Employee relocated out of Canada

[Conner Lantz]

#79659

We are a small non-unionized remote-first organization and based in Ontario. We have employees in ON, BC, AB, QC, SK etc. One of our employees just moved from Ontario to Spain and I’m not sure how to navigate that since we don’t yet have a policy on remote work. The employment agreement doesn’t address this. What are some things I should consider when deciding what to do? We are not planning on creating a work entity in Spain. Please include a sample policy or guide and links to supporting legislation if possible.

[Conner Lantz]

#79658

Before granting an employee’s request to telework from another country, employers need to ensure the organization is meeting all its obligations. Failure to meet tax obligations can result in problematic situations. It’s best to plan ahead and take the necessary steps.
In advance of granting an employee’s request to telework from abroad, an employer needs to understand what the employee’s residency status will be in the new country and the subsequent tax commitments. Canada does not have a bilateral tax treaty with Spain, so not only would you and your employee be liable for paying non-resident taxes to Spain, those contributions may also not be eligible for the foreign tax credit.
You may want to explore changing the employment relationship to a contract position to eliminate your potential tax/payroll risks associated with this move.

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