Due to the COVID-19 pandemic, many employees had to work from home. In our globalised world, a lot of them had their homes abroad, i.e. in a different country than the country where they had been originally working. Now, it is clear that remote work, including remote work from abroad, is and will be in demand from many employees. Thus, employers must start considering how to satisfy these requests without exposing their companies to any risks.

Remote work is a term, which covers various forms of work from a different place than the office, chosen by the employee. Typical kinds of remote work are: (i) Work from home, local or abroad; (ii) Telework – work from anywhere; (iii) Workation – work from a holiday destination; or (iv) Virtual assignments – where an employee of one group company works in the team of another group company, which is itself a separate entity and located in another country. Each of these situations can trigger specific risks for the employer and could result in significant additional costs.

The risks are related to the following:

• Labour law, health and safety rules, and financial reimbursement for work from home
• Personal Income Tax and the related obligations on both the employer and the employee
• Social security and health insurance
• Immigration
• Corporate Income Tax – permanent establishment
• VAT
• Transfer Pricing
• Regulatory issues

When setting up remote work rules and policies, employers should always analyse the risks and factors that affect them. This includes analysing the actual situation in the company. The employers should consider whether they already have a system in place for managing remote work, and whether it covers all of the above factors and potential risks. To be able to evaluate these risks, they can further consider inter alia: What is the most frequent type of remote work used or required? What country is the most frequent in the case of remote work from abroad? How many employees are actually involved?

The employer should also consider practical issues such as the availability and working hours of the employee (different time zones), and the channels of communication.

For further information on remote work and how to set it up in your company, feel free to contact us.