What to Consider Before Allowing Employees to Work Remotely From Another Country

For companies managing remote workers abroad, there are unique tax, benefits, and management considerations. Learn what to evaluate.

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What to Consider Before Allowing Employees to Work Remotely From Another Country

The COVID-19 pandemic has accelerated the adoption of remote work for companies around the country. Gallup reports as of October 2021, 25% of full-time United States employees worked from home full-time. White-collar jobs, in particular, are remote work-friendly, and more than 40% of employees in white-collar jobs worked from home exclusively in 2021.

Full-time remote employees report a number of upsides including:

  • Time preservation
  • Increased work-life balance
  • Improved wellbeing

In addition to reaping benefits like these, full-time remote work gives employees the ability to choose where they work. Remote employees can work from wherever they are in the world, as long as they have connectivity.

This makes many remote jobs ex-pat-friendly, as well. According to a study of 8,313 working ex-pats by InterNations:

  • 74% of U.S. American ex-pats rate their work-life balance positively, higher than the global average of 68%
  • 71% of U.S. American ex-pats feel very happy with their job security, higher than the global average of 67%
  • 74% of U.S. American ex-pats feel satisfied with their job, higher than the global average of 73%

American workers may want to move to another country for a variety of reasons. They might have family members abroad, or maybe they want a change of scenery and the opportunity to explore a new locale.

If you manage a remote workforce, some of your employees may wonder: can you work remotely from another country? Enabling international remote work can help you retain top talent, but it also requires considerations to protect your business.

Best countries for remote workers

An ex-pat employee policy helps keep workers accountable and safeguards the business in terms of tax liability, insurance, and other employee issues.

Barbados, in the southeastern Caribbean Sea, was one of the first countries to announce a remote work program during the pandemic in an effort to maintain economic momentum. The country’s Welcome Stamp program provides remote workers with a visa to work in the country for 12 months and reapply each year if desired.

Other countries followed suit and make it relatively simple for Americans to apply for a remote worker visa. These include:

In past decades, other countries around the world have welcomed American workers. In 2021, the InterNations survey found the most common destinations among U.S. American ex-pats were:

  1. Germany
  2. Italy
  3. Mexico
  4. China
  5. Japan

For companies that allow employees to work from other countries, an ex-pat employee policy helps keep workers accountable and safeguards the business in terms of tax liability, insurance, and other employee issues.

How do you manage an expatriate employee?

Before you allow your full-time remote workers to continue working for you while living in another country, get help from industry experts. Consult with a global mobility or tax advisor to understand how an employee’s overseas move might affect your business.

There are potential tax implications for your business when you enable remote work abroad. When a company has permanent establishment, also called nexus, in a foreign country, it may be required to pay sales taxes and income taxes in that country. The factors that will affect whether or not permanent establishment occurs includes an employee’s:

  • Geographic location
  • Length of stay
  • Nationality
  • Status and role
  • Visa status
  • Work environment

Each country’s definition of what constitutes permanent establishment will vary, depending on their employment and domestic tax laws. Since these laws may evolve while your remote worker is working in the country, your business will need to continuously monitor them to ensure you’re operating legally.

Other considerations for managing remote workers abroad include:

  • Who will cover visa costs and arrange obtaining a visa?
  • How will you manage benefits, like paid time off and sick days?
  • How long will the remote work arrangement be in place?

Some countries may have different regulations for employee benefits like sick leave, health insurance, and work hours. Employers must consider all of these factors to protect their business from liability.

What are the challenges of managing a remote team?

Since each country will have different rules and regulations regarding American ex-pats working in their country, some companies choose to transition full-time employees to contract workers when they’re working abroad. This can protect a business from local employment law risks.

If your business already has nexus in another country, you might suggest those countries to employees who are interested in working abroad. Again, you’ll want to determine who will be responsible for items like a visa and travel costs.

In addition to researching a country’s requirements for remote workers and abiding by regulations to stay compliant, businesses must make sure remote workers abroad meet their work expectations and feel like a part of the team.

In addition to researching a country’s requirements for remote workers and abiding by regulations to stay compliant, businesses must make sure remote workers abroad meet their work expectations and feel like a part of the team.

Steps companies should take

  • Set clear expectations. Tell remote workers abroad what’s expected regarding a work schedule and communication chains.
  • Be mindful of time zone differences. If the remote worker abroad must be a part of meetings in the home office’s time zone, make sure managers schedule them at a time that works for everyone.
  • Invest in secure technology. Online collaboration tools make it easy to manage projects, send instant messages, and upload work. Collaborate with your IT team to provide remote workers abroad with secure tools to efficiently do their jobs. Some employers use a virtual private network to manage business communications. Others use cloud storage to back up company files and enable anywhere-access of work materials.
  • Train managers to manage remote employees. To retain employee engagement, managers should regularly meet with employees, wherever they’re working. Regular one-on-one check-ins alert leadership to potential issues and can foster employee accountability.
  • Include employees on distributed teams. Even when your employees are working in other countries, you can still develop an inclusive company culture to reduce loneliness in remote work environments. You might consider hosting all-team meetings every year to bring employees together in person, or create virtual social events so employees abroad feel connected to the home office.

There are likely to be more challenges when you first start enabling remote work abroad compared to after you’ve established your policies. Connect with a professional to mitigate risk and liability.

International remote work could improve retention

Full-time employees increasingly desire the ability to work remotely. Many remote workers enjoy the freedom that comes with working in the exact place they want to live. FlexJobs’ 10th Annual Survey in 2021 found 58% of workers want to be full-time remote employees post-pandemic.

Giving your workforce the ability to live abroad can help you retain your top talent and attract high-caliber candidates. Gather feedback from remote workers on processes and management to craft and/or improve your international remote worker policies.

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