Workation – Definition, Legal Framework & Practical Tips for HR

A workation refers to working from a different – usually appealing – location, often abroad, combined with leisure and holiday elements. For companies, the model holds real potential as an employer branding benefit in the war for talent, but it also carries significant legal risks related to taxation, social security, and immigration law. HR professionals should therefore not approve workation requests ad hoc, but instead manage them in a structured and legally sound way with a clear policy.

What Is a Workation? Definition and Meaning

The term "workation" is a blend of the words "work" and "vacation." It refers to working remotely from a location typically associated with relaxation or travel – such as a holiday resort, another city, or a foreign country. Regular employment obligations continue to apply: employees work their full hours while freely choosing their location.

A workation is not a distinct legal category or a term defined by law. It is, rather, a flexible working arrangement based on the existing employment contract and agreed conditions. That is precisely what makes it so challenging for HR teams: there is no single legal framework that simultaneously resolves all relevant questions – taxation, social security, and immigration law.

Workation, Remote Work Abroad, and Sabbatical: The Differences

These three concepts are frequently confused, but they differ fundamentally:

Workation refers to a time-limited stay at a different location while continuing to work normally. The duration is generally short – a few weeks to a few months.

Remote work abroad involves a more permanent relocation of the workplace to another country, often without a fixed return date. This situation is significantly more complex from a tax and social security perspective and may establish a permanent establishment of the company in the country concerned.

Sabbatical, by contrast, is an extended period of paid or unpaid leave – without any regular work obligation. During a sabbatical, the employment relationship is suspended; during a workation, it remains fully active.

For HR teams, this distinction matters: a workation policy does not replace rules for permanent remote work abroad.

Legal Framework for Workations

A workation touches on several areas of law simultaneously. Blanket approval without proper review can be costly for companies.

Tax Considerations: What Rules Apply Abroad?

As a general principle, employees remain subject to taxation in Germany as long as their tax residence is here. The key factor is the so-called 183-day rule: if a person spends more than 183 days per year in another country, an additional tax liability may arise there – even if they continue to receive a German salary.

Germany has concluded double taxation agreements (DTAs) with around 90 countries, which protect against the same income being taxed twice. However, not every country is covered by a DTA, and the specific rules vary considerably. For workations of fewer than 30 days in DTA countries, the risk is generally low. For stays of 30 days or more, consulting a tax advisor is recommended.

Companies also face the risk of inadvertently establishing a permanent establishment (Betriebsstätte) abroad. A permanent establishment arises when employees work on a sustained and regular basis from a specific location abroad and make business decisions there. This can result in corporate tax liability in the country of stay.

Social Security and the A1 Certificate

Within the EU, EEA, and Switzerland, the rule is: employees who temporarily work in another member state generally remain covered by their home country's social security system – provided they hold an A1 certificate.

The A1 certificate is an official EU document confirming that a person remains subject to the German social security system despite temporarily working in another EU country. It must be obtained from the relevant social security authority (usually the health insurance fund) – and it must be applied for before the workation begins, not after the fact.

Without an A1 certificate, significant fines may be imposed during inspections in the country of stay – for both employees and employers. HR teams should therefore ensure that obtaining the certificate is a mandatory step in the workation approval process.

For countries outside the EU, automatic protections generally do not apply. The social security situation should be assessed on a case-by-case basis.

Immigration and Employment Law: A Tourist Visa Often Falls Short

An often underestimated issue: in many countries, a tourist visa explicitly does not permit working – even for a foreign employer. Anyone who works during a supposed workation on a tourist visa risks deportation or future entry bans.

Within the EU, this is less problematic, as EU citizens are generally entitled to work in other member states. For third countries – those outside the EU – the situation must be assessed individually. Some countries have introduced dedicated "Digital Nomad Visas" (e.g. Portugal, Spain, Greece), specifically designed for remote workers, which make legal workations easier to arrange.

Workation as an HR Benefit: Opportunities and Risks

Opportunities: Employer Branding and Employee Retention

Workation has become an in-demand benefit – particularly among younger professionals and in industries where remote work is the norm. Companies that offer workation in a structured way signal trust, flexibility, and a modern workplace culture. This strengthens both employer branding and employee retention.

According to a 2024 survey by Buffer, the ability to work from anywhere ranks among the most important reasons why the majority of remote employees choose to stay with their current employer. A clearly regulated workation benefit can reinforce this effect – without exposing the company to unmanageable legal risk, provided the right framework is in place.

Risks: Legal Pitfalls for Employers

The risks are real and should not be underestimated:

Tax risks: Unintended tax liability in the country of stay, or permanent establishment risks for the company.

Social security risks: A missing A1 certificate results in fines; in countries outside the EU, the situation is often unresolved.

Immigration law risks: Working on a tourist visa is illegal in many countries.

