Working remotely from abroad – how does this affect employee’s taxation?

Working remotely from abroad | With remote work becoming more and more common, it may be a good idea to have a discussion with employees regarding their dreams of working abroad. Remote work tasks can be performed at any location with a functioning online connection and in a suitable time zone, but what should be accounted for in terms of taxation when agreeing on remote work outside Finland?

Salary received from remote work from abroad is, in principle, taxable income for taxpayers in Finland. The country where the work is being done may also have taxation rights for remote work under the tax treaty, since work is being done in that country. If Finland remains the country of tax residence, then Finland taxes the salary and eliminates any potential double taxation. Finland has made a tax treaty with more than 70 states and the treaty determines the taxation of salary.
Therefore, employees planning to perform remote work from abroad should first determine the tax treaty of the country of work.

Working remotely from abroad should be differentiated from being stationed abroad due to work. The grounds for tax exemption of a person working from abroad is governed by a six-month rule, where a person is stationed abroad due to work for at least six months. The rule is generally not applicable for remote work done from abroad. When someone works remotely from abroad and their visit to a foreign country is not a requirement for work, their salary is not viewed as nontaxable income in Finland. It is also possible that the country of remote work is the country of residence for the employee
under the tax treaty. In this case, Finland does not have the right to tax salary for remote work done in another country.

We also recommend employers to find out potential obligations concerning them in advance. Due to the nature of work and the fact that remote work is being performed in a foreign country, even a short period of remote work may incur a registration obligation in the country of work for the employer. This must always be determined on a case-by-case basis. Also, be sure to account for insurance policies related to work from abroad!