Remote working across borders: the hidden risks businesses need to understand

In this special edition of Difference Makers Discuss, recorded for the Chartered Accountants Worldwide UAE community, host Carla Wilson is joined by international tax specialist Hugo van Zyl and HR leader Sarah Brooks. Together they unpack the tax, payroll, and governance risks of letting employees work across borders, along with the practical steps every organisation should take. You can watch the full conversation on demand below, and read on to discover the key lessons from this webinar.

Flexible working has become part of how modern organisations operate. An employee asks to work from another country for a few weeks or a few months, the request feels reasonable, and a quick yes follows. As this conversation makes clear, that yes can carry tax, payroll, and governance consequences that are easy to miss and expensive to unwind.

As Sarah Brooks put it, “Whilst I’m all for remote working, it is fairly serious. If you get it wrong, it can be an expensive mistake.” Here is what the panel wants every business and every employee to understand.

Your visa is not your tax status

One of the most common misconceptions, Hugo explained, is that employees use their visa to decide their tax position. A visitor visa may allow 90 or 183 days in a country, and people assume the visa title settles the question. It does not.

Countries count days in very different ways. The UK, for example, counts work days and can tax work performed there from day one. South Africa works on a day count within its tax year. The trigger may sit inside a 12 month cycle in one treaty and a tax year in another, which makes the calculation genuinely complex. The safest position is simple: if you are uncertain, take advice before you get on the plane.

A UAE contract does not travel with you

Because there is no personal income tax in the UAE, many people assume that income earned under a UAE employment contract is tax free wherever they go. Hugo described that assumption as dangerous.

Two things can change the picture. The first is the source rules of the country you are sitting in. The second is a provision found in the OECD and United Nations model treaties: if your employer recharges part of your salary to a branch in the country where you are working, the income can become taxable there. His example was memorable. Work remotely from a group hotel’s own property in Durban and the cost is recharged between companies, which can make you taxable in South Africa from day one. As Hugo said, “The 183 days are not going to protect you.”

You can be tax resident in two countries at once

It is entirely possible to be tax resident in two countries at the same time. Treaties resolve this through the tiebreaker tests in Article 4, which Hugo summarised in order: where you have a permanent home available to you, your centre of vital interest (where your core family is and where you are employed), your habitual abode (the home where you go to rest and recuperate), and finally nationality.

He pointed to the UK case of HMRC against Jonathan Oppenheimer, where the taxpayer spent more days in the UK than in South Africa, yet the court found his habitual abode remained South Africa, because that is where he went to rest. The lesson is that residency is not always decided by property, employment, or even where you spend the most days.

Permanent establishment is the risk that sits with the business

A permanent establishment, or PE, is the point where a business becomes taxable in another country. In plain English, two triggers matter most. The first is a fixed place of business, such as an office or construction site lasting more than six months. A genuine remote worker or digital nomad usually does not create this. The second is the one that catches businesses out: a senior person who habitually signs or concludes contracts on behalf of the employer. That authority alone can create a permanent establishment.

The consequences go well beyond a single tax bill. As Hugo explained, an accidental PE can bring registration obligations in the foreign jurisdiction, corporate income tax, payroll withholding, social security and medical contributions, value added tax once a turnover threshold is crossed, and in countries such as India and South Africa, exchange control. As Carla summarised, it is not as simple as writing a cheque. You have to register in that jurisdiction and meet a whole administrative process to stay compliant.

Payroll, visas, and end of service benefits

On payroll, the split is clear. The withholding and the social security obligations sit with the employer. The actual tax payment sits with the employee. Hugo’s practical suggestion is to agree contractually that there is no deduction, with the employee undertaking to manage their own tax.

There is a benefits angle that is easy to overlook. Staying on the formal payment system protects the employee. In the UK that means staying on the issued tax code so that Social Security contributions continue. In the UAE it means staying on the Wage Protection System and being paid into a UAE bank account, which keeps the end of service gratuity accruing. As Sarah explained, that gratuity is calculated at 21 days of basic salary for each of the first five years of service and 30 days for every year after that, and it continues to build while someone works remotely, as do medical insurance and annual leave accruals, unless the contract is terminated.

Sarah also flagged a UAE specific point on visas. You cannot press pause on a residency visa while someone is abroad. It keeps running, and if a person is out of the country for six months, or the visa expires while they are away, it is effectively cancelled and still needs a formal cancellation process carried out by the company.

Do not run this on WhatsApp

A great deal of remote working is approved informally, through a WhatsApp message or a quick email. Sarah’s advice is to treat it properly. Put a written policy in place that sets out what remote working is, the boundaries and day limits, and a documented approval process. The channel can be WhatsApp, email, or an HR system, as long as it is recorded somewhere to give transparency and consistency.

Two refinements stood out. First, build in the ability to end the arrangement. Hugo noted that recent events, from conflict to COVID-19, have shown why a policy should let a company unilaterally bring someone home, which also signals there was never any intention to create a branch abroad. Second, mind the difference between being present and exercising employment. Maternity leave, garden leave, and sabbaticals generally do not trigger tax, because the person is not exercising employment, but employees should still notify their employer of where they will be based, and keep documentation such as a no objection certificate that shows the reason for travel was not work.

Who owns the decision

Both speakers agreed this is not an HR decision made in isolation. Hugo was direct: from a tax advisory point of view it is a board level decision, because the board takes ownership of the permanent establishment risk, with HR involved in policy and execution. Sarah added that most organisations are not large enough to have a board, so in practice it sits with senior leadership and ownership, informed by finance, compliance, and external legal and tax advice. The pattern is clear. HR initiates around the employee benefit, leadership owns the risk, and the right experts are brought in early.

If you already have people working abroad, start here

Asked what a business should do in the next week if people are already working overseas, the panel offered a clear list.

Hugo’s three were to get legal or corporate tax advice, to manage risk (including checking that professional indemnity insurance covers the work, since some policies exclude certain jurisdictions and any country involved in a conflict), and to put the right permissions in place.

Sarah’s three were to gather the data first (who they are, where they are, and how long they have been there), to check the visa position, and to review the policies and use the payroll information to estimate the tax exposure, then have the conversation and, if needed, bring people back or rearrange things until the position is resolved.

The cost question, and where Chartered Accountants fit

Many small business owners hear all of this and ask how much it will cost, and whether AI can fill the gap. Hugo’s answer was practical. Reliable value for money often comes from the professional bodies, the Chartered Accountancy institutions around the world, which keep referral lists of experts in each country. You do not have to default to the big four. AI and software can help with monitoring and compliance, such as tracking visa renewals, but the advisory judgement belongs with an expert who understands your industry. As he put it, find an expert of that country, and start with the question Sarah keeps asking: where are you going?

The one thing to take away

We asked both speakers for the single point they hope people remember.

For Hugo, it was communication. Inform your staff that if they are working remotely, for a week or for three months, they should be transparent so the business can manage its risk, and then give them a fair policy with a clear yes or no.

For Sarah, it was this: “I encourage remote work, but, and there is a but, don’t treat it as a casual perk. Treat it as a governed exception that finance, HR, and leadership own together, with simple rules and transparent communication to your teams.”

As Carla reflected in closing, international remote working is no longer simply an HR or employee wellbeing issue. It is a business wide consideration that touches tax, payroll, compliance, governance, and risk. The organisations that handle it well are the ones that ask the right questions early.

This conversation is intended as general guidance and does not constitute tax, legal, or financial advice. Organisations and individuals should seek professional advice on their specific circumstances.