Over the past few years, remote work has stopped being the exception and has become part of everyday business. Romanian employers are no longer limited to hiring locally; many now engage in cross-border employment, working with staff who live abroad while Romanian specialists themselves often join foreign teams without leaving home. This flexibility is attractive, but it hides a complex legal reality. Payroll rules, tax obligations and employment laws do not simply disappear at the border, and ignoring them can expose a company to serious risks.
Legal and tax framework for cross-border employment
Whenever employees work from outside Romania, two sets of rules may come into play: those of Romania and those of the host country. The key issue is often taxation. Does the income have to be declared and taxed only in Romania, or also abroad? The answer depends on whether a double taxation treaty exists and how the individual’s tax residence is determined. Labour law can create further complications. An employment contract signed in Romania may still be challenged under foreign regulations if the employee spends a significant amount of time in another jurisdiction. For companies, this means that what looks like a simple remote arrangement may in fact require careful planning and legal review.
Payroll and tax compliance for cross-border employees
Running payroll for employees who split their time between Romania and another country often proves more complicated than companies expect. On paper, the Romanian system still applies: income tax and mandatory contributions remain due locally. But the moment an employee starts working from abroad, that foreign state may also request payments into its own system.
Within the EU, coordination rules usually prevent paying twice, though the paperwork can still be heavy. Outside the EU, things become even trickier, and employers may need to rely on bilateral treaties, or accept parallel filings. In practice, this can mean registering with authorities abroad, submitting reports in a different language, or hiring local consultants. These are the kinds of details that, if ignored, can quickly turn into unexpected costs.
Permanent establishment risk for Romanian companies
Another legal risk arises when international employees regularly perform work from abroad. Authorities may argue that the Romanian company has created a “permanent establishment” (PE) in that country, exposing it to corporate income tax there. This is particularly relevant if the employee negotiates or concludes contracts on behalf of the company. Businesses should monitor job functions closely and, where necessary, seek advance tax rulings or restructure arrangements to minimise PE exposure.
Labour law compliance and employee protections
When an employee works remotely from another country, Romanian employers cannot simply assume that local labour law rules stop at the border. Each jurisdiction where the person is based may claim that its own laws apply-covering issues such as minimum wage, maximum working hours, or even mandatory health and safety standards for home offices. Within the EU, the Posted Workers Directive adds another layer of obligations: companies may have to file notifications with foreign authorities or adapt contracts to reflect the host country’s rules. These steps are often overlooked, yet regulators take them seriously. For a business, the practical consequence can be double oversight, extra documentation, and the risk of penalties if obligations are ignored.
Data protection and remote work infrastructure in cross-border employment
Managing cross-border teams also involves GDPR compliance. Employers transferring employee data across borders must ensure that adequate safeguards are in place, particularly if data leaves the European Economic Area. Contracts with cloud providers should be reviewed for GDPR-compliant transfer mechanisms, and employees should be trained in secure handling of company data while working remotely.
Practical compliance strategies for Romanian employers
To successfully manage international teams, Romanian companies should adopt a compliance framework that integrates tax, legal, and HR considerations. Dealing with cross-border work is rarely about finding one magic solution, it’s usually about combining small, practical steps. The first is visibility: companies should know exactly where their employees are based and for how long. It sounds simple, but many firms only realise the problem once a tax office sends a letter. Another step is documentation.
Employment contracts and internal policies should say clearly whether remote work abroad is temporary, under what conditions it is allowed, and who carries the responsibility for compliance. On the payroll side, keeping a record of contributions paid at home and abroad helps show regulators that the company is not trying to avoid obligations. Finally, most businesses benefit from speaking with local advisers in the countries where staff are working. This avoids surprises and, in practice, often costs less than trying to fix things after a mistake.