HR tips for employees working from another country

As an employer, you have made the (smart) decision to offer your employees flexibility in terms of where they work. After all, remote workers report being 32% happier with their careers - and when they're happy, they're more productive too. They also contribute to employee retention.

But what if your employees really want to work remotely as part of your flexible work policies? That is, from another country.

This is possible, but there are some important HR and payroll considerations that you need to be aware of and plan for because the usual rules may not apply to digital nomads.

For example, if you are in the United States Your business operates within designated federal and state jurisdictions, making it easy to determine where you must pay taxes. Similar structures are also used in other countries. But what if your company is in one country and your employees are in another? Where and how to pay taxes can be, well, tax-problematic.

Let's look at three areas you should pay particular attention to when allowing your employees to work from another country. But you need to make sure remote work is right for your company. If Swiss , German or Austrian This article will help you with companies.

1. Visa requirements

When workers enter another country, they typically must apply for a work visa sponsored by their employer. However, this system was designed for workers who immigrate to a country to find work.

The age of digital nomads is a different story.

In most cases, these workers work for a company based in their home country and enjoy the freedom to travel. Although the work is an activity that they will undertake, their stay in the country is for recreation - and is therefore usually tied to a tourist visa.

There are some countries that allow workers to stay in the country on a tourist visa while working for a foreign employer. Antigua and Barbuda in the Caribbean, for example, has even created a special digital nomad program aimed at this type of worker with a special visa designation. However, this is not common everywhere in the world. So if your employees plan to visit multiple countries, it is advisable to research the visa requirements in each country they plan to visit to ensure sponsorship is not part of the agreement.

2. Taxes

When a company starts doing business in another country, it is subject to the right of establishment. This means that they are subject to corporate tax in that country. Because of the risk of permanent residency, many HR departments are cautious about letting employees work in other countries.

However, if an employee's activities are strictly limited to doing business in the home market, there is little risk that a company will be subject to corporate tax due to an individual employee's travel activities in another country, regardless of whether they work remotely or in the office.

However, certain employee activities could pose a risk to the company, such as: E.g.:

• Carrying out work for domestic subsidiaries or local employers
• Employing, recruiting or contracting workers from the local labor force
• Providing services or selling goods on the local market

For example, if you have an employee who works in sales and is encouraged to socialize with the locals. Or when a creative director who is used to working with freelancers asks for help from local talent.

One solution is to get ahead of this trend and develop a digital nomad policy for your company. This should specify which work activities are permitted across borders - and which are not. Additionally, it's a good idea to communicate with employees about things like:

• Travel routes
• Restrictions on the length of stay in a country
• Destinations that are prohibited due to their complex or risky tax regulations

And what about payroll for remote workers? Employees traveling abroad are still subject to home office taxes. That is, unless a company already has offices in the country they want to travel to and can offer a contract and work visa locally. And it is the employer's job to withhold these taxes through payroll deductions.

3. Classification of the employee

Given the complex tax situation, both employers and remote workers may be tempted to convert the digital nomad into an independent contractor. But that's not always a good option.

For one thing, employees may want or need to keep their benefits (to pay for the next root canal or save for retirement). Additionally, many employers may want to retain full-time employees to maintain their culture and stability.

Perhaps the most important reason to carefully consider whether you should convert your traveling employees into contractors, however, is the risk of misclassification as employees, especially if they work in countries where you are unfamiliar with labor law.

There are some common activities to keep an eye on that can help you assess whether your employee-turned-contractor puts you at risk of non-compliance, such as: B:

• Pay based on hours worked and not per project
• Using company tools or resources to complete a job
• Providing services only for your company and for a longer period of time
• Day-to-day work is managed by someone from your company.

If one or more of these apply, chances are good that the local authority will view your worker as an employee and not a contractor. At this point at the latest you will realize that there is one Head of Remote needs.

The conclusion about employees who work from another country

Many companies still have a lot to learn when it comes to letting employees work from another country. But the practice will prevail, so it's time to understand the implications for HR. Working from anywhere will become more commonplace as more employees ask for it and more companies recognize the competitive advantage that flexible working methods offer.

There are many situations where employees on a tourist visa can travel freely while working from home - as long as the employee does not interact with the local workforce (let's reiterate that).

Globally operating companies However, those operating in the country to which they are traveling should consult local laws depending on individual circumstances. The same applies to employees who intend to stay in the country longer than a traditional 90-day tourist visa.

Would you like to support digital nomads in your team? Learn how Global Employment Outsourcing can help you create flexible working environments in more than 165 countries - legally compliant - so you can offer your employees the world without worrying about HR and payroll compliance . Remote onboarding should also not be underestimated. Find out here you more about it.