Remote Working From Abroad

Remote working overseas is a complex situation and may create many issues for the both the employer and employee. There is no legal entitlement to work remotely, including from another country, either temporarily or permanently. Working abroad under an Irish contract may not be legal or practical and can create jurisdictional, tax and compliance complications. The workplace is seeing more requests for working abroad for a variety of reasons including family reasons, relocation and extended stays.

There are many factors that need to be taken into consideration:

Employment Law/Jurisdiction

The first consideration is the country that the individual is going to be carrying out work. Jurisdiction issues can arise even for short stays depending on the country. Individuals working in a foreign jurisdiction cannot contract out of the mandatory employment laws of the country in which they work and the individual may automatically assume employment rights in that country. Many countries have strict employment laws around the classification of employees v contractors and it is important that these are fully understood.

Employer Taxation Issues

While many tax authorities turned a blind eye during COVID, it must be assumed that normal taxation laws are now back in force. Employers will need to be mindful of the tax reporting requirements of both the foreign country and Ireland, particularly where an employee may become resident or non-resident in each country over a period of time.These could include income and social insurance tax obligations, corporation tax risks and dual reporting requirements. In some countries, an employer may need to register as a foreign employer even for a single employee.

Employee Taxation Issues

In addition, employees working remotely abroad may encounter unanticipated tax liabilities under the laws of their host country. With tax residency rules being specific to each jurisdiction, an employee moving abroad may inadvertently expose themselves to negative tax consequences not only in respect of their employment income, but also potentially on other events, such as capital disposals made. Changes in tax residency could also affect social insurance contributions. Other benefits provided to an employee by their employer (such as share options, benefits-in-kind or subsistence payments) may also be treated differently for tax purposes in a foreign jurisdiction than in Ireland.

Permanent Establishment

Where an Irish entity’s employees perform their employment duties outside of the State, this may create a foreign corporate tax presence and a “permanent establishment” (PE). Where a company has a PE in a foreign jurisdiction, the profits attributable to the foreign PE may be taxed in the other country and the Irish entity may have to comply with the tax reporting obligations of both Ireland and that jurisdiction.

A PE can arise if an employee is carrying out activities such as negotiating or finalising contracts in another country or if the employer is seen as having a “fixed place of business” there. In certain circumstances, an employee’s home office can be treated as a fixed place of business, depending on the nature of their duties and how long they work from that location. For this reason, employers should carefully assess the employee’s role and specific remote-working arrangements to ensure that permitting overseas work does not unintentionally create and PE in that jurisdiction.

Work Permit/VISA Issues

An another important (and often overlooked) consideration is the nationality of the employee. Permission to work in Ireland does not equal EU-wide permission to work. EU citizens also face restrictions in non-EU countries. It is important to check the work permit/visa arrangements for the country to which they intend to move and to make sure the correct permissions are in place. Overstaying tourist visas can cause serious legal consequences for both the employer and employee.

Health and Safety

There is no specific law setting out an employer’s responsibilities when an employee works abroad. However, under the Safety, Health and Welfare at Work Acts 1989 to 2005, employers must, as far as reasonably practicable, protect the safety, health and wellbeing of employees wherever they are working, not just in the office. This includes managing and organising work in a way that keeps employees safe, even when they are working remote overseas. Employers should also be aware that some countries have mandatory local H&S rules such as requirements for ergonomic working hours or rest breaks, which may apply when an employee works from that location.

Data Protection/Security Concerns

The need to facilitate employees using personal devices or work devices in a home or shared setting has naturally created some concern for employers as to how they can maintain the high level of data protection they have implemented in the workplace with respect to their data protection obligations. Working from outside the country can also raise the same concerns. Working outside the EU may also give rise to issues from a GDPR perspective.Some countries are not approved “third countries” under GDPR and security risks may vary from unsecured networks to limited data protection.

Insurance Issues

Not all insurance policies cover employees working from abroad. Policies will need to be examined to confirm there are no prohibition or exclusions on having employees working from abroad from an insurance perspective. Travel insurance rarely covers remote work and company or home insurance may not cover work equipment abroad. Health insurance and access to local healthcare services will depend on the country the employee is working from and any applicable local laws. In some countries, social insurance registration is required before medical treatment.

Irish Contract Issues

Employers may not be able to fulfil all Irish contractual terms for employees working from abroad. For example, access to insurance policies and healthcare polices may require employees to be resident to make a claim under the policy. There could be potential cost consequences falling to the employer in the case of a claim. It is also important to note that contractual issues may fall under foreign courts, not Irish courts.

If you have any questions on any aspect of the areas mentioned in this article,
please contact us on 01 525 2914 or info@voltedge.ie