Cross-border employment is no longer just a temporary occurrence, but an established trend in the international labour market. This is a result of many different factors, such as dynamic changes in the geopolitical environment, global competition, as well as the development of cooperation between companies in the world and easier access to new technologies with smooth flow of information. But there are many challenges of global mobility that arise even before the cooperation begins. With our experts from the Czech Republic, Poland, Romania and Slovakia, we explore the most common issues applicable to their respective countries, but these issues you would commonly find also in any other location across the globe.

Missing practical solutions for tax, legal and administrative matters

“In past years, we have seen a huge shift in the possibilities to work remotely that will continue to grow hand in hand with development of IT, telecommunications, digitalization and automation. We can list among the biggest challenges of global mobility and cross-border employment in the Czech Republic, as in many countries, the missing practical and simple solution of related tax, legal and other administrative liabilities. For employers and employees, it requires a well-coordinated effort involving legal, HR and tax expertise to ensure compliance and smooth integration. Each of these aspects must be managed effectively to mitigate risks and enhance the benefits of cross-border employment.

The practical and simple solution is missing due to the complicated international and local legislation. Even though there are treaties to prevent double taxation and bilateral agreements/EU regulation covering social security area, understanding and applying them correctly can be challenging. We can see some practical improvements in the social security area (e.g., new rules for telework) but we do not see any practical changes in tax legislation.

In case of a cross-border employment of a Czech individual, all the liabilities have to be currently fulfilled and processed by the foreign employer only. It brings other increased costs for the employer. It would be helpful for the foreign employers if some of the liabilities in the Czech Republic could be met by the employees directly.”

Kateřina Hrůzová | Tax Director of Accace Czech Republic

Complex tax obligations that are hard to navigate

“From the point of view of the Polish labour market, it is worth noting the performance of work for a foreign employer and the work carried out by a foreigner (expat) for a Polish company. Each of these variants means different challenges of global mobility on both sides.

From the perspective of hiring a foreigner in Poland, especially a non-EU citizen, it is in the first place a clash of demanding formal obligations such as residence permit, work permit or work visa. In general, the employer as a remitter is obliged to pay advance income tax and insurance premiums on a monthly basis, while the employee-foreigner himself must submit an annual tax return. In a situation where he becomes a Polish tax resident, this can be quite a challenge if he earns income from various sources located in different countries (e.g., real estate rentals, income from capital gains, etc.), as he will be required to declare his worldwide income in the Polish return. Unawareness of obligations, missing knowledge about complicated tax provisions and a language barrier in dealing with the tax administration often result in late filing of tax returns, which can expose to additional costs such as the payment of interest on overdue taxes.

In a position of a foreign employer, hiring employees in Poland also has its own specific consequences. A very important issue is the correct settlement of insurance premiums. In general, they should be paid in the country in which the work is performed, and thus, as a rule, the foreign company is required to register as a payer of social security contributions in Poland. In addition, depending on the nature of the work and the specific place where it is performed, such an employer should always take into account the risk of a permanent establishment.

On the other hand, if the employees earn income from an employment relationship from abroad, they have to calculate and pay monthly advance income tax individually, which often results in additional problems in their contacts with the tax authorities.

Finally, it is worth mentioning that the permanent amendments to legislation that need to respond to changes in socio-economic reality bringing several additional obligations, such as the creation of regulations for remote work, or internal procedures related to the recent implementation of the so-called whistleblower protection directive.”

Katarzyna Rogowska | Tax Manager of Accace Poland

Need for digital solutions to simplify administrative processes

“I believe that cross-border employment can vary depending on the perspectives of the different parties involved (employees, employers, authorities). In Romania, some of the main challenges of global mobility include legal aspects, language and cultural barriers, recruitment and relocation processes, differences in work standards, salaries, benefits adaptation to social security systems and beyond.

Addressing these challenges in the Romanian labour market requires careful planning, flexibility, empathy, and coordinated efforts from legal and taxation systems.

We must continually strive for improvement. Some ideas that come to mind include simplifying and digitizing administrative processes, encouraging employers to invest in digital solutions, developing cultural and linguistic integration programmes, fostering active collaboration with labour law and taxation consultants, creating an inclusive work environment and harmonizing salary packages with benefits to support international mobility.”

Alice Trifan | Director Payroll and HR Outsourcing Services of Accace Romania

Risk of permanent establishment and double-taxation

“Due to the globalization and digitalization, the entire word is dealing with the challenges of global mobility and cross-border remote work. New opportunities of employees to work remotely from another country raise tax issues that affect both employees and employers. In particular, there are risks related to the creation of a permanent establishment for companies in other countries and the taxation of employee’s income in multiple countries. The main obstacle to remote work is the administrative burden and the associated increased costs. As a result, local employees are often preferred over cross-border employment, or remote work is not permitted at all.

The difficulties in recruiting and retaining high-skilled workers are evident also in the Slovak labour market. In the field of social security, improvements in rules for cross-border telework can be positively noted. Based on the framework agreement on telework, teleworker can remain in the social security system of the employer’s registered office if the cross-border telework in the country of residence is up to 49,9% of the total working time. It would be great if the rules for taxation of cross-border workers were inspired by the treatment of social security contributions.”

Martina Paprčková | Tax Manager of Accace Slovakia

Tax overview for global mobility: your free guide to navigate the complexities

In cooperation with Accace Circle, our global business community that covers over 50 locations worldwide, we developed a tax overview for global mobility, to provide a basic yet valuable summary of local jurisdictions for employers and help them crucial obligations while bearing responsibility for their expatriates. Learn about the challenges of global mobility, residency conditions, tax rates, payroll-related matters, penalties and much more in Bulgaria, Cyprus, the Czech Republic, Egypt, Estonia, Greece, Hungary, Italy, Morocco, Norway, Poland, Portugal, Romania, Slovakia, Spain and Turkey.