Can an employee work from another country without creating a tax problem?
Sometimes, and the answer turns far more on what they do there than on how their manager describes the arrangement. Three things decide it: how long they are present, how senior they are, and what the work actually consists of. A developer writing code is a different exposure from a salesperson who negotiates and closes contracts while sitting in that country, because the second activity can give the employer a taxable presence there rather than a payroll duty alone. Establish what the person will be doing, country by country, and for how long, before the request is approved. The job title on the HR system is not the answer that matters.
Does one employee working abroad make our company taxable there?
It can. Payroll obligations and corporate taxability are separate questions, and the second is the expensive one. A person present in another country can create a registration and withholding duty for the employer. A person who habitually concludes contracts, or who holds an authority that binds the company, can bring the company itself within that country's charge on part of its profits. Seniority matters for the same reason: the more authority a role carries, the closer the activity sits to the company doing business there. An approval process worth having therefore asks what the employee is authorised to do, not only where they will be sitting.
What should a policy on working abroad actually say?
Four things, in writing. A list of approved countries, so that requests are decided against a position somebody has tested rather than case by case. A day limit per country, set low enough to stay inside whatever was tested. An approval route, so nobody agrees to an arrangement on the company's behalf without the tax question being asked. And a record of who approved what, with dates, because the record is what supports the position later. A rule that staff may work elsewhere with manager agreement is not a policy; it is an open exposure with a friendly name. Keep the approved list short and extend it country by country as each is examined.
How do we track days for staff working in other countries?
Contemporaneously, and from records that exist for another reason. Travel bookings, immigration stamps, expense claims and calendar entries can all support a day count. A spreadsheet completed at year end from memory cannot. Reconcile those sources against each other on a regular cycle — quarterly is usually enough — so that disagreements are settled while people still remember the trip. The reason to do this as it happens is evidential rather than administrative: almost every position you might want to take about an employee working in another country rests on a count of days, and a count that cannot be evidenced is an argument rather than a position.
Do we have to run payroll in the country an employee works in?
Often yes, and that duty can arise well before anything happens to the company's own tax position. Many countries treat the place the work is performed as the place the employment income arises, which brings a local withholding and reporting obligation on the employer regardless of where the contract was signed or which entity's payroll pays the salary. Relief, where it exists, generally has to be claimed and evidenced rather than assumed, and it is usually conditional on duration and on which entity bears the cost of the employment. For planning purposes, assume a payroll duty exists until someone has looked at that country and concluded otherwise.
An employee moved abroad without telling us — what now?
Establish the facts before taking any position. Fix the date the arrangement actually began, the country, the days present so far and what the person has been doing there, from records rather than from a conversation. Then treat it as two questions. What does the employer owe by way of local payroll for the period already elapsed, and has the activity created anything beyond a payroll issue. Most of these are containable if they are dealt with in the year they arise, because the correction is then a registration and a catch-up rather than a historic examination. The cost grows with the number of closed years sitting behind it.
Does hiring one remote employee in another country create a tax presence?
It can, on two separate fronts, and the second applies even when the first does not. A permanent establishment may arise if the employee has a fixed place of business there or concludes contracts for you. Independently of that, employing someone locally generally brings payroll registration, wage withholding and social security contributions in their country from the first payroll — obligations that do not wait for a permanent establishment finding. Contractor paperwork does not by itself avoid either. See remote work and tax exposure.
Does a foreign-owned US entity need an EIN?
Yes, for almost anything it must do: file its returns, operate payroll, open a bank account, and act as a withholding agent on payments abroad. It is applied for on Form SS-4, and the part that stalls foreign owners is the responsible party — a real person with a US identification number is expected, and where none exists the application route and the supporting explanation both change. It is worth starting early because downstream registrations queue behind it. See EIN applications.
