|
|
With more and more people working remotely, the idea of “working from anywhere” is becoming increasingly popular.
Just because your company’s main offices are in San Francisco doesn’t mean you have to live in an expensive city. You might prefer to set up a home office on a California farm. And why can’t you spend a few months in a foreign country while still working for your company based in the United States?
In theory, if all you need is a laptop and an internet connection, you can work from (almost) anywhere. But the reality is more complex.
Employment law is principally designed for people who live in one place, and the same place as their employer so that they are both under the same legal jurisdiction. The law is catching up, but slowly.
So, the question is, how long can you work from abroad, and what are the legal implications that you and your employer need to consider before you start working from abroad?
Read on for an in-depth discussion of the main legal considerations. But remember to seek specific legal advice for your situation.
How Long Can I Work from Abroad?
There is no easy answer to this question, which is why we are going to deep dive into the various considerations.
However, if you have a valid visa, in most cases, you can stay in another country for up to six months (183 days), before having to deal with the most serious legal implications.
This does not mean that you must return to your home country, only that you must move on to another country if you don’t want to face tax liabilities.
Again, rules vary depending on the country, but if you have a Green Card or are a resident in a country where you are not a citizen, you usually can’t stay away for more than a year without forfeiting your status.
While citizenship is not affected by your absence, in many cases, if you are away from your home country for more than one full tax year, you are no longer considered a resident for tax purposes. As well as affecting where you are liable to pay taxes, this can affect your social security contributions, and therefore your rights.
Rules are different for different countries, so do your research.
Consideration #1 – Visas
Perhaps the first thing to consider when wanting to work in a foreign country is whether you can obtain a visa that will allow you to live and work in that country for the desired duration of time.
Many people planning to travel for less than 90 days simply travel on a tourist visa. While it is explicit that you cannot work within the local economy during this period, whether you can work remotely for your foreign company is a grey area.
An immigration lawyer would probably err on the side of caution and tell you that you cannot work, even remotely, on a tourist visa.
However, if you are not working within the local economy, there is no easy way for immigration officials in your host country to track your employment. And if you are working remotely for a foreign country, they will probably turn a blind eye to any work because you are bringing money into the local economy.
However, if you intend to do anything such as sales or contract negotiations on behalf of your company with local people or businesses, you must have a work permit.
If your country has offices in the destination country, they may be able to apply for a work visa on your behalf. However, they may be restricted by local laws that require them to offer positions to local candidates before foreigners.
If they don’t have headquarters in your destination country, you may be able to apply for a temporary business travel visa with the assistance of your employer.
The other alternative are new digital nomad visas, which are now offered by more than 50 countries around the world. These are specifically designed for remote workers and often come with things such as tax exceptions that make working remotely for a foreign company easier. But we will talk more about digital nomad visas below.
Consideration #2 – Taxes
The next big question is taxes and where both you and your company are liable to pay taxes.
If you are living in a foreign country for less than six months, while you will be taxed on any local income that you earn, you won’t be liable to pay tax on foreign income, such as from your remote job.
However, once you stay in a country for 183 days, you become a resident for tax purposes. This means that you become liable to pay local tax on your international income, while still probably liable to pay tax on that same income in your home county.
Many countries have double-taxation treaties to deal with exactly this issue and ensure that your income is taxed in just one country. This needs to be investigated on a case-by-case basis. But don’t assume. For example, countries such as Brazil, Argentina, and Singapore do not have double taxation treaties with the United States.
If you stay in a country for more than a year, you may no longer be a tax resident in your home country, and therefore only liable to pay tax in your host country. However, this can depend on the visa that you have. For example, if you have a work visa, you will probably pay taxes in your host country, but if you have a digital nomad visa, you may still pay in your home country.
Moreover, it is not just you who may become liable for taxes in your host country, your business may also become liable to pay corporation taxes. This depends a lot on your position in the company and what you do in the foreign country. If your work there becomes a permanent outpost for your business, they become liable.
Laws vary from country to country, but if you are doing design or programming work from abroad, contributing to a team that is at least theoretically based on your home country, and if you are working from home or coworking space, it is unlikely to be considered an outpost.
