ProACT Sam Orgill clarifies where expat tax and social insurance contributions are payable when working remotely.
In recent times technology and global issues have accelerated the art of home working that continues and will continue to impact lifestyles around the world.
Remote working from a home office, or serviced office location is possible if some one can connect with clients, colleagues and online workplace.
The telephone has allowed people to communicate remotely. Show a 9 year old a land line dial telephone they won’t know what it is for. Many countries no longer have wired connections for telephone to every building as the interweb and wi-fi and mobile data will do the job. Countries like Cyprus have a 2Gb per second internet as standard in 2024. 30 years ago broadband speeds were 24kb – 2,000,000kb compared to 24kb. 2 million times faster.
Digital data can flow around the world in seconds.
Remote working could be around the corner or around the world. Living and Working Abroad offers attractive lifestyle options and potential tax benefits.
Families and friends could live in the same location while working around the world.
Warmer clients could give health benefits.
The European Union’s purpose in part is to allow citizens to live and work abroad within the EU without Resident Permit and Visa restrictions, even so all people living and working abroad have tax liabilities.
TAX DOMICILE
Your country of origin is where you are from and the country that has a default claim to your world wide tax residence – unless you are properly a tax resident in another country.
This could mean the country you were born in, grew up in up to adulthood, but also is related to your parents and grandparents origins. Hence the claims for dual citizenship that could be made to allow for residency permits.
The luck of the Irish heritage for the British is that Dual Citizenship offers EU citizenship and freedom of movement.
Even so your tax domicile may not be changed for up to 20 years.
Cyprus allow you to confirm you are non-domicile to Cyprus which saves Expats tax on overseas income – but confirms your country of home domicile and liability to Inheritance
and Capital Gains Taxes up to 40% on world wide investment and property and inheritance.
These liabilities follow you to the grave and the estate of your assets.
ProACT advises family and business how to ensure their overseas property, business and investment are freed up from taxes and can pass to your family without cost and delay.
TAX RESIDENCE
The 3 basic requirements being a residence permanent, accommodation you have rights to live in, and being in the country for more than 6 months in a tax year.
For remote working it is more complex, and the principles of the EU Schengen Zone have complications for non EU citizens.
A permanent resident of an EU country has EU citizens rights and can be obtained after a minimum of 5 years residence. That is 5 years residence to maintain a home but not necessarily a tax residence.
UK expats with a Pre-Brexit EU resident permit could retain their EU Citizen rights.
Otherwise EU Schengen Rules and Travel Authority being applied in 2025 will limit non EU citizens to 90 days in any EU country in any 6 month period without a residency permit – an issue for overseas property owners to address now before they become time limited to spend time working remotely in their overseas property.
With a Resident Permit, a remote worker could spend longer periods abroad in the EU.
In any country around the world any stay beyond 90 days generally requires a form of visa or authority to stay. Technology has allowed electronic ‘visas’ to be created by countries that will include the EU from 2025.
Even visa free travellers will be monitored by electronic travel authorities in the EU as well as other countries around the world including UK, USA, Australia and Middle East.
A resident permit is also required for a tax registration.
REMOTE WORKERS
If working remotely the obligation is to pay tax and social / national insurance in the country and jurisdiction where the work is being done.
For an employee the tax payment obligation is with the employer. They can be based in another country but must have a branch or employer of record arrangement in the employee’s country of tax residence if spending more than 90 days in that country.
If the employer accepts this arrangement then they can make arrangements to pay the correct level of tax locally for the employee. The employee and employer in turn make local tax returns.
If the remote worker is a contractor then the employing contracting business does not retain a tax reporting liability other than through their accounts of purchase expense and payment receipts to the contract remote working.
The contracting remote worker must have accommodation and resident permit to then remain for long stays in country and obtain a tax registration number that then allows them to prepare and complete tax and social / national insurance returns and payments.
The remote workers income in this instance may be liable to additional VAT reporting.
The contractor will be obliged to know their remote workers tax number in their country of tax residence. In turn this information is exchanged between the two tax authorities for the payer and receiver of income and earnings.
If a remote worker receives income as a contractor, their home country receive notification of the income paid by a home country employing company and exchange information with the remote workers country of tax residence. If tax returns are not completed in correctly for each country then tax penalties and investigations can arise.
Generally when leaving your home country the tax authority will require a tax return to confirm non residence at home, and tax country where living and working abroad.
ProACT Partnership can assist and advice remote working expat for residence permits, tax registrations and returns when Living and Working Abroad.
ProACT Sam Orgill
Contact Us:
Web Contact-Us: www.proactpartnership.com/contact-us
OFFICE Tel: +357 26 819 424 (Cyprus)
WEB: www.proactpartnership.com
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