UKH

I'm considering trying to 'work from home' overseas for a year for my current employer.  My employer say they cannot do that because:-

This would be in contravention of local and international tax law.

My employer would have to have a taxable presence in the country I'm working in (they don't)

My employer would have to be compliant with the country I'm working in's laws and statutes.

My employer says they would have to/be exposed to: Company tax, social taxes (SS/NI), law, working rights & withholding taxes in the country I want to work in.

Is this correct?  They say I would have to terminate my employment and become a contractor.  Has anyone here managed to retain their contract of employment whilst working away for that long?

In reply to Toerag:

Sounds about right, I was told by my employer that the only way to do it was to become self employed and them take me on as a contractor. It would be worth it to me if I can arrange the actual 'being in another country for a year' bit, YMMV obviously. Its not a small decision, but then going abroad for a year ain't either

In reply to Toerag:

Seems about right. Outside, possibly, a couple of countries like Bermuda with its special Digital Nomad visa they would be opening themselves up to a whole load of legal hassle.

It wouldnt be insurmountable for them but they would need to hire a country specialist to figure out all the paperwork so unless you are ultra valuable to them unlikely they would go for it.

If they already have an office in a country then its more likely to be viable although even then probably a bunch of hassle.

In reply to Toerag:

My employer, an organisation with over 15,000 employees allows us to work abroad from home provided:

• You have a right to work in that country,
• There are no security risks at the country you want to work in
• You do not exceed a certain number of days (can't remember how many) to avoid the tax issues you refer to above.
• All the software you are using is licensed to be used in the country you plan on working from.
• The country you want to work from doesn't have some weird tax rules that would make you double count. I believe this is not an issue for most western countries at least.

In reply to Toerag: Your employer is correct. And even if you become a contractor then a lot of that stuff still needs to be dealt with

In reply to Toerag:

Also lots of legal safeguards for data protection to consider when working overseas. This is particularly relevant if you work in a regulated industry - I can't work outside the UK because of the data we use as a business. Makes it easy to switch off when on holiday though!

In reply to Toerag:

We've been instructed that we are not allowed to do that because of the tax complexity involved since Brexit.  In order to ensure no problems we even need to ask permission in advance to connect to the company's systems from anywhere outside the UK now.

We used to have a guy in Spain works for us and had to let him go as we don't have a Spanish subsidiary (shame, as he was good).

Brexit, what a nuisance.

In reply to Toerag:

That's about right, I think.

We've had a couple of guys that worked for us in the UK that moved back home/abroad and we had to take them on as contractors for those reasons.

In reply to Toerag:

I live in France but work for my old UK employer. We set up a tax account over here with the help of a specialist accountancy firm, who process all my wages and taxes. I have a French employment contract, work to French law and pay my tax in France. All the company has to do is make the relevant transfer each month. My advice is find a good accountancy firm that can help and go for it. 

In reply to Toerag:

Become a contractor, provided you can work a role that is genuinely outside of IR 35, work remotely, come to their office every 3 months. Pay UK taxes. Everyone very carefully doesn't discuss anything inconvenient. Job's a good'un... Why would you want to be someone else's employee anyway?

In reply to Toerag:

Don't forget if you are there for more than 6 months (or so) you might be due to pay local income tax equivalent, which can be higher than the UK. When I worked abroad for my UK company they covered the increase in tax on my behalf (this was years ago, mind)

In reply to CantClimbTom:

Because my terms and conditions are excellent (16% employer pension contribution for example) and it's far harder to get rid of an employee than a contractor.

In reply to Toerag:

Having looked at this for a similar situation it seems about right. When I was discussing it with my employer the easiest route appeared to be using an Employer of Record (essentially a company which satisifies all the local employment criteria and your uk employer just sends them your monthly salary, which they then disburse to you, I guess it basically turns you into a contractor but without having to setup on your own in a new country). In the end I happened to find an equivalent job in the county we were moving too whilst the discussions were ongong so it became moot (though our original plan was to move back to the UK in a couple of years but I now have permanent job in Norway so who knows...)

If you go down the route of short term working abroad remember that even though it avoids most of the tax hassle working remotely you still need the right to work in the country you are living temporarily even if your employer is not in that country, which may be an issue depending on the countrys/citizenships/visas involved.

In reply to Toerag:

You didn't say what you do, or where you want to do it, but your employer is of course correct. I did it in 2011 moving from London to France but pre-Brexit it was easy (no limits on living and working) but I had to quit, set up my own French-based company, and contract back to the old employer in the UK.

I still had to pay tax on 100% of my global income to the French after being fiscally resident there more than 183 days, but mutual tax agreements meant I was no longer taxed in the UK on the same income. Whatever you do, get a good accountant as you'll still have to pay a tax return if you're officially there regardless of what and how you're earning.

