There are many employers who allow workations within the European Union (EU) as they often entail less risks than flying to a third state. However, there are territories for which it’s unclear whether the same rules than in continental Europe apply. We’ll dive deeper into the distinction of workations and business travel-related compliance risks in outermost and overseas territories such as Azores (PT), Aruba (NL) or French Polynesia (FR).

There are over twenty territories worldwide in regions like the Atlantic, Antarctic, Arctic, Caribbean, Indian, and Pacific Oceans, whose status can be confusing for employers who allow employees to work from "anywhere in Europe." Due to historical and geographic reasons, determining whether a territory is part of the EU and which rules apply can be more complex than expected.

Fortunately, the European Commission provides some clarity by categorizing territories outside of its continental borders into two groups:

These territories are integral parts of the EU and its single market. The nine outermost regions, though geographically distant from continental Europe, are considered extensions of their respective member states and enjoy the same rights and obligations as any region within the EU. EU law fully applies to these areas. Examples include the Azores (PT) and the Canary Islands (ES). More info here.

These territories have a special relationship with an EU member state (such as Denmark, France, and the Netherlands) but are not part of the EU itself. Unlike outermost regions, OCTs do not have full EU membership, and EU law does not automatically apply. However, OCTs maintain ties with the EU through various agreements with their respective member states. Notable OCTs include Greenland (DK), Aruba (NL), and French Polynesia (FR). Learn more here.

This categorization means that the rules surrounding tax, social security, and other legal matters vary by territory. For instance, Aruba (NL), as an overseas territory, is not covered by the treaties signed by the Netherlands. In contrast, the Azores (PT) is treated as part of mainland Portugal for legal purposes, meaning workation and business trip risks are the same as those in continental Portugal.

In summary, not all territories outside of continental Europe are equal when it comes to tax, social security, labor law, and visa matters. As a general rule, outermost regions usually involve fewer challenges than overseas territories. However, a case-by-case assessment is necessary to manage potential risks. That’s why WorkFlex provides individual risk assessments for each workation request and generates essential documentation like employer statements, PWD registrations, and employee instructions. This ensures that both employees and employers can enjoy workations, even in territories farther from continental Europe, with confidence.