Tax tip: How to work from home abroad

Since many companies have allowed their employees to work from home, temporary working abroad has also become more popular. For many, the idea of extending their holiday abroad by working from their holiday destination is an appealing one. Technically, this is often possible without any problems, but employees should observe certain legal and tax rules if they don't want to experience any nasty surprises.

This should ensure that no tax liability arises abroad. This can happen in particular if employees have a holiday home or family living in the country in question. The consequence is that employees have to submit a tax return in the country and the employer may have to pay income tax. Outside Europe, there is also the risk that double taxation agreements do not exist with all countries. A tax liability may already arise if employees work from home for one day.

There are also countries with tax registration obligations for foreign employees, such as Greece. The registration obligation also applies to short-term work in a foreign home office. Violations can result in severe fines. Employees should therefore find out in advance whether their company allows workation (work plus holiday) and has drawn up a company agreement or other guidelines in this regard.

This is the case for almost 50 per cent of German companies. As a rule, there is a standardised approval process with the aim of avoiding tax, insurance and residence law risks. This should be strictly adhered to. So-called "hush trips", where employees work abroad without informing their employer, can have consequences under labour law. Although many countries now have so-called "digital nomad visas", this does not mean that employees can work from home in these countries without any tax risks. The visas only provide relief under residence law. Whether German employees are subject to tax in this country is not regulated there.