I can only speak for the EU but the biggest issue is a visa. You can't just come here and work now like in the good old days and trying to stay under the radar on a tourist visa is asking for trouble. Wherever you live you're going to want accommodation, internet connection, health care etc - all pretty difficult (if you want a nice, comfortable, easy life) especially in countries with official ID schemes. 

In reply to yorkshireman:

I drive telephone exchanges for a living, and the move would be to Germany.  Tax isn't an issue, but I could probably wangle myself less than 180 days anywhere due to likely timings and pay no tax   Visa would be under my wife's nationality as she's a Germ.

In reply to Toerag:

When I was trying to work out if I could do the <180 days abroad option I was eligible for a spouse visa which would give me the right to work in Norway but in that application I would have to sign a statement which said it was my intention to live in Norway as a resident. I suspect it wouldn't have caused any problems but arguably I would have been breaking the rules and immigration services aren't always the most forgiving of entities... 

Also the visa process meant I would have ended up with a social security number here so would still have had to file a Norwegian tax return even if it was to say I wasn't paying them anything. Sadly I looked at the double tax agreement between UK-Norway and there are tie-breaker rules for spending less than 180 days so I think to avoid paying tax in either I would have had to spend something like <100 days in each (can't remember exactly) so would still have been paying UK tax even if like you I was planning to spend less than half the year in any particular country.

These details will vary by country but just some of the things I came across to look out for

In reply to Toerag:

You may only travel to Germany if your wife is German to visit. Working is specifically prohibited. You can apply for a work visa if the work is in Germany and is in one of the desired categories. You can also work as a freelancer in which case you need a different visa and have to conform to the rules regarding freelancing, in your case you won't be. Other countries may vary.

In reply to CantClimbTom:

It's all fun and games until there's a recession. Hang on..

In reply to jimtitt:

I assume Toerag already knew this but this is wrong; the freedom of movement principle is extended to the spouses of EU citizens - so it should straightforwardly give you the right to live and work there; however as my friends who moved to Spain discovered, exactly how this is administered seems to vary by country so it doesn't entirely preclude some admin hassle! Hopefully Germany have it sorted better, certainly their federal website is unambiguous:

https://www.make-it-in-germany.com/en/living-in-germany/family-life/spouses...

Even if your spouse is non EU/EEA then in most countries you can still normally work unrestricted on family reunification visas, though this probably isn't a given everywhere.

In reply to MB42: Good call - Norwegian immigration staff are very on the ball and we've had people refused entry and a friend also got a call one morning to get his butt out of the country or sort out his paperwork pronto

In reply to montyjohn:

As my grandad (who both looked and sounded like Fred Dibnah but with a broader Lancashire accent) used to say "where there's muck.. there's brass". Recession is opportunity for some. F*****d if I know what it's good for, but it is good for some people

In reply to CantClimbTom:

That's what my dad used to say, but with a thick West Yorkshire accent.

Let me know when you figure it out.

In reply to Toerag:

If you want to work in Germany, and have the right to do so why not just apply for a job with a German company? I'm guessing the language barrier is not insurmountable for you. Their economy is big enough to share with you.

In reply to Toerag:

I do exactly this. I work from home in Austria for an NL company (mine). As the work is predominantly executed from Austria (even though the end customer is in Germany), I had to register an Austrian branch of my company, who is now my employer and is also responsible to pay employee income tax and social security in Austria, as well as VAT and corporation tax on any turnover generated from Austria. 

The location of where the work is executed is the determining factor, and in your case, the location you choose as your "work from home" place. 

I would say that becoming a contractor is the only option unless your employer is a prepared to make the above steps. Security aside, being a contractor does have some serious benefits though..... Depends on your outlook towards risk. 

In reply to supersteve:

Is that through a Salarie Portage scheme?

It's something I'm looking into for next year, but my employer is in Saudi...

In reply to Toerag:

Tax may be an issue for the company though...are you fully versed with German rules on employing people and the companys responsibilites in that area.What looks simple can often be a nightmare and no go for the company.

In reply to CantClimbTom: There are industries and sectors where not only do you get a better overall package as an employee,  you get a better pay packet each month as well.  Don't assume all contractors are driving round in Ferrari's...

In reply to mutt:

My skills are highly specialised even within the telecoms sector. I'd invariably be looking to work for a telco, and of course that would mean working in a major city and probably not where I want to work (Bavaria), probably at a serious paycut due to needing to re-train. My German isn't up to doing 'field work' and communicating technically with customers who don't have good English. I'm mid 40's so won't be top of the pile of job applicants. Essentially it's a risk thing - I've got it good where I am and there's quite a risk my family and I would end up with a poorer quality of life.

In reply to Toerag:

This question comes up now and then on this forum:-

https://community.cipd.co.uk/discussion-forums

I don't think you have to be a CIPD member to post and if you wish you can post anonymously.

Someone on there will know the definitive answer - I don't!