Why You Should Let Your Employees Work Abroad—and How to Make It Work

As business leaders consider a more permanent shift to remote work, employees are imagining a bold future with more freedom than they previously thought possible. Many now realize that their dreams of traveling the world and living abroad can become a reality, without having to give up a well-paying, full-time job with their current employer. And that’s good news for employers, too. Allowing employees to work remotely from anywhere in the world makes teams happier and more productive. Plus, businesses who fully embrace remote work get greater access to the world’s best talent. So what are the specific advantages that come from letting your employees work overseas–and how can you make it work for your business?

A 2019 study by MetLife showed that offering employees the opportunity to work abroad for international assignments boosted loyalty and retention. However, employers don’t need to arrange foreign assignments for employees to see these benefits. By simply allowing team members to work in the country of their choosing, employers can supply the type of work-life balance modern employees crave.

Another study by Harvard Business Review showed that remote employees tend to relocate to areas with lower cost of living when given the choice. So on top of the personal benefits of living abroad, these employees enjoy an effective salary increase–at zero cost to the company.

Remote employees who can choose where they work are more productive than those confined to one geographic location. Harvard’s research revealed that US patent examiners who transitioned from working from home to working from anywhere increased productivity while maintaining quality. That’s a win-win for businesses and employees.

Like it or not, the gig economy has changed employee expectations. Workers are demanding greater flexibility, and those who can’t find this freedom at an established company are working as freelancers and becoming entrepreneurs. Building flexibility into your company culture with a policy that allows team members to work from anywhere in the world will help you stay competitive when hiring and retaining employees.  

Employers considering a work-from-anywhere model that will allow employees to work abroad will need to address a few key challenges:  

Remote employees rely on technology to communicate and work effectively. These systems are even more critical for teammates working in different countries. Choose user-friendly software and make sure employees use it consistently. Doing so will help you realize the productivity gains of autonomous work.  

U.S. companies are required to report and withhold payroll taxes for U.S. citizens living abroad to the United States government. However, some U.S. expats can completely eliminate their federal tax liability by using a special tax break called the Foreign Earned Income Exclusion. Don’t be surprised if these employees request an exemption from federal withholding by submitting Form 673.

To complicate matters further, companies may need to report employee income to foreign countries for U.S. citizens working within their borders. Businesses with expat employees should make sure they are prepared to accommodate these additional payroll considerations.

If an employee becomes a resident or citizen of a foreign country, it may mean your business needs to comply with certain foreign regulations. From taxes to employment, laws can vary widely from country to country. So make sure you consult a legal professional to understand the requirements.