countries by EOY 2025.
Why Companies Choose Rise
We've helped companies successfully handle international contractor payments by providing:
- Automatic compliance: No more manual tax calculations or form filing
- Global reach: Operations in 190 countries
- Payment flexibility: Supporting both traditional and crypto payments
- Cost savings: Lower operational costs and expansion risks
- Speed: Onboard contractors in days, not weeks
Common Mistakes We Help You Avoid
Many employers and contractors make big errors when handling crypto payments:
- Treating cryptocurrency like regular money for taxes
- Not tracking dollar values at payment time
- Ignoring country-specific rules
- Keeping poor records
- Not planning for taxes throughout the year
Our platform prevents these mistakes through automation and built-in compliance features.
We designed every part of Rise to protect you from costly errors while making your work easier.
Conclusion
Managing taxes for international contractors who receive cryptocurrency payments doesn't have to be complex.
While regulations keep changing, the right partner makes all the difference.
We understand these complexities because we handle them daily.
Our team combines compliance expertise, tax knowledge, and technology to make international payments simple and compliant.
Ready to simplify your international contractor payments and ensure tax compliance?
Book a demo with our team today to see how Rise can transform your global payroll operations.
FAQs:
1. How does Rise handle cryptocurrency payments differently from traditional payroll providers?
We built our platform specifically for crypto payments, automatically calculating dollar values, creating tax forms, and staying compliant across multiple countries. Unlike traditional providers, we support 100+ cryptocurrencies and handle all the complex tax work automatically.
2. What tax forms does Rise create for international contractors?
We automatically create W9 forms for US contractors, Form W-8BEN for international individual contractors, and Form W-8BEN-E for foreign business entities. At year-end, we generate Form 1099-NEC for IRS reporting.
3. How does Rise calculate cryptocurrency values for tax reporting?
Our system captures the cryptocurrency's dollar value at the exact payment moment, using real-time exchange rates from multiple sources. We give this information to both employers and contractors in detailed reports, making tax filing easy.
4. Can Rise help with existing contractor relationships, or only new hires?
We can onboard your existing contractors quickly through our automated system. Just invite them to join Rise, and we'll handle all compliance requirements, tax form creation, and payment processing going forward.
5. What countries does Rise currently support for employer of record services?
We currently provide full EOR services in the United States, United Kingdom, and Canada. We're expanding to 60+ more countries by EOY 2025. For contractor payments, we already support 190 countries worldwide.
