How to Pay Remote Contractors in Latin America

US companies usually pay remote contractors in Latin America in US dollars, once or twice a month, through an international bank wire or an online payment platform the contractor already uses. Before the first payment, the company signs a contractor agreement, collects Form W-8BEN, and agrees on the invoice format, the currency and who covers transfer fees.

What do you need before the first payment to a Latin American contractor?

A US company paying a Latin American contractor for the first time needs four things on file: a signed contractor agreement, a completed Form W-8BEN, the contractor's payment details in writing, and an agreed invoice format. Collect all four in the first week. A late or short first payment is a bad way to start with someone you just hired.

The W-8BEN goes to you, not to the IRS. The IRS says a foreign person who is the beneficial owner of an amount subject to U.S. withholding gives the form "to the withholding agent or payer." IRS Publication 515 adds that foreign persons who provide a valid Form W-8 are "exempt from backup withholding and Form 1099 reporting." On sourcing, the IRS says pay for personal services is sourced to where the services are performed, and a nonresident alien "generally is subject to U.S. income tax only on income from U.S. sources." How those rules apply to your company is a question for your accountant, so send them the form and the contract before the first invoice arrives.

A short onboarding checklist for payments:

1. Contractor agreement signed by both sides, with rate, currency, payment schedule and who pays fees.
2. Form W-8BEN signed and stored with the agreement.
3. Payment details on a document the contractor signs: legal name exactly as it appears at the bank, bank name, account number, SWIFT code or platform account, and the country of the account.
4. A sample invoice the contractor will copy each period.
5. A test payment of a small amount if the method is new to either side.

If you have not hired yet, the order of operations is simple: start a search for your first Latin American hire and build this checklist while interviews run, so the paperwork is ready on the start date.

Which payment methods do US companies use for contractors in Latin America?

US companies pay Latin American contractors through a handful of channels: international bank wires, online payment platforms and digital wallets, transfer services that deposit local currency into a local bank, and occasionally digital dollars. The right channel depends on the contractor's country, how the contractor wants to receive the money, and how much of each payment disappears in fees.

The fee your bank quotes is only the sending side. After the first payment, ask the contractor for a screenshot of what actually landed in their account. The difference between what you sent and what arrived is the real cost, and it tells you whether to switch methods before month three.

Should you pay Latin American contractors in dollars or local currency?

Paying a Latin American contractor in US dollars keeps the company's cost fixed and leaves the exchange-rate swing with the contractor. Paying in local currency does the opposite: the contractor's income stays steady at home and your cost changes every month. Many contractors ask for dollars, so write the currency into the contract and print it on every invoice.

In countries where the official exchange rate and the rate people actually get can drift apart, a dollar payment into a dollar account matters a great deal to the person receiving it. Ask the contractor what account they have and what they need before you pick a method. That one conversation saves a lot of rework.

Settle three more details in writing:

• Who pays the transfer fee. Many companies cover the sending fee and agree that the contractor covers receiving fees, or they gross up the payment by a fixed amount.
• Which exchange rate applies if you pay in local currency, and on which date.
• What happens when a payment bounces because of wrong bank data.

How often should you pay remote contractors in Latin America?

Remote contractors in Latin America are most often paid on a fixed monthly or twice-monthly schedule against an invoice. Pick dates that leave room for bank processing, because an international wire can take a few business days. Send early before US bank holidays and the contractor's local holidays, which do not line up with the US calendar.

Hourly contractors invoice for hours worked; full-time contractors often work on a fixed monthly fee. Either way, the invoice should list:

• The contractor's legal name, address and tax ID in their own country
• Your company's legal name
• The period covered and the hours or deliverables
• The amount and the currency
• The payment details already on file, with no changes unless confirmed by a separate call

Here is a hypothetical to show why the schedule matters. A company pays on the 15th and the last day of the month, but its bank's cut-off for international wires is early afternoon Eastern time. If the controller approves payments at 4 p.m., the money leaves the next business day. Move approvals to the morning and the contractor in Lima gets paid on the date the contract promised.

