International Remote Worker – the new norm?
As a result of Covid-19 and already occurring lifestyle choices being championed by employees of multinationals, the ‘digital nomad’ or ‘remote worker’ is being championed by some organisations as a way forward.
Some countries are updating their immigration programs to take advantage. United Arab Emirates, Estonia and a number of Caribbean nations launched visa programs in 2020 to attract ‘digital nomads’. Whilst countries including Georgia, Germany, Portugal and Spain already have visa programs geared toward freelancers.
However, most countries still do not have immigration programs that recognise the ‘digital nomad’ or ‘remote worker’. It is not as simple as relaxing on a beach in Bali with your laptop. If you are working in a foreign country an appropriate visa permitting work is still required. Without a legitimate work visa, Covid-19 restrictions and quarantine requirements, make it impractical to enter and depart a country for short term visa renewal purposes. It is prudent for a business to ensure an individual holds an appropriate visa before such an assignment commences.
Likewise, corporate and individual tax implications need to be assessed. Permanent establishment concerns will need to be considered when a business agrees to a remote worker type of employment arrangement. It is possible that local tax authorities may consider the presence of workers supporting your business to have effectively created a taxable corporate entity. Such an assessment of permanent establishment may result in significant corporate audit and tax liability issues. Personal income tax will also need to review. Hopefully, countries will recognise this new area of global business and update tax regimes in the future, however, at this time most jurisdictions operate under a traditional tax regime.
Professional Employer Organisations (PEO) provide a sensible solution in ensuring remote worker arrangements are established efficiently, quickly and compliantly. A PEO will hire the remote worker as their own employee in the country where the remote worker is located. The PEO will manage immigration (if required), payroll, social security requirements, HR functions and some tax matters. The PEO will then contract the remote worker to the business in question to enable the individual to commence his/her assignment.
By utilising the services of a PEO it possible to ensure a remote worker is able to commence the intended assignment quickly and compliantly. Additionally, where a business does not operate in the location of the remote worker, permanent establishment risks are mitigated when a PEO is used as the employer of record.
The world of global mobility is changing rapidly. It is very important that businesses are across the changes and review ‘digital nomad’ or ‘remote worker’ arrangements in advance of commencement to ensure a business and the individual receives no nasty future surprises.
Eos – Employment Outsourcing Solutions is Asia’s leading PEO. For over 20 years the Eos team has been supporting multinational clients in over 15 countries across Asia. We have enabled hundreds of companies, ranging from Silicon Valley start-ups to global market leaders to achieve their full potential in the region. Our remote worker service offering continues our commitment to provide innovative solutions to develop business across the region.
Should you require any additional information please do not hesitate to contact Tim Denney at [email protected].
