Remote Work Abroad: Limited to 30 Days Max Within Europe – What Could Go Wrong?

Offering employees the flexibility to work remotely from a European destination sounds like a fantastic perk, right? 🌍 But while allowing employees to work from within the EU for up to 30 days may seem like a hassle-free option, it still carries significant compliance risks. From permanent establishment issues to HR and tax challenges, here’s what you need to know to keep everything running smoothly.

Permanent Establishment (PE) Risk‍

Even within the EU, remote work abroad can trigger permanent establishment risks. If an employee conducts activities on behalf of the company during their stay, a Dependent Agent PE could easily be triggered. Some EU countries take a strict approach to PE, and depending on the location, even a Fixed Place of Business PE could be established.

Lack of Documentation and Employee Confirmation‍

Without a clear audit trail or confirmation from the employee regarding the remote work-from-abroad policy, you risk complications under labour law. Without proper documentation, things can get tricky if issues arise during the employee's time abroad. Combine this with the lack of employer-provided travel insurance, and the situation becomes even riskier.

Lack of Proper Management‍

Managing a 30-day remote work period abroad isn’t as simple as it seems. Even if the employee is working within the EU, it’s crucial that they are properly briefed and provided with necessary documentation, such as A1 certificates (or a WorkFlex Social Security Statement where the A1 process is slow). Proper management is often overlooked but is essential to ensure compliance.

Accumulated Presence Risks‍

Different EU countries have varying rules on how they calculate tax obligations based on an employee’s physical presence. Countries like the Czech Republic, for example, have more complex tax regulations, making compliance more difficult. It’s important to stay up-to-date with local regulations as they frequently change.

HR Risk‍

Not having a clear “Working From Abroad” policy in place can lead to employee dissatisfaction. Employees may wonder why they can’t spend more time abroad, especially if they are EU nationals. Without a formal policy, you risk damaging employee engagement and retention.

Implications of Family Visits‍

One of the main reasons employees take advantage of remote work abroad is to visit family. However, this can lead to two significant issues. First, if an employee’s “center of vital interests” shifts to the country they are visiting, it could have tax implications. Second, allowing only EU-based remote work might frustrate non-EU employees who cannot visit their families, ultimately reducing employee engagement and retention.

How to Mitigate Risks‍

Your employees undoubtedly love the freedom of working from abroad! To avoid compliance risks, we strongly recommend implementing a solid management process for remote work abroad. Even if your current policy allows employees to work within the EU for up to 30 days, it’s crucial to have the right systems in place to manage these arrangements effectively.

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