Reference · Glossary
The vocabulary of cross-border pay
The acronyms and rules that decide how you pay people abroad — defined plainly, and honestly about what they don’t mean.
Contractor of Record (COR)
A provider that formally engages an independent contractor on your behalf and, in the strict sense, assumes the misclassification liability of that arrangement — so the exposure sits with the provider rather than with you.
Employer of Record (EOR)
A provider that legally employs a worker on your behalf in a country where you have no entity, handling payroll, taxes and benefits. It’s for employees, not contractors.
Agent of Record (AOR)
A provider that manages the contractor relationship and compliance for you, often described as reducing misclassification risk — but it may not carry the same liability assumption as a full Contractor of Record.
Misclassification
Treating someone as an independent contractor when, in substance, they are an employee. It can trigger retroactive back-taxes, social contributions, benefits and penalties.
Permanent establishment (PE)
A taxable business presence created in a country by your activities there — sometimes triggered by how a contractor works — which can expose you to local corporate tax.
IR35
The UK’s off-payroll working rules: if a contractor working through their own company would be an employee “but for” that company, they’re “inside IR35” and taxed like an employee. For most clients, the client determines status.
Scheinselbstständigkeit
German for “false self-employment” — a contractor who is, in practice, an employee. German authorities assess the real relationship and can demand years of back-dated social contributions.
Pejotização
A Brazilian term for engaging a worker through their own company (PJ) when the relationship is functionally employment (CLT). Labour courts can reclassify it and award back-dated benefits.
SEPA
The Single Euro Payments Area — a fast, low-cost bank-transfer scheme across the EU/EEA, ideal for paying euro-denominated contractors.
Pix
Brazil’s instant payment system: near-real-time transfers between Brazilian accounts, and the cheapest, fastest way to pay a Brazilian contractor.
Mid-market rate
The “real” exchange rate midway between buy and sell prices, with no markup. Comparing a payment against the mid-market rate reveals the hidden FX cost some services bake in.
W-8BEN / W-9
US tax forms collected before paying: a W-9 for US persons, a W-8BEN for foreign contractors, establishing tax status and withholding.
1099 / 1042-S
US information returns reporting payments to contractors: 1099 for US persons, 1042-S for foreign persons. A payer’s reporting obligation, separate from how the money moved.
Stablecoin payout
Paying a contractor in a cryptocurrency pegged to a fiat currency (e.g. USDT, USDC), often fast and low-fee where the contractor can convert it locally.
Owned entity vs partner
Whether a global-hiring provider operates its own legal entity in a country or routes employment through a local partner. Owned entities shorten the compliance chain; many providers blend the two and don’t disclose the split.