What happens if my team relocates to work abroad?

A StartUp Studio Insight blog from accountancy experts RSM.

RSM is a leading provider of audit, tax and consulting services to middle market leaders, globally.

“If Facebook are doing it, do I need to offer it too?”

In early June, Mark Zuckerberg made an announcement that Facebook would allow all full-time employees to work from home if their jobs can be done remotely. Within this announcement was an interesting note that employees would be able to request remote working across international borders. The Tech giant’s US employees could request to remote work from Canada and by January 2022 UK employees could permanently move between seven countries in Europe.

This announcement sat alongside a raft of announcements from global firms on the future of working. Opinions and policies differ – and are very likely to change over the summer. Forming a hybrid working policy is a hot topic for Tech founders and boards of all sizes. The balance is to create an employment proposition that both meets the need of the business and, crucially, compares favourably to the approach taken by their competitors.

Does the Facebook announcement create a precedent for global working that all Tech companies will need to follow? Their suggestion that employees can work cross-border is fascinating and compelling. UK travel rules for holidays have been a hot-topic throughout Spring and Summer as many dream of getting away even for a week or two. Many have missed travelling abroad throughout the Pandemic and will find the prospect of a more permanent relocation very appealing.

From the perspective of the business what is stopping a team member taking the company laptop to the foot of the Alps or a beach in the Mediterranean? Even better if the employee is happy to agree they will work on UK time and travel home once a quarter at their cost for key meetings. Can a benefit be taken from over twelve months of remote working that creates a fully digitally enabled global workforce?

Unfortunately, the company law and tax landscape is not quite as fluid as modern technology. Founders and boards need to be mindful that rules and regulations vary by country and can be very complex. A key area to consider is often referred to as ‘Permanent Establishment’ or ‘creating PE’. Broadly, this is the principle that the activities of the individual create a taxation point to be handled in the overseas country. The impact of the PE position can create a more complex tax scenario for the company via corporate or indirect taxes (VAT). It can also trigger other legal and accounting requirements. Not performing an assessment on a timely basis can be costly and create penalties depending on the overseas country. It’s an important area to assess.

Alongside the PE assessment, the tax position of the individual will need to be assessed. Just because a UK citizen abroad is working for a UK company doesn’t mean the taxes are avoided in their new home. This assessment and the consideration of whether the company needs an overseas payroll is something we recommend considering well in advance of the move abroad.

What can a small, growing company do? Large companies carefully manage these considerations either internally or through their own network of professional advisors. Our strong recommendation is to seek advice from the professionals – and a good starting point are the global accountancy firms. At RSM we spend a lot of time partnering with our clients and navigating through this stage of growth. RSM are an international business with two offices in the South West – Bristol and Swindon. If you would like to explore any questions from this article with the team please reach out to Ben Bilsland directly and we would be delighted to chat.


To learn more about RSM and how they can help your business reach its full potential, go to rsmuk.com

Find out more about the Tech South West StartUp Studio at techsouthwest.co.uk/startupstudio


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