Global mobility can present unique risks for employers that arise from rules governing digital nomads and working from home.
Remote work has changed how businesses operate. Employees are no longer tied to a single location — and many are choosing to work from another country, either temporarily as part of a work from home arrangement or as digital nomads.
For employers, this flexibility can unknowingly create tax and compliance risks.
1. Permanent Establishment Risk
If an employee is working from another country, even from home, this can create a permanent establishment (PE) for the employer.
This means:
- The company could become taxable in that country
- A portion of profits may need to be allocated and taxed locally
- Corporate tax filings may be required
What seems like a simple remote working arrangement can therefore trigger unexpected corporate tax exposure.
2. Deemed Employment and Local Payroll Obligations
Authorities may view the employee as being locally employed in the host country.
This can result in:
- Employer registration requirements
- Local payroll taxes and social security contributions
- Employment law compliance (leave, benefits, protections)
Even if the employee remains on the home country payroll, the host country may still assert taxing rights.
3. Employment Law and Compliance Risks
Allowing employees to work abroad can unintentionally expose the employer to:
- Local labour law obligations
- Employee rights under foreign jurisdictions
- Termination and dispute risks
These are often more onerous than expected and vary significantly between countries.
4. Lack of Visibility = Increased Risk
Many employers:
- Don’t track where employees are working
- Don’t assess how long they stay in a country
- Don’t evaluate tax thresholds or triggers
Without proper oversight, risk builds silently – until it becomes a costly issue.
How to Manage the Risk Employers Face
Employers should:
- Track employee locations and time spent abroad
- Assess PE and tax exposure in each jurisdiction
- Understand local employment obligations
- Put policies in place for remote cross-border work
This is where structured global mobility support becomes essential.
How SAIL Can Help
SAIL International works with employers to:
- Assess permanent establishment risk
- Evaluate cross-border tax exposure
- Advise on employment and payroll obligations
- Provide practical, tailored solutions for managing remote workers