Data protection risks: Accessing company data from unsecured networks or from countries without an adequate level of GDPR-equivalent data protection can create compliance issues.

Employment law minimum standards: The country of stay may impose its own minimum standards (e.g. mandatory rest periods, holiday entitlements) on employees working there.

Creating a Workation Policy: Checklist for HR Teams

A clear policy protects both parties and prevents ambiguous case-by-case decisions. The following five points form the core framework:

1. Define a maximum durationMany companies limit workation to 30 to 60 days per calendar year. This significantly reduces tax and social security risks.

2. Specify approved countriesA list of approved countries is advisable – ideally EU member states or countries with a double taxation agreement. Countries without clear regulations or without a DTA should initially be excluded.

3. Establish an approval processWho approves the workation (direct manager, HR)? How much advance notice is required (at least 2–4 weeks)? What documentation must be submitted in advance?

4. Define employee obligationsEmployees should be required to apply for the A1 certificate in good time, comply with data protection rules (mandatory VPN use, no public Wi-Fi networks for sensitive data), and notify HR of their location.

5. Clarify insurance and liabilityDoes statutory accident insurance cover employees abroad? What additional insurance is necessary or advisable? These questions should be aligned with the relevant accident insurance carrier.

Frequently Asked Questions About Workation

What is a workation?

A workation describes working from a different – often holiday-like – location, frequently abroad. The term combines "work" and "vacation." It is not a legally defined form of employment, but rather a flexible arrangement based on the existing employment contract. Employees continue to work normally but may freely choose their location and environment – within the bounds of the company's internal policy.

How long can a workation last?

There is no statutory maximum duration in Germany. From a tax perspective, stays of fewer than 183 days per year abroad are generally unproblematic in countries with a double taxation agreement. From a social security perspective, an A1 certificate is recommended from the first working day in another EU country. Many companies internally limit workations to 30 to 90 days per year in order to minimise legal risks.

Is a workation taxable?

Tax liability in Germany generally remains in place. For stays abroad of fewer than 183 days per year, no additional tax liability in the country of stay is typically expected in DTA countries. For longer stays, or in countries without a DTA, a tax liability in the country of stay may arise. Consulting a tax advisor is recommended for stays of 30 days or more.

What is an A1 certificate and when is it required?

The A1 certificate is an official EU document confirming that a person remains insured under the German social security system while temporarily working in another EU/EEA country or Switzerland. It must be applied for through the relevant social security authority (usually the health insurance fund) – ideally before the workation begins. Without this document, fines may be imposed during inspections in the country of stay.

Can an employer refuse a workation request?

Yes. There is no statutory entitlement to a workation. Employers may decline requests – for example, on legal grounds (tax risks, immigration law), data protection grounds, or due to operational requirements. A transparent policy helps communicate such decisions clearly and fairly, and prevents individual case-by-case disputes.

Which countries are well suited for workation?

EU member states are the most straightforward option, as freedom of movement for workers applies, A1 certificates can be issued without difficulty, and double taxation agreements are in place. Particularly popular destinations include Portugal, Spain, Italy, Croatia, and Greece. Some non-EU countries (e.g. Portugal with its Digital Nomad Visa) have introduced dedicated visa programmes. For third countries, the legal situation should be assessed individually.

How do I create a workation policy?

A solid workation policy covers at least five elements: (1) maximum duration per year, (2) a list of approved countries, (3) an approval process with advance notice periods, (4) employee obligations (A1 certificate, data protection, reporting requirements), and (5) clarification of insurance coverage and liability questions. The policy should be aligned with the legal and tax departments and updated regularly.

Conclusion

Workation is more than a trend – it is a benefit that employees are increasingly requesting and that can deliver real impact for employer branding. At the same time, it is a topic that HR professionals should not approach without a proper legal foundation. Tax, social security, and immigration law are interlinked and require a clear policy.

The pragmatic approach: limit workation to EU countries and defined time windows (30–60 days per year), make the A1 certificate mandatory, and establish a binding approval process. Companies that approach this in a structured way can leverage workation as a modern benefit – without taking on unpredictable legal risks.

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Sources

• Working Hours Act (Arbeitszeitgesetz, ArbZG). Federal Ministry of Justice, 2023. https://www.gesetze-im-internet.de/arbzg/
• Income Tax Act (Einkommensteuergesetz, EStG), §§ 34d, 49. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/estg/
• A1 Certificate – Information for Employers. Deutsche Rentenversicherung, 2024. https://www.deutsche-rentenversicherung.de
• Directive 96/71/EC on the posting of workers (amended by Directive 2018/957/EU). European Commission. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018L0957
• State of Remote Work 2024. Buffer, 2024. https://buffer.com/state-of-remote-work
• Home Office and Mobile Working in Germany. Bitkom, 2024. https://www.bitkom.org