During this time when remote working is more popular than ever, and not only due to the COVID-19 pandemic, the possibility of working remotely from abroad seems to tempt more employees than before. Employers need to consider whether allowing remote work abroad could for instance be a decisive pull factor for a flexible and forward-looking organisation in attracting the best talent. But on the other hand, employers also need to look at whether the lack of clarity regarding some questions in remote work abroad or the amount of potential paperwork would surpass the benefits.

In this article we outline some of the questions that should be acknowledged when an organisation is considering allowing remote work abroad. The purpose is to present, from the employer's view and in a general manner, some of the areas to which the employer should pay attention. Naturally situations may significantly vary depending on multiple factors of the individual arrangement, like the employer’s country and the country of the remote work, length of the remote working period, and the position and duties of the employee working remote abroad. These circumstances need to be evaluated.

Agreement on remote work abroad and applicable law

The employer can allow the employee to work remotely from another country. An agreement on re-mote work abroad should always be concluded in writing, and the employer should pay attention to the applicable law during the remote work period. The main principle is that the laws and regulations of the working country apply to the employment. The parties can still make a reference to an-other law in the agreement which would then in principle be applied to the employment also during the remote working period, but for instance in the European Union parties cannot lessen the employee’s rights from the level provided by the country of work. Therefore, the employer should al-ways find out the relevant requirements of the applicable laws and regulations of the working country to avoid surprises.

With remote work in general, the employer and the employee should also agree on other relevant terms of remote work, such as the applicable working hours and reimbursements of expenses. Regarding remote work abroad, it is also important to agree on the duration and place of the remote work period.


There are several questions relating to taxation when an employer is considering allowing remote work abroad. First, the employer should always find out which country has the right to tax the employee’s income when the work is performed from another country. It is possible that both the employer’s home country as well as the country of remote work have the right to collect taxes according to their legislation. To avoid double taxation, the employer must consider the relevant tax regulations of both countries and find out if the countries have a bilateral tax treaty in effect. Usually bilateral tax treaties include some sort of rules on the avoidance of double taxation. Some of the treaties include a so-called 183 days rule, according to which the foreign country’s right to tax an employee’s income could be excluded when the employee does not reside in the foreign country for over 183 days, and other requirements of the specific treaty are met.

The employer must also consider the risk of the employee establishing a fixed place of business in the country of remote work i.e. permanent establishment. The criteria for a permanent establishment (“PE”) depends on the specific legislation of the country of the remote work. Typically, if the foreign country’s authorities consider that the remote working employee establishes a PE for the employer, the foreign country could tax the company revenue generated by such a remote worker, and several registration and reporting obligations could also follow. Therefore, the employer should examine the relevant legislation to find out if the criteria of a PE would be met if an employee starts to work from another country. Usually the assessment takes into consideration factors such as the length of the working period and the nature of the work performed, and if the employer provides the employee with a workplace (e.g. a hotel room).

Social security

Regarding social security, the essential question is to find out which country’s social security legislation applies to an employee during the remote work period, since this usually determines the country to which the employer is obliged to pay the social security payments. In the EU the main principle is that the working country’s social security legislation also applies during remote work periods abroad. However, in the EU, it is possible to remain within the social security system of the country of origin during a remote work period abroad if certain requirements are met. This could be possible if the employee is considered a posted employee whose work period abroad is temporary, and the authorities in the employer’s country provide the employee with an A1 certificate.

If remote work is performed outside the EU, depending on the relevant legislation, it could be possible that the employee remains within the security system of the country of origin (at least for a certain period). To avoid the possibility of being obliged to make social security payments in two countries, both countries’ legislation should be inspected.

Other relevant questions

There are several other questions the employer should consider, depending on the legislation of the employer’s country and the country of remote work. If remote work is done in the EU, work permits are not required, but there could be some registration obligations to local authorities. In general, outside the EU, questions relating to work permits are usually relevant.

Data privacy and protection should also be considered if an employee is working from another country, as local regulation may provide some additional data privacy requirements. Extra consideration is always needed when data is being transferred across borders.

In addition, depending on relevant legislation, equal treatment requirements could come into play when the employer is determining its remote working policy. In Finland for instance this could mean that if the employer allows one of the employees to work remotely abroad, in principle, the same may need to be allowed to other employees if circumstances are similar. However, it may be possible to treat the circumstances as different in case remote work in a different country would mean more administrative burden to the employer.

The employer should note that the safety regulation of both countries may be applicable during the remote work period, and it is also advisable to consider the validity of insurances when an employee is working from another country.

The employer may decide quite freely if it allows remote work abroad or not. As is evident from above, there are many questions to be considered if remote work abroad is allowed. However, when the battle for the best talents accelerates and the working conditions are evolving to an ever more flexible direction, remote work abroad could become a regularity in the future. We have successfully assisted many clients in drafting remote work policies and agreements for remote work abroad, and as a global firm we will be able to find the solutions that serve your needs best.