Working from anywhere culture requires diligent approach to tax and social security

View our series on working from anywhere and find out more about our global employer services. 

Employers and employees must pay heed to cross-border regulations and requirements. RSM’s Global Employer Services map the way ahead. 

The world of employment has changed dramatically and suddenly since pre-pandemic days; there can be little doubt that digital nomads and working from anywhere are here to stay. 

From fully remote and hybrid set-ups, to ‘workcations’, the alternatives on offer in the modern workplace bring flexibility and opportunity but also – according to Kenny Ransquin, Partner and Head of Global Employer Services at RSM Belgium – challenges and costs for both employer and employee. 

Tax and social security issues can be particularly thorny for both digital staff and their organisation, and require a proactive approach for each side of the employment relationship in order to maintain a positive work environment. 

Working out your tax residency 

“The tax landscape for working from anywhere can be quite complex”, says Kenny, with the most critical aspect represented by tax residency. 

The term applies to the country in which an individual is legally obliged to pay tax, often on your total income regardless of which part of the world it was earned. And – to complicate things – it is not always where an individual lives that dictates residency, even though that will often have some bearing. 

Tax residency is often linked to the number of days spent in a given country and your ties to that location. "Where is your family living? Where are you spending your free time? Taken in a global context, these, and other circumstances will determine where an individual must declare income and pay tax," says Kenny. 

He adds: "It is probably best in a situation like this to talk with a tax consultant. They will assist with compliance, preparing tax declarations, submitting them, making tax calculations, and help to determine the tax impacts of your working from anywhere options." 

“Work-related expenses must also be considered. Travel, flights, accommodation, rent – all of this is likely to be subject to locational taxation regulations”, says Kenny. “Keep track of the time you are spending in each country and keep evidence of everything related to expenses and payments.” 

Be wary of double taxation 

Double tax is another important consideration. Every country does things differently and while there may be agreements between countries to avoid double taxation, complications and complexities often arise. 

Treaties are commonly in place to prevent double tax, attributing the right to tax to one country and allowing for a tax exemption, essentially a tax credit in the other country. 

"But it is essential to understand the provisions, how they should be interpreted, and how to comply because the penalties for failing to do so include fines and other legal consequences," says Kenny. 

Organisations must also be cognisant of the rules, not only to support employees but to stay on the right side of the regulations as an employer. Establishing a compliant and balanced working-from-home policy will provide clarity both in the short and long term – and can only benefit the brand of the organisation as an employer. 

Creating a (social) security blanket 

Digital nomads must also give consideration to matters relating to social security, payments, pensions, health cover and other issues. 

Some countries have bilateral agreements to ensure an individual is only paying social security in one country and that benefits (including pension pots, etc) are retained. But the landscape can be quite complex, even more so than with tax, so the best advice is to consult a professional who can guide the way. 

It is also worth considering private health insurance as an individual, or, if you are an employer, perhaps providing company health insurance that works globally, in order to fill gaps that might otherwise appear. 

“There may also be tax repercussions on an organisational level,” warns Kenny. “Professional activities of the individual in the country where they are working or residing could have significant corporate income tax consequences.” 

Take care of business 

The digital nomad lifestyle has gained increased popularity due to the ever-growing availability of remote positions, the desire for flexibility, the allure of experience in different cultures and a range of other factors. 

"For organisations, we believe it is really important to consider the appetite for working from anywhere and accommodate this as far as it is possible," says Kenny. "The employer will benefit from workers experiencing the world differently while maintaining employment and contributions to the organisation." 

For the employee, but also for the employer, it is essential to stay informed about regulations surrounding tax and social security, registration formalities, and to keep thorough records about time and spending in each country. 

"Don't let the complexities discourage you," adds Kenny. "There are many benefits to working from anywhere and it can enrich your life." 

Organisations will also benefit. Create a framework for remote workers, ensure the company is compliant with its own tax and social security obligations, and take care of your people – because they are ultimately there to take care of your business.