International mobile employees – aspects to consider

In the last two decades, it has become quite common to take employment in another country than in the country of residence. Due to travel restrictions and closed borders, many employees are now in quarantine in their country of residence. Since rules for taxation and social security often are based on where the work is physically performed, i.e., actual presence in a certain country, the taxation and social security belonging needs to be reviewed in the light of the current situation.

What are the aspects to consider?

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In the last two decades, it has become quite common to take employment in another country than in the country of residence. Especially within the Nordic region, daily cross-border commuting is well established, e.g., the labor market within the Öresund-area is naturally spread between Denmark and Sweden. Many key functions within Nordic groups are often held by the same person for all Nordic subsidiaries. Hence, regular cross-border travel is a necessity. Since Sweden is a small labor market, international assignments in and out of Sweden are also well stipulated.

Due to travel restrictions and closed borders, many employees are now in quarantine in their country of residence. This can lead to a situation where employees will be working from a country other than the country in which they normally conduct their work. Since rules for taxation and social security often are based on where the work is physically performed, i.e., actual presence in a certain country, the taxation and social security belonging needs to be reviewed in the light of the current situation. Employer compliance issues may also arise in countries where work now is being carried out by employees during the pandemic.

Aspects to consider for cross-border workers during COVID-19 pandemic are:

• Will a permanent establishment (PE) arise for the foreign employer when the employee works from a Swedish residence?
• How will the employment income be taxed when the cross-border worker is prevented to work in the country of employment is?
• Will work in the employee’s Swedish home create social security footprints and compliance issues for themselves and their employers in the country where the work is now being carried out?
• What obligations does the employer have with regards to providing a safe working in case work is performed in the employee’s home?

Learn more by reading our Covid-19 Mobility Handbook