Key Takeaways:
- Working remotely for a U.S. company from another country can trigger local immigration, tax, payroll, employment-law, and benefits requirements.
- Tourist visas generally don’t authorize remote work, regardless of where the employer is based.
- Employers need to consider tax, payroll, social security, employment law, and benefits before approving an employee’s move abroad.
We all know that the rise of remote work has made it possible for employees to live where they want, rather than being limited to commuting distance from an office.
For some workers in the United States, that’s led to a desire to not just move from Arizona to Arkansas or Maine to Minnesota, but to live in an entirely different country while still working for a U.S. employer.
However, the moment an employee crosses an international border, the employment relationship can become subject to new legal, tax, payroll, and immigration rules.
Understanding the implications for both the employee and employer before relocating to another country can help ensure a smooth transition.
Can Someone Work Remotely for a U.S. Company From Another Country?
Yes, but working for a U.S. company doesn’t automatically give an employee the right to work wherever they want. Whether the arrangement is legal depends on factors such as where the employee wants to live, how long they plan to stay, and their citizenship and immigration status.
A manager saying, “You can work from anywhere,” doesn't mean employees can confidently book a flight, store their stuff, and start working from a cafe in Paris or Paraguay. Employer approval doesn’t override local immigration or employment laws in other countries, and the employee must have the appropriate visa or other authorization to work internationally.
Employers also need to determine whether they can legally continue employing the worker if they relocate to another country and what tax, payroll, or other requirements the move could trigger.
Which Visa Do Employees Need to Work Remotely From Another Country?
The type of visa or work authorization an employee needs depends on the country, how long they plan to stay, and the nature of their work.
Tourist visas, digital nomad visas, and traditional work visas all serve different purposes, and being granted permission to enter a country doesn’t necessarily mean they also have permission to work there.
Tourist Visas Usually Don’t Authorize Remote Work
Tourist visas and visa-free entry generally don’t authorize someone to work in another country. Just because they’re working remotely for an employer based elsewhere doesn’t necessarily make the arrangement legal.
Immigration authorities take different approaches to remote work by visitors. Some countries may allow or tolerate it in limited circumstances. Others treat it as unauthorized work that can affect future visa applications or even lead to expulsion from the country.
Employees planning to work from another country should check its immigration rules instead of assuming a tourist visa allows remote work for a foreign employer.
Digital Nomad Visas
More than 50 countries now offer digital nomad visas, which allow eligible remote workers to live in the country while working for a company based abroad. Some of the most popular digital nomad destinations include Portugal, Spain, Thailand, and Colombia.
Eligibility requirements vary by country but tend to follow a similar pattern: a minimum monthly income (anywhere from a few hundred to several thousand dollars, depending on the country), proof of ongoing employment with a foreign company, valid health insurance, and a clean criminal record.
Digital nomad visas can last anywhere from a few months to several years. Some visas can be renewed; others can’t. A few countries also offer a path to permanent residency or citizenship.
When a Work Visa May Be Required
Digital nomad visas are generally designed for people who work remotely for an employer or clients based outside the host country.
Employees who plan to work for a local company or don’t qualify for a digital nomad visa may need to obtain a traditional work visa or residence permit instead.
Tax Implications of Working Abroad
Working from another country can create tax implications for both the employee and employer. Employees may face filing or payment requirements in more than one place, while employers can take on additional payroll and corporate tax exposure.
Tax Residency and Local Taxes
Living and working in a foreign country can make an employee a tax resident there, potentially creating a local tax filing obligation. Each country sets its own residency rules, which may consider factors such as how many days the employee spends there, where they maintain a permanent home, and where their personal and economic ties are strongest.
U.S. Tax Obligations
Moving abroad doesn't end an American's relationship with the IRS. The United States taxes citizens and green card holders on their worldwide income regardless of where they live, and Americans abroad generally remain subject to U.S. tax filing requirements.
The Foreign Earned Income Exclusion can reduce the tax bill substantially — the maximum exclusion is $132,900 per qualifying person for the 2026 tax year. To qualify, individuals must have foreign earned income, have a tax home in a foreign country, and meet either the bona fide residence test or the physical presence test. Foreign tax credits and tax treaties can also help reduce double taxation.
Employer Tax Risks
An employee working abroad can create payroll withholding and social security obligations for the employer. In some cases, their presence can also create a permanent establishment (PE), potentially exposing the company to local corporate taxes.
The Organisation for Economic Co-operation and Development (OECD), which helps set international tax standards, updated its guidance in November 2025. The update clarified that remote work for less than 50% of an employee’s total working time over a 12-month period generally won’t create a PE on its own.
However, the 50% threshold isn’t a universal safe harbor. Employers still need to consider local laws and applicable tax treaties when assessing PE risk.
Local Employment Laws May Apply
Once an employee starts working from another country, local employment laws may take precedence over the terms of their U.S. employment agreement. Employers may be required to follow local standards for minimum wage, working hours, paid leave, termination protections, mandatory benefits, and employment contracts.
For example, an employer’s U.S. vacation policy may provide less paid time off than local law requires. In that case, the employee may be entitled to the more generous statutory benefit.
