Working in the EU: How it works
The possibility of working from home or for a company abroad brings both opportunities and challenges. Employers must consider many aspects. These include:
- Tax, labor law, and social security issues
- Effective communication with employees
- Compliance with the occupational health and safety regulations of the respective country of residence
Special labor law aspects of working from home abroad
On this page, we will introduce you to the complex topic. Special labor law aspects can differ significantly when employees work from home from abroad. Employers must consider a variety of legal aspects to ensure that they comply with the laws of another country. These include questions about working hours, vacation entitlements, remuneration, and protection against dismissal. In some countries, for example, the maximum number of working hours per week varies, and special regulations apply to overtime. In addition, dismissal law varies greatly from country to country. As an employee, you should work for your (former) employer through your own company. This is how you can get started in a new country without knowing everything about the language and culture beforehand.
When considering Cyprus as an example, employers must pay particular attention to local laws and regulations. This presents several challenges. Cyprus has its own labor laws that differ from those in other countries. Therefore, as an employer, you should inform yourself and seek legal advice if necessary. In this way, ensure that you meet all labor law requirements when employing employees in a home office in Cyprus. This way you know what happens after moving abroad.
Working from home abroad within the EU
Working from home from abroad, especially within the EU, is a growing trend, as it combines working with travel. Thanks to the EU principle of freedom of movement, EU citizens can work in any member state without needing a VISA residence permit. However, there are differences and similarities in the individual EU member states. For example, certain regulations and requirements must be observed for assignments in Europe. The responsible social security institution must clarify these for safety.
Cyprus is a popular destination for digital nomads and remote workers. As in other EU countries, it is possible to work here without a special permit. However, all parties must observe the local laws and regulations to avoid legal problems. The following applies: Working from home abroad is not generally permitted and requires the express consent of the employer.
Employment and working conditions for a secondment
The secondment of employees abroad, such as to Cyprus, requires careful planning and preparation. Employment and working conditions vary depending on the country and company. In general, the process involves a number of steps for employers. These are:
- The selection of suitable candidates
- The provision of training and support
- The clarification of visa and work permit issues
- Ensuring that remuneration and other working conditions comply with local laws and regulations
With regard to Cyprus, the EU regulations for the posting of workers apply. This means that employees who are seconded to Cyprus for a limited period can continue to be covered by social security in their home country. However, they must apply for an A1 certificate before being seconded. It confirms that they are insured in their home country.
What is the A1 certificate?
The A1 certificate is a European form that confirms the social security status of an employee who is temporarily working in another member state of the European Union (EU), the European Economic Area (EEA), or Switzerland.
It ensures that the employee remains covered by social security only in their home country and is not covered by social security twice, i.e. also in the host country. The A1 certificate is important for employees who work abroad as part of a secondment, a business trip, or while working from home.
The document must be applied for before the start of the activity abroad. This is usually the responsibility of the employer.
He receives it from the responsible social security institution in his home country. Please note that in many countries the presentation of an A1 certificate is required by law if you do not want to become active on the local labor market.
Waive bureaucratic hurdles for employers in the EU with the Cyprus Limited
Working abroad in the EU can involve a lot of bureaucratic hurdles. On the Mediterranean island, however, you can plan your stay permanently and with successful integration without stress. Thanks to the Cyprus Limited, a corporate form that functions similarly to the British Limited Liability Company, employees and employers can avoid many challenges. In this way, companies enable their employees to live abroad.
First of all, you should understand what a Cyprus Limited (FAQ of Cyprus Ltd) is. It is a form of company that is registered in Cyprus and functions similarly to a British Limited Liability Company. It enables companies to operate throughout the EU while benefiting from the comparatively low taxes and flexible corporate legislation in Cyprus.
The advantages of the Cyprus Limited for former employees are diverse when they take the step into self-employment. They benefit from less bureaucracy, more flexibility, and lower taxes. This corporate form can therefore be an attractive option for anyone who wants to continue working for their former employer. This speaks for them:
- Less bureaucracy: Setting up and managing a Cyprus Limited is less complex and time-consuming than setting up and managing a company in many other EU countries.
- Flexibility: A Cyprus Limited offers more flexibility in terms of management and the ability to do business in different countries.
- Lower taxes: Cyprus has one of the lowest corporate tax rates in the EU. That’s why it’s an attractive location for companies.
If an employee emigrates to Cyprus and wants to continue working for a company such as a GmbH, then there are also positive aspects for the employer. For example, the Cyprus Limited will enable the company to retain a qualified employee without having to worry about bureaucratic hurdles with regard to work permits and social security. So you save money while you are no longer responsible for complying with employee rights.