If you are in a country for more than a couple of months and you are making sales or negotiating contracts on behalf of your business, or you have a designated office space in your host country, then you probably will be considered a permanent establishment. This means that they may have to pay some corporation tax there.
To get around these complications, many employees become independent contractors before they travel overseas. This takes tax obligations away from the employer, which streamlines things. But it also means that your taxes will become more complex.
Consideration #3 – Social Security
Social security and tax generally go hand in hand, but the rules can be different. In general, social security for employees should be paid in the country where the work is done. Again, this is a grey area for remote workers, and it is unclear whether the main concern is where they are physically located or where their work benefits their business.
Again, for short trips of less than six months where the employee is not making sales or negotiating contracts in the local market, social security can usually continue to be paid in the home country. Once the stay passes 183 days, social security will probably become payable in the host country, though these contributions are also often covered by double taxation agreements.
If you are selling or negotiating contracts in the host country, then you are probably liable to pay local social security, and your employer is liable for employer’s social security. They can face serious fines if they fail to contribute.
Consideration #4 – Data Privacy
Data privacy is the next major problem, which grows increasingly complex, and countries implement very different data privacy laws.
The first concern is maintaining the integrity of your company’s data when it is being accessed from abroad, which increases the risks of hacking and cyber fraud. Virtual private networks (VPNs) and multi-factor authentication are increasingly used to manage this issue, but employers need to have a good idea of where and how employers are accessing their sensitive data.
The bigger issue is data privacy laws, such as the California Consumer Privacy Act (CCPA). If you work with personal data, and that data is transported into the country where you are located, the handling of that data needs to comply with local data protection requirements. This becomes even more complex if the data is served on servers in those countries.
VPNs that ensure that data does not leave the company’s country of operations can be used, but there are considerations about where the VPN servers are based, and whether the VPN data logs also comply with data privacy regulation.
Find cybersecurity tips for remote working here.
Consideration #5 – Workers’ Rights
This again depends quite a bit on how long you spend in a country, where you work from that country, the scope of your work, and your position in the business.
With more and more people working remotely, the idea of “working from anywhere” is becoming increasingly popular.
For many remote workers, they will continue to be subject to employment law, including workers’ compensation, in their home country. But if your host country becomes your “usual place of work” because of the time you spend there, the nature of your work, or a dedicated office, you can become subject to employment law, including workers compensation, in your host country.
Health and safety can be even more complex, and it is important to remember that your employer is responsible for your health and safety while working, even when you are working remotely from a foreign country.
Companies need to carry out risk assessments and should also consider health and safety laws that are stricter in the host country. While they may or may not technically apply, if something does happen and local health and safety standards were not met, it could still have legal implications.
Read guidelines for creating a remote work policy here.
Digital Nomad Visas
It is pretty clear that working from abroad is more complex than it seems, especially if it lasts for more than a few months. However, digital nomad visas are helping to resolve some of these issues.
Not only do these visas let remote workers stay in a country for longer than the standard 90-day tourist visa, but they also remove the grey area around working abroad by specifically allowing this activity.
Most, but not all, digital nomad visas also include stipulations that visa holders will continue to pay taxes and social security in their home country, minimizing the risks to both employer and employee. However, if the worker engages with the local market by making sales or negotiating contracts on behalf of their company, corporation tax can still apply.
So, How Long Can You Really Work from Abroad?
So, what is the answer to our big question?
Well, as long as you have a visa that lets you stay in the country for that long, you can probably live and work remotely from most countries for up to six months before it becomes a problem, as long as you aren’t engaging with the local market through activities such as sales and contract negotiations.
Safer than this option is a digital nomad visa, which doesn’t just ignore this kind of work, but puts specific rules in place to enable it. More than 50 countries currently offer digital nomad visas, and new visas are announced on a regular basis.
You should always speak to your country before deciding to work remotely from abroad because it can have implications for them as well as you. As well as potentially incurring corporation tax, they need to consider data security, health and safety, and workers’ right implications.
