The tax implications of remote working abroad

By now, we all know that getting back to ‘normal’ will, for many people, not involve going back to work in the way we did before COVID-19 hit. There are tax implications for remote working abroad that employers need to know.

Remote working abroad

Cathy Bryant looks at all you need to know regarding the tax implications of working from home abroad in an article first published in Business Matters Magazine.

Terms such as ‘remote working’, ‘agile working’, and ‘flexible working’ are now used interchangeably to indicate how the workplace will look as we start to ease out of lockdown. But for some, remote working has been – and is likely to continue to be – more remote than for others. Taking advantage of the ‘work from home’ rule, some employees have returned to their home countries, moved to look after elderly relatives in foreign countries, or simply escaped to warmer climes for the duration. For these folks and their employers, taking early advice on the tax implications of this way of working is key to getting the tax right.

How is tax paid when remote working?

Where tax is paid will depend on several factors, but the most important is the employee’s tax residence status. The rules are complicated, but at its simplest, if your employee has been out of the country for longer than 183 days, they have likely established tax residency in the other country. If this is the case, the employee will be liable for tax in the country where they have established tax residency.