Working remotely abroad – consider these thing as an employer
“An employee who works remotely abroad is primarily covered by the social security of the country where the remote work takes place,” says Helen Hägglund, who is a specialist in international personal insurance and employee benefits at Söderberg & Partners.
“When work is carried out in the EU, EEA countries or Switzerland, the employer can apply for an A1 certificate on social security coverage in Finland. If an employee wants to work outside these areas, the case is a little more complicated.”
However, Finnish employers do not in principle have any obligations to enable remote work abroad when the employee makes the initiative concerning a move to abroad.
Allowing employees to work abroad may be a significant competitive advantage
“In certain fields, where companies compete for skilled employees, the possibility to work from abroad may be a significant advantage,” Hägglund reminds.
If it is decided that working remotely abroad is allowed, it should be kept in mind that the employer operating in Finland is always obligated to ensure insurance coverage.
A person working in another EU country, the EEA or Switzerland may be a posted employee if the requirements for being entitled to the Finnish social security are met and if an A1 certificate has been obtained.
“If the employer has not applied for an A1 certificate, the foreign authorities may even interpret the case so that obtaining statutory insurance has been neglected. Compensation under any insurance policies referred to in the Finnish Workers’ Compensation Act must be applied for from Finland, as they differ from travel insurance policies when it comes to working abroad,” Hägglund explains.
The European health insurance card does not cover, for example, an ambulance flight to the home country. For this reason, Hägglund always recommends that travel insurance is also taken out.
“If you fall ill or have an accident and you want to return to Finland, the travel costs for the return can be high. It may also be extremely difficult to organise an ambulance flight locally without help from an insurance company,” she says.
In faraway countries, many things are more complicated
If remote work is performed in a country with which Finland has no social security agreement, the employer may be subject to double insurance obligations.
“This means that the employer must obtain statutory insurance for the employee in Finland and, additionally, equivalent insurance in the target country in accordance with the target country’s legislation,” Hägglund says.
Outside the EU, EEA countries and Switzerland, employees usually also need a work permit, which is granted by the immigration authorities of the country in question.
Some countries also require that the employee has a valid travel insurance at the time of granting a work visa. Such countries include, for example, New Zealand, Thailand and Indonesia, which are favoured by remote workers.
“Various travel insurance policies are naturally a part of the basic insurance packages for companies. However, insurance cover should be checked in case of international assignments or longer periods of remote work abroad. If an employer wants to provide additional cover for employees working abroad, expatriate insurance could be considered,” Hägglund says.
Expatriate insurance is intended for work carried out abroad when the employer specifically sends the employee to work abroad. In most cases, work is carried out abroad for at least months, and the duration is often known in advance.
As a rule, taxes are paid to Finland
Finnish citizens are primarily liable to pay taxes to Finland, unless the move is permanent. There are specific tax exemption rules that apply to working abroad, but they do not automatically apply to remote work. Therefore, the employee continues to pay taxes to Finland.
Finland’s right to levy taxes may, however, be limited pursuant to a tax treaty between Finland and the country where remote work is performed, and the foreign country may easily obtain the right to levy taxes on income.
The tax liability related to the country where remote work is performed is determined on the basis of national legislation. Tax liability is often incurred if the time spent in a country exceeds six months, but there are exceptions.
“In case of tax liability in the country where remote work is performed, any double taxation must be eliminated. For this reason, it is important to agree whether the employer or employee is liable for the obligations in each country,” Hägglund says.
A permanent policy for remote work abroad saves a lot of trouble
The rules and meeting of obligations related to remote work abroad must always be agreed in writing with the employee. When working from abroad, many practical things must be considered – starting from the time difference.
“Companies should have permanent policies, which both employees and managers could rely on when working remotely abroad is discussed. This helps avoid unpleasant surprises, which could not only be difficult but also unreasonably expensive to rectify retrospectively,” Helen Hägglund says.
Söderberg & Partners provides consulting, advice and management services in business insurance, employee benefits, taxation and pensions.