The pandemic has fundamentally changed the way people work: the home is starting to replace office buildings and is becoming more important for employees. But why work from home if you can work from anyplace you like? Soon, working remotely from anywhere in the world will also become an undisputed trend.
How so? It all starts with the relaxation of travel restrictions after lock down. After a long period when employees around the world were confined in their homes, it has given them an incentive to travel while working.
Their new workspace can be on an exotic beach, thousands of kilometers away from home; in the mountains, where they can enjoy the cold fresh air and also go wildlife sighting; on a tropical island with luxurious vegetation, a strong internet connection and comfort at their discretion.
All this sounds excellent, but the dream of digital nomadism can come with unsuspected tax and legal challenges that should be considered not just by employers, but also by employees.
What does this entail? The employer must pay taxes to either the country where the employee has signed their work agreement or in the country of current residence. The legislation of each country can have a different approach on tax matters. This means your legal experts must not just consult it, but also check if there are any conventions between states that can apply to your digital nomads.
Right after the employee informs the company of their intention of working abroad, the employer should study the tax implication given the temporary immigration. This insures their protection for additional tax obligation in the host country, if applicable.
For instance, in some European Member States, working remotely can imply the employer is obliged to register for social security reports and payments in the destination country, as well as tax payments. Other reports the employer may have to generate are those covered by the European Directive regarding assignments and business travelers, as well as those covered by the local legislation of the destination country.
It would be ideal for the employer to have a pre-defined framework that lays down the rights and obligations of the employee during their work abroad. Some states have decided to ease the process for digital nomads. Among them are popular touristic destinations trying to compensate for the economic losses brought by the pandemic: Estonia, Georgia, Barbados, The Bermuda Islands, Mexico, Costa Rica, but the list will surely grow with time.
Other countries providing this type of nomad visa (or a similar one, that may be called differently) are Germany, Norway, Portugal, Spain, The Czech Republic and Australia. These countries have understood the value this trend can bring to their national economy.
The dream of digital nomadism can only materialize after the employer has check the immigration legislation for work purposes in the destination country, because the rules differ significantly from those for touristic travel.
Considering the fact that working from the office is less likely to make a comeback in the near future, more and more employees will shift from work-from-home to digital nomadism. This means that companies should be ready, legally and tax-wise, to tackle this change of paradigm and adapt to the growing desire to work from anywhere around the world.The pandemic has fundamentally changed the way people work: the home is starting to replace office buildings and is becoming more important for employees. But why work from home if you can work from anyplace you like?