How to Manage Your Digital Nomads
A long-term shift to remote working means that more remote employees will want to travel while working. Read on to find out how letting your remote employees work and travel can benefit your business and how you can manage your distributed team.
Companies with distributed teams need to be aware of their remote employees’ locations. This is the best way for businesses to remain compliant with local tax and employment laws.
In the midst of the Covid-19 lockdowns, a Boston Consulting Group survey found that 60% of 12,000 international employees would like to work more remotely post-pandemic. Many employees may well take remote working as an opportunity to travel and live in different places for longer periods. Being open to your employees travelling and working simultaneously will signal your adaptability, engagement, and responsiveness to their needs.
So if an employee is moving from country to country every few weeks or months, what does this mean for your company and remote team? Here we outline how to manage the travel agendas of your nomadic remote employees effectively.
Tax Residence Threshold
Tax residence tends to be triggered for employees when living in a country for more than 6 months or 183 days. In the UK, for example, this means they are liable to pay taxes if they have spent 183 days in a year in the UK.
For an employee who is a UK tax resident, the following scenarios are possible:
- Short-term working outside the UK (less than 6 months): generally taxable in the UK. However, this will also depend on the tax residence threshold in the other country or countries where an employee is spending time. If tax residence is triggered earlier there, an employee may need to pay taxes both in the UK and abroad.
- Medium-term working outside the UK (6 months - 1 tax year): typically taxable in the UK and abroad.
- Long-term working outside the UK (1 tax year +): typically not taxable in the UK and typically taxable abroad.
Double Tax Agreements (DTAs) may exempt people from paying taxes twice if they are residing in multiple countries throughout the year. Considering DTAs will typically be useful, for instance, if an employee with UK tax residence spends 6 months to 1 year outside of the UK.
However, the threshold can vary from country to country. In Switzerland, employees become liable to pay taxes after 90 days of residency. Employees will need to be aware of the different tax residency thresholds of the jurisdictions where they live throughout a tax year. As you are managing payroll for your remote team, you also need to be aware of where your staff are living and which authorities to pay their income taxes to.
Centre of Life
The 183 or 90 day thresholds may not be the only way to ascertain whether an employee needs to be paying taxes. Some countries use the principle of where the centre of an employee’s personal life and main activities are, to determine their tax status. For example, while an individual may be working in one country, their spouses and children might be living elsewhere. Therefore, they might be considered liable to pay taxes in both or multiple countries. Again, DTAs can kick in here to ensure people aren’t paying taxes twice.
Social Security Contributions & Benefits
You will need to know where, what, and how to pay social security contributions and benefits. Each country has their own laws on this and their own payroll system so there is no one-size-fits-all solution. Meeting these requirements is a standard of compliant employment.
Of course, you cannot change your remote employees’ contracts and payroll if they are moving every few weeks - this is a huge amount of work for you. It might also not be feasible for your employees either. Many countries’ banks, for example, need a resident permit or proof of residence to open a bank account.
The good news is that you will never be liable to pay social security contributions twice. Generally, you should pay social security contributions in line with the laws of the country where your staff are spending most of the year and where they are tax residents. You can also take out an additional travel insurance plan and tailor benefits packages to meet the needs of their nomadic lifestyle.
Travel & Work Permits
Work permits aren’t a problem for countries where employees are citizens as this means they are eligible to reside and work there. However, be wary of travel permits - employees can run into issues if they overstay somewhere or don’t obtain the right permits. The onus is on the employee but being aware of your employees’ whereabouts and their right to remain is also essential for you. This will protect both your employee and your company in the long-run.
The global HR trends of 2020 have shown that clear communication is vital for running an effective distributed team. Having the right technology and communication practices in place is the key to managing your distributed team. Your digital nomads are part of a team and a company. Regular communication will help keep them integrated, engaged, supported, and oriented towards your company’s goals.
Effective communication channels will also help you stay on top of where your employees are, where to and when they are travelling, and how long they are staying in different places. Ask them to inform themselves about tax residence thresholds in advance and to notify your company. This can help you foresee things like workflow delays, internet issues, or employee tax residency triggers.
Stay Compliant with Omnipresent
At Omnipresent, we help companies like yours stay compliant by taking care of all your employees that want to work and travel. Compliant payroll and employment are the main logistical hurdles to managing travelling employees. We can help you stay on top of this to protect your company from non-compliance charges as well as your staff from potential difficulties.
Our comprehensive service includes:
- Benefits & Welfare
In addition, we can tailor your benefits packages to further improve your employees’ experiences. We are partnering with Vitrue VIDA and SafetyWing to offer you holistic health and travel insurance packages catering specifically to your digital nomads. By staying compliant and taking care of your digital nomads’ wellbeing, you can harness the benefits of an engaged team and focus completely on high ROI activities.
Get in touch so we can help you stay compliant and take care of your digital nomads.