As remote work continues to evolve and international talent becomes more accessible, companies face increasingly complex considerations when managing cross-border employment.
Whether it's an employee asking to work from abroad or a business looking to set up operations in a new country, global mobility involves far more than simply allowing someone to open a laptop overseas.
This article addresses the most important questions companies need to ask, and answer, before supporting international working arrangements. Drawing on expert insight, we explore the legal, tax, payroll, and policy implications of international mobility, helping businesses understand their obligations and avoid costly mistakes.
This article has been created as a guide based on an interview we had with one of our global mobility partners, Daniel Howse from Tax Advisory Partnership.
This article is written as a guide only and you should always seek professional advice before making any decisions.
How does a company move an employee to another country?
The starting point is always to ensure the employee has the legal right to work in the new location. Tourist visas are often misunderstood, and many countries strictly prohibit any form of work, even remote work for a foreign company, while on such visas.
Beyond immigration, companies must assess whether the employee’s activity could trigger local tax, social security, or compliance obligations.
Can an employee work from anywhere in the world on a tourist visa?
In practice, it’s not that simple. Many countries, including the US, prohibit individuals from working while on a tourist visa, even if the work is remote and for a foreign employer. Customs officials frequently ask about the purpose of travel, and working without the proper authorisation can lead to penalties, denial of entry (both immediately and in the future) and restrictions on the business operating in that country.
It is essential to check local rules before allowing remote work from abroad.
Does a company need to set up a local entity to employ someone in another country?
Not always. In many cases, a business can have someone working remotely in another country without establishing a formal legal entity. However, this depends on the nature of the work, the duration, and the number of employees involved.
If the activity creates a taxable corporate presence, known as a permanent establishment, then local registration and compliance is required.
What are the implications of establishing a permanent entity in another country?
Creating a permanent establishment can subject the business to local corporation tax, payroll reporting, and other filings. This risk increases if senior staff are involved or contracts are being signed locally. Businesses may unintentionally establish a presence by deploying people without pre-planning, leading to backdated liabilities, penalties, and even restrictions on operating in that country.
What are the tax implications for both an individual and a company?
For individuals, tax exposure depends on time spent in the country and the terms of any double tax agreement in place. The commonly cited '183-day rule' does not offer blanket protection, various conditions must also be met. For employers, liabilities may include income tax withholdings, employer payroll costs, and social security contributions. Even where conditions to be exempt under a double taxation agreement are met, employer reporting (such as Short Term Business Visitor reporting in the UK) may still be required.
These vary significantly by jurisdiction and must be assessed individually.
What can a company do to ensure they’re compliant with payroll and tax?
The key is proactive planning. Companies should consider whether individuals will remain on the home payroll or transfer to a local one. In some cases, using an employer of record for globally mobile employees can simplify compliance by outsourcing employment responsibilities.
Early due diligence helps avoid unexpected costs and administrative burdens, especially around registration, filings, and social security contributions.
How can companies manage the risk of unexpected social security liabilities?
Social security is one of the most common areas where employers get caught out. If an employee relocates permanently, social security obligations typically switch to the host country immediately, even without a local entity.
Employer rates can be significantly higher than in the UK. In contrast, short-term postings may be covered under A1 certificates or bilateral agreements that preserve home-country contributions.
How can companies manage different employment laws and contracts across jurisdictions?
Companies must ensure that employment terms comply with local laws.
This often means issuing a supplementary assignment letter or adjusting the contract to meet statutory requirements such as holiday entitlement and working hours. It’s not enough to rely on the original employment contract, compliance must be reviewed and updated when the work location changes.
What are the data protection or licensing requirements for international workers?
Employees accessing sensitive information from abroad may be subject to local data protection rules or restricted by UK laws accessing sensitive data or documents overseas. Additionally, some industries require specific licences or insurance to operate in a given country.
Companies must assess these risks alongside employment and tax matters.
How should companies manage truly globally mobile employees?
For employees moving between countries frequently, compliance becomes even more complex. Employers must track where work is being performed, ensure insurance coverage, and maintain clear documentation. Employers of Record may provide a solution for some, but may not be all, globally mobile employees and case-by-case assessments are still required.
Even when an employee believes they are not tax resident anywhere, authorities may take a different view, and the absence of treaty protection can lead to unexpected tax bills.