One fraud rule is worth adopting from day one: never change a contractor's bank details based on an email alone. Confirm by video call or a phone call to a number you already have. Fake "new bank account" emails target international payments because the payer cannot walk into the contractor's branch to check.

Payment timing also interacts with working hours. If you need same-day answers on invoices, see how Latin American time zones line up with US business hours.

Can a US company pay a contractor in Venezuela?

Paying a contractor in Venezuela takes extra checks. OFAC says U.S. sanctions on Venezuela are not a country-wide embargo, and that "the Venezuelan people" are not subject to comprehensive U.S. sanctions. Executive Order 13884 does block the Government of Venezuela, including PdVSA, the Central Bank and entities it owns 50% or more, so a US company has to screen every payee and bank.

Before you agree to pay someone in Venezuela:

1. Screen the contractor's name against OFAC's sanctions lists.
2. Check that the receiving bank or platform is not owned or controlled by a blocked entity.
3. Read OFAC's current Venezuela guidance. OFAC keeps changing its Venezuela general licenses, with its most recent action on October 16, 2026, so what applied last quarter may not apply now.
4. Ask your bank how it handles payments to Venezuela; banks set their own policies on top of the rules.
5. Talk to counsel if anything in the screening is unclear, and keep a record of each check you ran.

Put a repeat screening on the calendar, for example every quarter and whenever the contractor changes banks.

Contractor or employee: which rules apply?

Whether a person who works for you from Latin America is a contractor or an employee depends on the laws of the country where that person works, and each country sets its own tests. Those are questions for an advisor in that country. For an overview of what US companies should ask before hiring abroad, read how legal it is to hire remote workers.

The role you hire for also shapes the setup. An executive assistant hired in Latin America who works your full calendar is a different arrangement from a part-time designer who invoices per project, and the contract should say which one you have. Tax firms that send return information to staff outside the US have their own consent rules; those are covered in Section 7216 consent and the WISP for offshore tax staff.

Where Remote Latinos fits in

Remote Latinos recruits and vets professionals in Latin America for U.S. companies. A 30-minute call maps the role, the tools and the hours, candidates are vetted against your scorecard, and you interview and choose from a shortlist of finalists. Seats run full time (30 to 40 hours a week) or part time (15 to 25). With the payment checklist above ready, meet a shortlist of vetted Latin American professionals.

This article is general information, not legal or tax advice. Rules vary by country; confirm them with a qualified advisor.

Frequently asked questions

Do I need to send a 1099 to a contractor in Latin America?

IRS Publication 515 says foreign persons who give the payer a valid Form W-8, or permitted documentary evidence, are exempt from backup withholding and Form 1099 reporting. Collect the W-8BEN before the first payment and keep it on file. Your accountant should confirm how the rules apply to your company.

Does the contractor send Form W-8BEN to the IRS?

No. The IRS says a foreign person gives Form W-8BEN to the withholding agent or payer, which is your company. Store the signed form with the contractor agreement and ask for a new one if the contractor's details change.

Can a US company pay a contractor who lives in Venezuela?

OFAC says U.S. sanctions on Venezuela are not a country-wide embargo and that the Venezuelan people are not subject to comprehensive sanctions, but the Government of Venezuela and entities it owns 50% or more are blocked. OFAC keeps changing its Venezuela general licenses, so screen the payee and the bank against OFAC lists and read the current guidance before paying.

Should I pay Latin American contractors in US dollars?

Many contractors ask for US dollars, and paying in dollars keeps your cost fixed while the contractor carries the exchange-rate risk. Paying in local currency moves that risk to you. Agree on the currency in the contract and on every invoice so nobody has to guess at month end.

Sources

• IRS: About Form W-8 BEN
• IRS Publication 515 (2026)
• IRS: Nonresident aliens, source of income
• OFAC FAQ 680
• OFAC FAQ 519
• OFAC Recent Actions, October 16, 2026