Step-by-step instructions for setting up a Cyprus Limited
The establishment of a Cyprus Limited is an effective way to start a business in the EU and continue working for the previous employer. In this step-by-step guide, you will learn how the process works.
Step 1: Create a business plan
The first step in establishing a Cyprus Limited is to create a comprehensive business plan. This plan should include a clear presentation of your business idea. Define the specific goals you want to achieve. Elaborate your strategy in detail and decide how you will manage your operations. Also, consider the cooperation with your main client, in this case your former employer. An important part of the business plan is also the financial forecasts, which should reflect a realistic assessment of your expected income, expenses and profitability based on this existing business relationship.
Step 2: Choose a name
The second step in establishing your Cyprus Limited is to choose a unique company name. It should not only represent your business and brand, but also not already exist in Cyprus. An already registered or similar name could lead to confusion and legal problems. Therefore, conduct a thorough review. So make sure that the chosen name is not already in use.
Step 3: Clarify structure
The third step in establishing a Cyprus Limited involves clarifying the company structure. The Memorandum and Articles of Association, which set out the basic rules of your company, are central here. These should be prepared carefully and ideally by a professional. In addition, you must name the directors and shareholders of your company. In Cyprus, at least one director and one shareholder are required, with one person being able to assume both roles. In addition, you must provide an address in Cyprus as the registered office of your company. This will be the official place for receiving documents and communications. We can provide you with a suitable space!
Step 4: Apply for registration
Once your company structure is established and all necessary documents are prepared, there is nothing standing in the way of submitting these documents to the Department of the Registrar of Companies and Official Receiver in Cyprus. The process includes:
- Submission of the Memorandum
- Submission of the Articles of Association
- Specification of the names of the directors and shareholders
- Specification of the address of the registered office
This process involves complex and time-consuming steps. BS Holding will be happy to assist you with the application. With our expertise and experience in company formation in Cyprus, we simplify this process for you. Establish your company successfully with us. We will also inform you about possible fees and more.
Step 5: Open a business account
Open a business account with an online bank or a bank in Cyprus. This is necessary so that you can carry out transactions and take over the financial management of your company.
Get started with your own Cyprus Limited! Rely on our experience of over 500 successfully established companies. We will accompany you safely and competently from the establishment in Cyprus to the ongoing operation of your new company. Take the next step in your company history with us! Simply contact us as a future cross-border commuter.
What are the advantages of a foreign home office for your company?
The foreign home office for working in Cyprus has several advantages for your company. These include:
- Cost savings: In the home office, companies save costs for office space and equipment.
- Employee retention: By giving employees the opportunity to work from anywhere, you can retain valuable experts in the company.
- Increased employee motivation: The flexibility to perform the job from any location increases employee satisfaction and motivation.
- Modern and cosmopolitan company image: If you promote the home office abroad, you give your company a modern and cosmopolitan image.
- Access to international talent: You expand your talent pool and can hire professionals with special qualifications from all over the world.
Please note that these benefits may be accompanied by legal and tax challenges in different countries for individuals. Obtain detailed information and seek professional advice if necessary before relocating your workplace abroad.
How long are employees allowed to work from home office abroad?
The duration of the home office abroad varies depending on the specific regulations in different countries. However, there are several general guidelines on this topic. These are:
- If the duration of the stay abroad is less than four weeks, there is usually no need for action under labor law.
- For a stay of more than three months, a tax liability may arise in the country of stay.
- In some cases, special regulations may apply if the company sends its employees to another country for a maximum of 24 months.
- There is also a 183-day rule in tax law, which states that employees who work abroad for less than 183 days remain taxable in Germany.
Please note that this information is for general guidance only and specific legal advice should be obtained from a professional. These experts know, for example, social security agreements and your rights to mobility in the Eurozone in detail. We can offer you help if you need support.
Frequently Asked Questions
Why is the permanent residence of an employee in another EU country problematic for the employer?
A residence with permanent residence of an employee in another EU country can be problematic for the employer, as this entails tax and legal challenges. The topic raises questions about social security, tax obligations and labor law. These are regulated differently in different countries. In addition, labor law provisions such as working hours, vacation entitlement or protection against dismissal may also deviate from the home country regulations for employment. These differences can lead to complexity and uncertainty. They usually mean additional administrative effort for the employer.
Can the employer prohibit home office abroad?
Yes, the employer can prohibit home office abroad. There is no general right for employees to work outside the company headquarters. Working in the home office, especially from abroad, requires the explicit consent of the employer. Even if an employee lives in the EU and has the privilege of freedom of movement, he or she must inform the employer and obtain his or her consent to work from abroad. So you need a work permit from the company. It is best to have an additional contract drawn up that regulates the rights and obligations of both parties at this point.