Can someone avoid tax by never staying in one country for more than 90 days?
Not reliably.
Although many believe they can remain tax-free by rotating through countries, most jurisdictions tax non-residents on income earned while present. Without residency in any one country, individuals may lack access to treaty protection and find themselves liable in multiple locations.
Payroll taxes may also continue to apply by default.
If someone is non-resident everywhere, do they still have to pay tax?
Yes. If an individual is working in a country, even temporarily, they may be subject to local taxes on income earned there. Being non-resident does not exempt someone from local tax obligations. In fact, the absence of a tax residence will reduce options for relief under double tax agreements, increasing the risk of double taxation.
What are the risks from increased data sharing between countries?
Tax authorities are increasingly sharing information between countries, making it harder to go unnoticed. Passport scanning, banking disclosures, and digital footprints provide a clear trail. Even if tax isn’t owed, inconsistent reporting or failure to disclose income or presence can trigger audits or 'nudge letters' encouraging voluntary compliance, often as a prelude to enforcement.
What should a company do if an employee has moved abroad without permission?
The first step is to assess the risk created.
This includes reviewing tax, immigration, social security, and employment law implications. Expert advice is crucial. If the company decides the arrangement cannot continue, employment law considerations in the home and host country will affect how the situation can be resolved and what risks the business faces.
How can a foreign government pursue a company with no legal presence in that country?
While enforcement may be more difficult without a local entity, it’s not impossible. Governments may use information-sharing agreements or lean on authorities in the company’s home country to pursue action.
Larger companies with other global operations may also find themselves targeted via their other local entities. As a result, staying compliant is increasingly important for reputation and access to future opportunities.
What costs can companies expect when relocating someone internationally?
Costs vary depending on whether the move is business-driven or employee-led. Traditionally, companies provided generous relocation packages including cost-of-living allowances, housing, schooling, cultural training, and logistical support for business-driven moves.
These packages are becoming less common, especially for employee-initiated moves, where support may be limited to temporary accommodation or a modest relocation allowance.
What kind of tax help can employees expect from employers?
If the move is employer-initiated, companies often cover tax advice and return preparation for both home and host country.
This may continue for the duration of the assignment. For employee-driven moves, support may be limited to the first year, or provided via a lump-sum allowance to cover personal advice. In either case, early access to tax guidance improves compliance and employee satisfaction.
Is the employer or the employee responsible for ensuring tax compliance?
Responsibility is shared. Employers are generally liable for payroll withholding and social security and may face penalties if they fail to register or report income properly.
Employees, meanwhile, are typically responsible for filing returns and reporting global income as required by local laws. Mistakes can be costly on both sides.
Who bears the consequences of getting tax wrong?
When payroll or social security contributions are missed, the employer is usually held liable, even for the employee’s share. Penalties, interest, and reputational risk follow. For personal tax filings, the burden falls on the employee.
Companies must ensure that obligations are met on both fronts to protect themselves and their people.
Is it better to relocate existing employees or hire locally?
Each option has pros and cons. Relocating known employees helps establish brand values and culture in a new market but incurs higher costs and administrative effort.
Hiring locally can reduce costs and ease compliance, especially once a legal entity is in place. Most businesses adopt a hybrid model, sending a core team to set up operations, then hiring locally for growth.
Quick summary and why it’s important to speak to a global mobility specialist
When a company relocates an employee abroad, or has an employee working cross-border, the tax consequences can be significant.
The employee may be required to have tax withheld via a host country payroll, and social security obligations can shift immediately to the host country, even without a local legal entity.
Employer social security rates can be far higher overseas, and failing to register properly can lead to backdated liabilities, penalties, and reputational risk.
A relocated employee could also create a “permanent establishment” for the company, triggering corporation tax and reporting duties in that jurisdiction. Many tax authorities now share data automatically, making it harder to remain unnoticed.
Employers are usually liable for withholding taxes and social security, while employees are responsible for filing. Proactive planning, clear documentation, and specialist advice are essential to staying compliant.
For employers new to international employment and global mobility, it’s very easy to make mistakes and that’s why it’s vital to get help.
If you’re planning to expand internationally or support remote workers across borders, request a free introduction to one of our trusted global mobility experts today.
