Performing an Activity as Remote Work: A Cross-Border Analysis
By Karina Reizner and Florina Mattick, Hategan Attorneys
According to the latest statistics, 10% of employed persons in Europe now work remotely, with the Netherlands leading the trend at 13.7%. Worldwide, it is expected that remote work will at least equal, if not exceed, fixed-offce locations by 2025.
This new work paradigm, although it presents many advantages, also presents legal aspects which need to be taken into consideration, such as when the employer has its place of business in one country and the employee performs the activity as remote work in a different country. In this circumstance, one of the most important legal issues is the payment of the fiscal obligations which should be paid either by the employee or by the employer.
The teleworking agreement signed between the most important social partners in Europe does not provide any regulations in this regard, which makes it diffcult to measure and research remote work in various states. Although the industries which lead the way in remote work such as IT are booming in Romania, the rate of remote work remains very low at 0.4%. Consequently, the legal aspects are not clear.
In order to avoid the disadvantages for the international company that does not have an operating point in Romania, Romanian legislators regulated some fiscal arrangements in order to facilitate remote work in our country. Currently, the foreign employer has two legal possibilities.
1. Fiscal Registration in Romania of the Foreign Employer
The foreign employer has the legal possibility to register with the local authorities in Romania and obtain a fiscal number solely for employing purposes. This option obliges the employer to pay the fiscal obligations in Romania, similar to a Romanian employer. After the fiscal registration in Romania, the foreign employer shall act as a Romanian employer, which means the company must declare, calculate, and pay the fiscal obligations for each employee that works remotely from Romania.
2. Payment of Social Contributions by the Employee
Another alternative is for the foreign employer to conclude an agreement with the employee stating that the employee is due to declare and pay his/her fiscal obligations directly to the Romania competent fiscal authority, without any obligation for the employer.
In this situation, all fiscal obligations are met directly by the employee, while the foreign employer has basically no extralegal obligations in this regard towards the Romanian state.
Nevertheless, even if the foreign employers decide to choose the latter legal alternative, they should ensure that the fiscal obligations are declared and paid monthly by the employees accordingly, in order to avoid any possible risks.
Given the growing trend of crossborder remote work, it is paramount for the European authorities to create a common legal and fiscal framework across the European Union.
Karina ReiznerGGI member firm
Law Firm Services
T: +40 256 430 454
Hategan Attorneys is an independent, full-service business law firm located in Timisoara, Romania, providing a tailored and integrated range of legal services to meet the needs of a wide variety of businesses, individuals, and organisations. More than three quarters of their clients are international companies that plan to invest, or are already doing business, in Romania.
Karina Reizner specialises in labour and social security law, data protection, and commercial litigation, representing local and international companies before national authorities in matters related to her expertise. Karina is a quick thinker, able to identify problems and establish a legal strategy to resolve them swiftly and successfully.
Florina MattickGGI member firm
Law Firm Services
T: +40 256 430 454
Florina Mattick has been part of the Hategan team since 2011. With a high level of proficiency and years of litigation experience, Florina is able to accurately analyse difficult and challenging legal matters and to advise clients accordingly.
Published: Labour Law Newsletter, No. 07, Autumn 2019 l Photo: pressmaster - stock.adobe.com