Remote work has not only advantages but downsides too. If you ignore tax or visa requirements, you could get into trouble and be penalized by the authorities.

In this article, you will find the answers to the most important questions related to taxation, stay, and remote work in Europe.

#1. Taxation Of Remote Work Within The EU

Assume that a US citizen who works for a company registered and operating in the US can work remotely from anywhere in the world. The employee comes to London (the UK). He stays here for 2 months and then leaves London for Nica (France), where he lives for 8 months. So, the question is, will he have to pay taxes in the UK or/and France?

Only tax residents must pay taxes in almost all European countries, including the UK and France. An individual becomes a tax resident if he or she:

• stays in the country for more than 183 days in a row; or
• satisfies a home tax test requirements. For example, if an individual owned, rented, or lived in the United Kingdom for a total of at least 91 days, including 30 days in the tax year under consideration, or he or she works full-time in the UK for any period of 365 days with no significant break of 31 days or more, then such an individual becomes a resident of the UK for tax purposes.

Answering the question above, the remote worker from the US will not be a tax resident in the UK. However, he may be regarded as a tax resident in France because he stayed for more than 183 days.

Before coming to Europe, it is vital to research taxation rules to avoid the trap of being recognized as a tax resident. Note that each European country has its unique legislation. Taxation rules of your home country and Greece, Sweden, or Italy may be very different. 

You can find the websites of the national tax offices of EU member states by clicking this link.

Read more on taxes in Tax Guide For Digital Nomads.

Tax Exemptions For The Owners Of Digital Nomad Visas

A digital nomad visa (also known as a freelancer visa or self-employed person visa) is a particular visa type that entitles its holder to stay and work remotely in the country that issued it. As a rule, you can stay in the country for up to one year on such a visa. At the moment, the following countries in Europe offer digital nomad visas:

• Estonia
• Greece
• Iceland
• Malta
• Portugal
• Sakartvelo (former Georgia)
• Croatia
• Czech Republic
• Germany
• Spain
• Romania
• Norway

In some countries, holders of such visas are exempted from the requirement to become tax residents, even if they stay longer than 183 days. For example, according to the amendments of the Croatian Tax Code made in 2020, the income of a digital nomad is excepted from tax on working income.

There is no exemption on passive income in Croatia (passive income is earnings from a rental property, limited partnership, or other business in which a person is not actively involved). That means you are liable to report and potentially pay tax to Croatia on passive income while you are a tax resident in Croatia.

#2. Can I Work Remotely On A Schengen Visa?

A Schengen visa is a short-stay visa allowing its holder to circulate in the Schengen area. The Schengen area covers 26 countries without border controls between them (Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland).

The United Kingdom is no longer a member of the European Union, and respectively it doesn’t belong to the Schengen area.

A Schengen visa is an authorization issued by a Schengen State with a view to:

• an intended stay in the territory of the Schengen States of a duration of no more than 90 days in any 180 days period (“short stay visa”),
• transit through the international transit areas of airports of the Schengen States (“airport transit visa”)¹.

You cannot work in the European Union on a Schengen visa because there is no Schengen work visa. You can get a Schengen visa for other purposes, such as tourism, visiting family and friends, business, medical, etc. However, you cannot get a Schengen work visa for work. If you have a Schengen visa for other purposes, you cannot work either. 

The EU legislation does not specify any particular requirements for remote work. However, it is worth saying that under the EU legislation, “work” means to be employed by a local company or the provision of services within the EU borders. So, if you are a US citizen working remotely for a US company while in the EU, you are in a grey zone because:

• A Schengen visa may be issued only for a specific purpose (e.g. tourism, medical, etc.). So, if you entered the EU on a Schengen visa issued for tourism purposes, you can be in the union only as a tourist. Strictly interpreting the EU laws, by working remotely, you infringe the law because you are engaged in an activity that is not permitted by the visa;
• However, suppose you work for a non-EU company or provide services to non-EU companies and individuals. In that case, it’s doubtful that the authorities will bother you because your activity does not harm the interests of EU countries.

National (D) Visa And Digital Nomad Visa

An individual holding a national (D) visa can enter and stay in the country of the EU that issued the visa for up to 12 months. This visa grants the right to be employed in the EU country that gave it. On this visa, an individual can work remotely and in an office for a company based in the EU. On such a visa, you can work remotely too.

A digital nomad visa removes all uncertainties for remote workers and digital nomads. Holders of such visas can stay in the country that issued them and work remotely. But, such a visa holder cannot work for local companies. So, your employer must be a foreign company.

#3. Can I Work Remotely While Visiting A European Country?

The answer to whether a foreigner can remotely work while visiting a European country (the UK, Portugal, Switzerland, etc.) depends on the ground on which a foreigner entered the European country: 

• Tourist, study, etc., visa. If you entered the country on such a visa, you could not work there. However, if you work for a foreign company and don’t provide any services to locals, it’s unlikely that the local authorities will approach you because you do not harm them. 
• Digital nomad visa. You can stay in the country and work remotely for a foreign company. This visa doesn’t allow you to work for a local company either remotely or in an office.
• Work visa. You can stay in the country and work remotely or in an office for a local company.
• Visa-free. Over 60 countries do not need a visa to travel to the European Union, including citizens of the US, Australia, Chile, Canada, and South Korea. If you are eligible for a visa-free entry, you can stay 90 days in any 180 days within the Schengen area. Note that you can come only as a tourist, visit friends, attend business meetings, medical treatment, and do any similar activities. A visa-free stay does not entitle you to work remotely or in an office for a foreign or local company.

#4. How Long Can I Work Remotely From A European Country?

Most remote workers and digital nomads enter a European country on a tourist visa or without a visa at all. Under visa or visa-free entry requirements, an individual can stay for a maximum of 90 days within half a year in the country that issued the visa or in the EU if an individual entered on a Schengen visa or is entitled to a visa-free entry. So, a foreigner can stay for up to 90 days.

If a foreigner enters the country on a digital nomad visa, he can stay and remotely work for up to 1 year.

However, you must not forget that in most cases, you will become a tax resident in the country if you stay there for more than 183 days in a row. This can be especially painful for citizens of the United States who must pay taxes on their worldwide income regardless of their places of residence. If a US citizen spends 190 days in a row in France, he must pay taxes on his worldwide income in both countries, France and the US.

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