A Guide for Global Employers Navigating Cross-Border Remote Work
As global teams become more mobile, digital nomad visas have emerged as a convenient workaround for individuals seeking to work abroad without triggering complex immigration processes.
Digital nomad visas, offered by over 50 countries, appear to offer a convenient legal path forward. They grant individuals the right to reside in a country while working for a foreign employer, often without the need for local sponsorship or a work permit.
Employers are increasingly asked to accommodate team members who want to live abroad while continuing to work remotely.
But here’s the problem: these visas were never designed to address employment compliance. And for employers, treating them as a standalone solution is not only incorrect, it’s risky.
But for employers, these arrangements often create more legal questions than they answer.
At Acumen International, we regularly work with companies navigating this scenario. The misunderstanding is common and costly: the employee may be present legally under immigration rules, but the employer may have no legal basis to operate, engage, or pay that individual in the host country.
This article outlines where digital nomad visas fall short, how they intersect (or fail to intersect) with labour and tax systems, and what responsible employers need to put in place to support compliant remote work.
The Compliance Mirage of Digital Nomad Visas: A Warning for Global Employers
Digital nomad visas are built around the individual, not the employer. In almost every case, they offer temporary residency for foreign nationals who meet specific criteria, typically involving minimum income, proof of remote employment, private health insurance, and a declaration that they won’t engage with the local labour market.
Put plainly: a residency visa is not an employment framework. Employers remain responsible for assessing and structuring the relationship in line with local requirements, regardless of what the visa allows the individual to do.
Most schemes follow a similar structure:
- Permission to reside in the host country for a defined period (typically 6–24 months);
- Proof of income from a foreign employer;
- Exclusion from the local labour market
- Prohibition on offering goods or services locally
- No entitlement to social security benefits.
Examples include Portugal’s D7 visa, which allows passive income earners to reside but bars local employment; and the UAE’s Virtual Working Program, which makes clear that no employment relationship with a UAE entity is permitted.
These schemes serve a political and economic purpose: attract high-spending foreigners without allowing them to compete locally for jobs or access public resources.
What they do not provide:
- A recognised employment relationship under host-country labour law;
- Protection from payroll or corporate tax obligations;
- Any structure for managing benefits, termination rights, or employer liabilities.
In other words, the individual is legal, but the employment arrangement is legally unsupported.
The Compliance Gap: Visibility for the Worker, Risk for the Company
The compliance risks are real, not theoretical. They emerge automatically when certain conditions are met, regardless of intent. The individual may be fully compliant from an immigration standpoint. But you as the employer may not be.
Once a person is performing work in a country, even remotely, the company may be seen as operating there by extension. Local labour laws may apply by default. Mandatory benefits, minimum wage rules, and notice periods may be enforceable. And if the employee’s work is strategic, revenue-generating, or ongoing, it may trigger corporate tax exposure via permanent establishment.
These risks can materialise during disputes, tax audits, offboarding, or even during routine filings. The longer the arrangement continues without legal infrastructure, the more difficult it becomes to unwind or defend.
Most countries treat immigration, tax, and employment law as separate systems. A worker might have legal residency, but if they are physically present and working in a country, local employment rules may still apply, depending on duration, seniority, scope of work, and other factors.
The result is a persistent compliance gap. Companies may remain exposed on multiple fronts:
- Employment law: Local protections (working hours, leave, termination) may apply based on physical presence, regardless of the contract’s origin;
- Payroll and social contributions: Employers may owe local withholdings or contributions, even without a local entity;
- Misclassification: If the worker is managed, paid, and integrated into the business, they may be considered an employee under local law;
- Permanent establishment (PE): The worker’s presence may qualify as a permanent establishment if they play a strategic or revenue-generating role, exposing the employer to corporate tax liability.
Why This Is a Present-Tense Problem
In 2020, digital nomadism was novel. In 2024, it’s a common HR scenario. The pandemic normalised remote mobility before most legal systems were ready for it.
As tax authorities and labour regulators catch up, we’re seeing increased scrutiny of cross-border employment, particularly in jurisdictions with strong enforcement frameworks or where social security contributions are significant.
Add to that a growing wave of relocations initiated by employees themselves, sometimes without informing HR or legal, and it becomes clear that companies need a clear policy, not just goodwill.
Companies are increasingly receiving requests or discovering after the fact, that an employee has relocated under one of these visas. Digital nomad visas may be a useful part of that policy, but they cannot be treated as a compliance shortcut.
At the same time, tax and labour authorities in many jurisdictions have moved to tighten enforcement, particularly where:
- Social security systems are under fiscal pressure;
- Remote work has reduced transparency;
- Corporate taxation relies on economic substance tests.
Without an internal policy or review process, companies may unknowingly breach local rules, not by hiring abroad, but by failing to structure existing work relationships legally.
The difficulty for many employers is not that they are unwilling to support remote mobility, but that they lack a repeatable, compliant framework to evaluate requests. Many companies still rely on informal case-by-case assessments, where the validity of a visa is wrongly assumed to imply legal employment. But residency and employment are not the same.
A digital nomad visa may remove immigration friction, but it does nothing to create legal infrastructure around payroll, benefits, reporting, or tax presence. Without such infrastructure, exposure builds quietly — and becomes visible only during audits, disputes, or termination.
Meanwhile, authorities are catching up. Countries with high statutory benefits or payroll taxes — France, Spain, Germany, among others — are taking a stricter view of foreign companies with unregistered staff on their soil. Companies that once believed they were accommodating flexibility are now facing scrutiny for informal arrangements that appear non-compliant on paper.
In this context, approving remote work abroad without structure is no longer a generous policy, it is a governance liability.
What Employers Should Actually Do
Approving a digital nomad request should involve more than a line manager’s approval or a passport check. Employers need to carry out a jurisdiction-specific assessment of:
- Immigration rights: Does the visa permit remote work for a foreign employer without violating its terms?
- Employment obligations: Does the worker’s presence trigger local labour rights or statutory protections?
- Tax exposure: Are there any payroll, income tax, or corporate tax implications?
- Legal employer status: Should the worker be employed directly, or through a local intermediary like an Employer of Record (EOR)?
This assessment should not be left to the employee. It requires coordinated input from HR, legal, and finance, and in many cases, local legal or payroll partners.
Structuring International Remote Work Compliantly
There is no one-size-fits-all answer. In some countries, the risks are minimal. In others, remote presence, even on a digital nomad visa, creates substantial compliance exposure.
In higher-risk jurisdictions, the most practical solution may be to engage the worker through an Employer of Record (EOR) — an in-country employment partner that assumes responsibility for employment contracts, statutory benefits, and payroll compliance, while you retain day-to-day operational control. This separates your company from legal exposure without requiring you to set up an entity or navigate unfamiliar labour law.
For employers managing a globally distributed team, the key is alignment: between immigration status, employment structure, and tax compliance.
How Acumen International Supports Employers
At Acumen International, we help global employers close the gap between individual mobility and legal employment structure. We act as Employer of Record in over 190 countries, ensuring that your employees are not only lawfully present, but also lawfully employed.
We draft and manage compliant local contracts, align payroll with host-country rules, administer statutory benefits, and provide immigration and mobility guidance when required. More importantly, we provide clarity, enabling companies to support flexibility of global operations without compromising compliance.
Mobility is easy to grant. Compliance is not. But the two are not mutually exclusive, when structure is built into the system. At Acumen International, this is exactly what we help companies achieve: compliant global employment that enables mobility.