The same principle can apply to more consequential requirements, such as working-hour limits, mandatory benefits, and dismissal protections.
Payroll and Benefits Considerations
Working from another country can create new payroll requirements, affect which social security system applies, and change how employers provide employee benefits. Employers need to review each of these areas before an international move.
Payroll Requirements for Employees Working Abroad
Payroll obligations often depend on local tax and employment rules. Some countries require employers to register locally and withhold taxes when an employee works there for an extended period — even if the company has no other presence in the country. Currency conversion, exchange rate fluctuations, banking regulations, and country-specific withholding rules can add another layer of complexity.
Social Security and Mandatory Contributions
Employees working abroad may fall under the host country’s social security system, which may require contributions from both the employee and employer. In some cases, U.S. Social Security may also apply.
A totalization agreement coordinates social security coverage between two countries to help prevent workers and employers from paying into both systems on the same earnings. The U.S. has totalization agreements with 30 countries, including South Korea, Canada, and the United Kingdom.
Health Insurance and Employee Benefits
Relocating abroad can also disrupt an employee's existing benefits. U.S. health insurance plans may offer limited or no coverage overseas, while retirement plans and other employer-sponsored benefits may work differently once an employee moves abroad.
Employers should review existing benefits before approving an international move and determine whether the employee needs local or international health coverage. Depending on the country, employees may also need to participate in local health or social insurance programs.
Common Challenges for Employers
Allowing employees to work from other countries can create issues that are easy to underestimate. Beyond understanding the legal requirements, employers need processes for handling international remote work as requests arise. Some of the biggest challenges include:
- Managing requirements across multiple countries: Employment, tax, payroll, and immigration rules vary widely. It only takes a handful of employees relocating to different countries for a company to find itself navigating multiple legal systems at once.
- Tracking employee locations: Employers need to know where their employees are actually working. A short-term move that happens without the company’s knowledge can create unexpected tax, payroll, immigration, or employment issues.
- Responding to relocation requests: A clear international remote work policy gives employers a consistent way to evaluate requests before an employee moves, including where employees can work, how long they can stay, and when legal or tax review is needed.
A consistent process makes it easier to catch potential issues before a move occurs, rather than addressing them after an employee has already relocated. It also gives employees clearer expectations about when and how international remote work can be approved.
What Employers Should Do Before Approving a Move
An international move shouldn’t be approved until the company understands what it means for both the employee and the business. Employers should review the proposed location and length of stay, the employee’s immigration status, and any tax, payroll, employment law, social security, or benefits requirements the move could trigger.
The company also needs to determine whether it can legally continue employing and paying the worker from that location. That may mean confirming whether an existing entity can employ the worker, whether local payroll registration is required, whether current benefits will still provide coverage, and whether the arrangement creates permanent establishment or other tax risks.
Employers should also confirm that the employee has the appropriate visa, work permit, or other immigration status before approving the move.
Only after reviewing these issues should the company approve the move and document any conditions, such as how long the employee can stay or whether another review will be required if their plans change. Legal, tax, or immigration specialists can help when the requirements aren’t clear.
Hire and Employ Workers Across Borders With RemoFirst
Not every international move will have a straightforward solution. If a company already has an office in the destination country, an employee transfer may be the easiest path. In other cases, the company may need a different employment structure, while the employee will need the appropriate immigration status or authorization to work there.
A digital nomad visa may provide a legal path in some situations, but eligibility and employer requirements can make that option difficult or impractical.
RemoFirst helps companies legally employ workers in 185+ countries without setting up their own local entities. When a work visa or permit is required, RemoFirst can also help companies navigate the visa application process in 110+ countries.
Book a demo to learn how RemoFirst can help your company hire and employ workers across borders.
Frequently Asked Questions
Can an employee work remotely for a U.S. company while living abroad?
Yes, but employer approval alone isn’t enough. The employee must have the appropriate authorization to work from that location, and the arrangement may also create local tax, payroll, employment, and social security requirements for the employer.
Can an employee work remotely from another country on a tourist visa?
Usually not. Tourist visas and visa-free entry generally don’t authorize someone to work while in the country, although remote work rules vary. Employees should have the appropriate immigration status or authorization before working abroad.
Does an employee need a digital nomad visa to work remotely abroad?
Not necessarily. Depending on the country and circumstances, an employee may qualify for a digital nomad visa, work visa, residence permit, or another immigration status that permits remote work.
Do U.S. citizens pay U.S. taxes while living abroad?
Generally, yes. U.S. citizens and green card holders remain subject to U.S. tax rules on their worldwide income while living abroad. Foreign tax credits, tax treaties, and the Foreign Earned Income Exclusion may help reduce double taxation.
Can working remotely abroad create tax obligations for the employer?
Yes. An employee working from another country can trigger local payroll withholding, social security contributions, employer registration requirements, or permanent establishment risk, depending on the country and the arrangement.
Can a U.S. company employ someone who lives in another country?
Yes, but the company must be able to employ and pay the worker in that country legally. This may involve an existing local entity or an Employer of Record, and the employee must have the appropriate authorization to work there.
