Business Impact of Global Workforce and Digital Nomads

by | Sep 9, 2022 | Global Employer Services

Let’s say that you’ve let your employees choose where they work, or you’re planning to build a distributed team overseas for expansion.

Did you know that happier employees are more productive, and remote workers are 32% more satisfied than their counterparts?

Most employees suggest they should be able to work from anywhere with a flexible schedule. Furthermore, it expands the talent pool and gives businesses flexible alternatives while increasing retention rates.

Of course, the management of remote teams presents particular challenges. You may need the right collaboration technology, ex-pat employee policy guidelines, and other best practices for your distributed teams.

It may be challenging but it is doable. Most digital nomads are more likely to follow non-traditional norms. Before allowing employees in another country to work remotely, let’s consider the following aspects.

Work Visas

Employees frequently need work visas authorized by their company. But this system is for those who relocate to a country in pursuit of a job.

In the era of the digital nomad, things are different. When working for a company based in their own country, these employees often enjoy the freedom to travel as they want.

Although they will work, their main purpose for visiting the country is relaxation. Hence, digital nomads typically obtain tourist visas.

Some countries permit workers to remain and work on tourist visas.

For instance, beginning on September 1, 2022, the Thai government agreed to accept visa applications for digital nomads.

It’s fantastic news for digital nomads who have fallen in love with this lovely and reasonably priced nation.

With cities like Chiang Mai, Koh Samui, and Bangkok serving as hotspots for digital nomads, Thailand has long been a preferred location for remote workers.

Many other countries offer equivalent visas like in the Caribbean. The Digital Nomad Resident visa was established for those who are not citizens and gives them the option to work away from their homeland.

However, it is highly advised that your employees who desire to travel to other countries are informed of the visa requirements in each place they intend to visit because sponsorship is unusual globally.

Taxes

Taxes are occasionally the most confusing and challenging aspect of a remote job abroad since, like visas, each nation has incredibly unique tax legislation.

When a company begins conducting business abroad, permanent establishment regulations become applicable. This means they have to pay corporate taxes in that country.

Due to the risk of tax duties and penalties, many HR departments are reluctant to let employees work overseas.

However, whether an employee works from home or in an office, there is little probability that their travel arrangements may cause their firm to incur corporation tax liabilities abroad.

You could also be liable to “double taxation” in some countries, such as if you are concurrently listed as a resident of two different countries and the government of that country taxes its residents on their worldwide income.

You may create a Digital Nomad Policy for your company in front of this trend. It should specify which types of work are permitted across borders and which are not. It’s a good idea to align yourself with your staff regarding this matter.

Many countries have agreements to prevent double taxation. However, it’s a good idea to clarify this with an expert in international taxes before working remotely from another country.

Employee Classification

Due to the intricacy of the tax situation, employers and remote employees may be persuaded to alter the status of the digital nomad to an independent contractor. It’s not always a great decision, though.

Employees could need or want to keep their benefits. To maintain stability and retain their culture, many businesses also want to keep their full-time employees.

The most important reason to give it serious consideration is probably the risk of misclassification. It comes with making your remote employees into contractors, especially if they’ll be working in countries where you might not be familiar with the labor regulations.

By keeping in mind a few common factors, you can decide whether your remote staff is putting you at risk of non-compliance.

How does Global Talent Affect Your Business? 

When it comes to enabling workers to work remotely from foreign countries, many firms still have a lot to learn. The practice will persist, thus it’s critical to start understanding the effects on human resources.

Furthermore, as more firms see the advantages of remote work, workers will ask to be able to do it.

When working remotely, employees can usually travel at will using tourist visas as long as they don’t contact the local labor force.

However, depending on unique circumstances, foreign companies operating in a specific country should study local laws.

A Great Solution for Your Distributed Teams and Global Expansion

Indeed, having an Employer of Record (EOR) partner for your distributed teams will alleviate the burden of handling your global workforce on your own. 

EOR service providers like Employ Global can help you manage your international payroll, employee visas, local taxation, and other HR duties on your behalf. 

Contact us today. Let’s make favorable global opportunities for your business possible.

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