Remote working has quietly shifted from exception to expectation. For many senior executives, the idea of working abroad over the summer—extending a holiday while staying “online”—feels low risk.

From a tax and governance perspective, it rarely is.

Why this matters at board level

Short periods overseas can trigger disproportionate consequences. What looks like a few weeks of remote working can, in the wrong circumstances, create:

• a taxable presence for the company in another jurisdiction
• payroll and social security obligations
• indirect tax complications
• employment law rights in a new country

Crucially, these risks often arise unintentionally.

Corporate tax: the permanent establishment risk

One of the key risks to consider is the creation of a permanent establishment (PE).

Broadly, this can arise where:

• the individual has authority to conclude contracts, or plays a key role in doing so; or
• there is a fixed place of business at the company’s disposal (which can, in some cases, include a home office abroad).

For senior employees, particularly board members, the threshold is more easily met in practice:

• strategic decision-making overseas can be scrutinised;
• habitual contract negotiation or approval can be sufficient; and
• even short periods may be relevant depending on the nature of the activity.

A PE can expose part of the company’s profits to corporate tax in that jurisdiction, alongside compliance and reporting obligations.

Corporate residency: the central management...

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