Remote Working in Another Country: What You Need to Know for Absence and Tax

Remote Working in Another Country: What You Need to Know for Absence and Tax

At the start of the pandemic, ahead of the impending world-wide lock-down, many workers that were asked to work remotely, made the decision to move closer to loved ones. This caused a surge of people moving to overseas locations, away from their physical place of employment and into a more 'virtual office'.

With remote working set to stay, many companies have a mountain of questions regarding absence management and tax.

Today we will look at the implications for companies when their employees decide to work abroad remotely and what they will need to keep an eye out for.


When an employee decides to work abroad remotely it can raise a few questions about how their holiday is dealt with. Does their holiday entitlement change to meet the local rules and regulations of the country they now reside in? Or does it stay the same as it was before they left? And what about sick leave? The answer is that it simply depends on the approach your company wants to take to employees working abroad.

If you decide that those working abroad can use the same holiday/sickness regulations as the county they left, there will not be too much to change. The employees in question will keep the same entitlement and have the same public holidays as their country of origin. For companies that decide to change their employees’ entitlement, it may be a little more complex.

Companies that choose to change the leave entitlement of their employees will need to amend their entitlements to match the local rules and regulations of the country they relocate to. This can be a difficult task without the necessary knowledge or absence management system in place to change this for you.

Within e-days, your business can easily adjust employee holiday and sickness entitlements depending on their location by applying convenient templates. These easy-to-use templates are pre-set to meet the local rules and regulations of the countries you operate in, ensuring you are compliant with how much holiday and sick leave you are offering. If you plan on offering more than minimum holiday and sickness entitlement to your employees, you can also add additional entitlement easily.


The employment tax (income tax and social security) and payroll related implications of an employee working remotely from home can be very significant when the employee has chosen to base themselves in a different international location than their “normal place of work”.

Depending on the duration of the remote working period, an employee runs the risk of becoming a tax resident of the location they are working from (usually if the period of presence in the remote working location is greater than 183 days in a specific measurement period) and this will almost certainly give rise to a personal income tax liability.

Social security is another major consideration as dependent on where in the world the individual is based, a local social security liability may exist from the first day of work in the remote working location or at best their will be formal paperwork such as an A-1 or Certificate of Coverage to be claimed to formally retain the employee in the “home” country social security system and provide exemption in the remote working location.

Any local income tax or social security liabilities established as a result of an employee working remotely, places employment tax and most likely payroll obligations and responsibilities on the legal employer of that employee in the remote working location.

This can present significant challenges for employers, not least from a cost, timing and administrative perspective but also because in many cases the only “presence” the employer has in that remote working location is the employee themselves!

So what are your obligations and responsibilities as an employer from an employment tax and payroll perspective for your remote working population? Do you really need to set up and administer a payroll in a location where you have a remote worker based even if you have no business there? Where can you get the necessary practical guidance, support and advice to ensure you are compliant as the legal employer of the employee whilst remaining sympathetic to the wishes of the employee?

activpayroll’s global mobility division can provide answers to all of these questions and many more and provide practical solutions to these challenges and a clear understanding of the requirements from an employment tax and payroll related perspective so please contact for further information.