Stricter 2026 tax rules turn workations into a compliance minefield for companies
Tax rules for workations are set to become far more complicated by 2026. Companies allowing employees to work abroad temporarily will face stricter regulations from the OECD and national authorities. Without careful planning, businesses risk unexpected tax liabilities or legal issues.
The changes follow broader updates to international tax frameworks, including OECD guidelines and EU reforms. While no country has announced sweeping new workation-specific laws, existing rules are being applied more rigidlyâparticularly around social security, permanent establishment risks, and expense reporting.
The OECD has tightened its criteria for determining when an employeeâs foreign work presence creates a substantial commercial advantage for their employer. This shift increases the chance that companies could inadvertently establish a taxable permanent establishment in another country. German firms, in particular, may face higher scrutiny if staff work abroad for extended periods.
Social security obligations are also under the spotlight. Employers must now ensure workers on workations hold an A1 certificate within the EU, proving they remain covered by their home countryâs social security system. Failure to secure this documentation could lead to penalties or double contributions. The Netherlands recently introduced a narrow exemption for cross-border commuters, allowing them to work up to 34 days a year from home without changing their tax status. However, officials have stressed that this rule does not apply to traditional workations in third countries. The change highlights how exceptions remain limited, even as remote work grows more common. Companies must now draft detailed written agreements with employees before approving workations. These contracts should specify the tripâs duration, expected workload, assigned tasks, and which costs the employer will cover. Without such clarity, disputes over taxable benefits or reimbursements could arise. Another layer of complexity involves adjusted flat-rate allowances for meals and accommodation. Employers must now keep precise records of each workday abroad, along with the nature of tasks performed. Tax authorities are less likely to accept estimates, demanding proof that expenses were business-related rather than personal. While no major 2026 overhaul targets workations directly, the combined effect of OECD model updates, the EUâs ViDA VAT reforms, and country-specific adjustmentsâsuch as Switzerlandâs revised double taxation agreementsâmeans businesses can no longer treat remote work as a simple perk. Professional tax advice has become essential to avoid missteps.
The era of informal workation policies is ending. From 2026, employers will need to navigate tighter documentation rules, social security checks, and permanent establishment risks. Those failing to adapt could face financial penalties or operational disruptions.
The changes do not ban workations but demand greater diligence. Companies must now treat foreign remote work as a structured arrangementânot an ad-hoc benefitâwith clear contracts, tax compliance, and record-keeping at every stage.
