What is remote work?
Remote work is a state of work where an employee of an establishment works outside a typical office space designated by the company. Remote work became prominent during the Covid-19 pandemic in 2020 when companies had to continue operations while staying safe in their homes. Today, remote work has grown so much more than it was in 2020. It has opened companies to the possibility of working with global talents. It also sets employees to work from anywhere worldwide, provided they meet the requirements.
With the internet and companies being more open to remote work, employees are beginning to get more creative with remote work while fueling their passion for travel. Many of these employees travel to exotic locations as tourists and work from there for as long as their tourist visa affords them. Some other groups tagged digital nomads travel for extended periods, provided they meet the requirements to do so.
The legality of an employee in one country working remotely from another country depends on a lot of factors such as the local laws in the country they plan on working from, their establishment and how long they plan on staying there. Many countries allow visitors on tourist visas to work remotely within their borders, provided they abide by their rules, while others have additional requirements. In the same vein, some countries have structures in place like the Digital nomad visa that permits and encourages tourists to work within their borders.
Perks of remote working from another country
Working remotely has its good sides, and the flexibility it offers is chief, among other benefits. It has also been shown to increase productivity by 20-25% while increasing happiness and satisfaction by about 32%. Travelling the world also increases job satisfaction and happiness by 34%. Employees working remotely from a different country reap the benefits of working remotely while travelling the world. All things being equal, it should spur them to put out their best work.
As an employer, allowing your employees to work remotely gives them the flexibility to be the best they can be for you. Before the Covid-19 pandemic, remote work was a nice to have benefit from employers; however, in 2022, employees between the ages of 22 and 60 are 70% less likely to take a role with no remote options.
On the part of the company, they are likely to have fewer running costs if most of their employees are working remotely. A company’s running costs, including electricity bills, cleaning, internet, and other utility bills, can be reduced if most of its employees work from home or outside the office. Some companies have devised a means of having no running cost for their office as they do not have any physical office space. These companies can channel the resources they would have otherwise used to run an office into more productive ventures like paying salaries or increasing their marketing budget.
Working remotely affects the employer and the employee positively regardless of where the employee works, their host country or working abroad.
Requirements for working remotely from another country
Working remotely requires you to have a good internet connection and power supply, regardless of where you are working from. The legal requirements are diverse, with each country having its own rules. However, there are other legal requirements for working remotely from another country.
Most countries offer a tourist visa and allow tourists to work while on their vacation on the basis that their stay is more recreational than work-based, and they are usually right. Provided you do not get involved in a local contract or contact the local workforce to join you on your task; you can work from most countries on a tourist visa for the duration of the visa.
Most tourist visas have a validity period of 90 days, after which you are expected to return to your home country. Some countries support working remotely abroad, and they provide a digital nomad visa that allows tourists to work and stay in their country longer than the tourist visa regularly affords. The requirements for digital nomad visas vary from country to country. Some of the countries with this visa type include Iceland, Brazil, Thailand, Germany, Seychelle, Mexico, Greece, the United Arab Emirates, Portugal, and Antigua and Barbuda. Before travelling to any of these countries to work remotely for an extended time, conduct extensive research on the visa requirements and ensure to meet them to avoid getting into trouble with the local authorities.
As a manager or human resource personnel, managing remote workers in your own country is already hard enough; managing employees in other countries adds a different level of difficulty to the task. While a manager who is aware of the benefits of remote work may not want to deprive their employees of the chance to travel the world while giving in their best work, they are also careful not to attract legal consequences to the company. Some of the most important aspects where the employer needs extra care include:
When an employee travels abroad and decides to work from another country, communication may become an issue, especially when there is a difference in time zones. The parties involved would have to practice asynchronous communication to get work done. Asynchronous communication means communication that is not done in real-time. It usually involves sending messages to other team members and expecting a reply during their convenient time. If done correctly, it can ensure that there is a seamless flow of information between you and the employees that work abroad.
One of the most concerning factors of having an employee overseas or abroad is paying taxes. A simple way many organizations solve this is by employee classification. Companies can decide to classify an employee as an independent contractor just before they embark on their digital nomad journey; however, there are peculiarities to it. It will take away tax obligations from them to the employee turned contractor, but the employee may not want to work under those conditions, as it takes away benefits like health insurance from them. While on the journey, if your employee turned contractor still has someone who manages their daily work from your company, receives compensation per time rather than per project, or thrives on using company resources to complete the job, they may be in violation of the local employment laws in the country where they are. They may still be seen as an employee rather than an independent contractor.
The individual circumstances surrounding data protection in one country may not apply in another country. Many employees are also not very skilled in the subject of protecting data. Remote employees are at a higher risk of cyber attacks than those who work locally. In addition to education and being more security conscious, having a multi factor authentication system can protect company data from getting into the wrong hands.
Tax issues and tax laws are the main barrier or limitations to having employees travel abroad. As an employer with a foreign employee or an employee working abroad, the question becomes who to pay taxes to. Everywhere around the world, provided you are employed and get paid for the work you do, you are required to pay tax in one form or another. The laws surrounding tax payment vary by country. However, most employees are required to pay taxes to their resident country, regardless of where they work from, especially on short visits.
If a person works in the UK, travels to South Africa on a tourist visa, and works from there during their stay, their UK employer must withhold taxes for them in the UK. When an employee stays in a foreign country for an extended period, their employer may be at the risk of permanent establishment. It is a situation where an employer is required to pay corporation tax to the host country where their employee is working from. Apart from an extended stay in the country, other scenarios that put the company at risk of permanent establishment include offering services at the local market and working with local employers.
Another tax situation an employer has to take note of is double taxation. Double taxation is a situation where a person is required to pay tax in the two countries where they are residents. If a person is a resident of the UK and Nigeria, for example, they may have to pay income taxes to both the UK and Nigeria. Some countries charge this tax on worldwide income. Before allowing your employees to travel to work abroad, ensure their intended country has regulations against double taxation.
Bringing it all together, it is mostly legal to work remotely from a different country from where your company is based. However, there is no one-size-fit-all approach, and it depends on the countries in question, the duration of stay in the country, and the person’s conduct. Before travelling to another country to work abroad, check out the rules and regulations surrounding it in your intended country.
Companies are becoming more flexible with their remote rules and regulations, and so are the countries. Many countries are beginning to make provisions for digital nomads to work freely from their land while enjoying the country’s scenery and experience. Some other countries have also established structures to ensure travelling workers are not taxed twice with these and many more, the incidence of working abroad from other countries increases and further plunges the world into a global village.
Last modified on February 3rd, 2023 at 2:01 pm
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Many countries allow you to work remotely, provided you abide by your visa type rules. Some countries may require a work visa before you can work legally for your foreign employer. It is vital to research the visa requirements of the country you intend to visit before travelling, so you do not put yourself at risk.
Where you pay your tax when working abroad is usually your resident country. If you are a full-time employee, you may have to pay taxes to the country where your company is based. However, if your company classifies you as an independent contractor, then local legislation may require you to pay tax to the other country where you are working from.
Before the pandemic and the blow-up of working remotely, individuals would need a work visa to work abroad. However, post-Covid, people can now work for a company based in their home country from another country without a work visa. People who consider themselves digital nomads and want to work for long periods in another country may consider applying for a digital nomad visa.
Self employed contractors can work from anywhere worldwide, provided they do not go against the local legislation in the country they plan to work from. Whatever companies you are contracting for, ensure to inform them of your whereabouts to prevent sanctions from the locals. Ensuring that both you and the company you contract for are on the same page prevents you from having issues with the local market.