Should I give an overseas contractor a laptop?

You can, but it carries a classification signal. The US Department of Labor’s economic reality test looks at investments by the worker and the employer, and HMRC’s guidance says provision of necessary equipment by the engager points toward employment. A short loan is unlikely to decide the matter alone, but supplying a full kit is one more fact pointing the wrong way. Many businesses let contractors use their own equipment and price that into the rate.

Is a remote work stipend taxable?

It depends on the country and the route. Under the US framework in IRS Publication 463, an allowance that meets the accountable plan rules (business connection, adequate accounting, return of excess) is not included in wages, while a flat allowance without those rules is treated as a nonaccountable plan and reported with wages. For overseas employees, local tax rules apply instead. A stipend to a contractor is part of the price of the contract.

What is an accountable plan?

In US tax guidance, it is a reimbursement or allowance arrangement that meets three rules: the expense has a business connection, the employee adequately accounts for it within a reasonable time, and any excess is returned within a reasonable time. IRS Publication 463 treats accounting within 60 days and returning excess within 120 days as reasonable. It applies to US employees, not to contractors.

Do employers have to pay for home internet and equipment abroad?

In some countries, yes. Spain’s Law 10/2021 says the company must provide the means, equipment and tools and cover or compensate the costs of remote work. Colombia’s Law 2121 of 2021 says the employer provides the tools and equipment and covers the cost of energy and internet or telephony. The Philippines’ Telecommuting Act has no cost rule, so the contract decides. Check each country before you budget.

What does Mexico require for teleworkers’ equipment?

NOM-037-STPS-2023 requires employers to provide an ergonomic chair or suitable chair, the supplies needed for the work and, where needed, ergonomic accessories, to keep a list of the computer and ergonomic equipment issued (items 5.1(k) and 5.12(d)), and to document how equipment is maintained. It is a safety and health standard and does not set a cash allowance figure.

Who is responsible for customs when I ship a laptop abroad?

Someone must act as the importer of record, and that should be agreed in writing before shipping. Duties, taxes and restrictions differ by country and product, so confirm them with the carrier or a customs broker. In many cases it is simpler to let the worker buy locally and reimburse or pay an allowance, which avoids the border entirely.

What security should a remote device have?

RemoteStaffingWiki’s baseline is full-disk encryption, enforced updates and screen locks, work accounts rather than personal ones, multi-factor sign-in, separate work and personal profiles, and a written lost-or-stolen procedure. Company-owned devices can be managed centrally. For worker-owned devices, use managed accounts and written minimum standards instead.

What should the contract say about equipment?

Ownership, an inventory with serial numbers, who pays for the device, repairs, internet and power, any allowance and its currency, care and use, security requirements, return terms (timing, method, shipping cost and data wipe) and a review date. Check local rules before deducting anything from final pay for unreturned items.

Equipment and Stipends for Remote Staff

The short answer

Who supplies and pays for a laptop, an internet connection or a desk is not a small admin detail when your team works overseas. The answer depends on how the person is engaged. For an overseas employee hired through an employer of record (EOR), the local employment rules and local tax rules apply, and in some countries the law itself says the employer must provide equipment and cover home-working costs. For an independent contractor, equipment is normally the contractor’s own business cost, and supplying it yourself can be a sign that the relationship looks more like employment.

This guide covers both routes. It explains why equipment is a classification factor in the US and the UK, how the US tax rules treat reimbursements and allowances for employees, which countries set statutory rules (with a table), what to do about shipping, security and returns, and what to write into the contract. It is general information for small-business owners in the US, UK and Australia, not legal or tax advice. Background on the engagement routes is in the guides to the employer of record model, the independent contractor and contractor versus employee.

Why the engagement route changes the answer

There are two broad routes for an overseas hire, and they treat equipment differently.

Employee through an EOR. The EOR is the legal employer in the worker’s country. Local labour law decides whether the employer must provide equipment or compensate home-working costs, and the local payroll decides how an allowance is taxed. Your company directs the day-to-day work, but the paperwork runs through the local employer.
Independent contractor. The contractor runs their own business, invoices you and normally supplies their own tools. A recurring “equipment fee” is part of the price you agree for the work.

If you are weighing the two routes more broadly, see the comparison of EOR versus independent contractor and the guide to how to pay international contractors.

Equipment as a classification factor

For contractors, the main risk with generous equipment support is not cost. It is that the arrangement starts to look like employment. Two government sources make the point from different directions.

United States: the economic reality test

The US Department of Labor’s Fact Sheet 13 explains the economic reality test that the Wage and Hour Division uses under the Fair Labor Standards Act. One factor looks at “investments by the worker and the employer”. The fact sheet says investments by a worker that support the growth of a business, such as reducing costs or extending market reach, weigh in favour of independent contractor status. It gives examples of a graphic designer who is provided with software, a computer and office space by a design firm (pointing toward employment) and one who buys their own software, computer and drafting tools, rents their own space and markets their services (pointing toward an independent business). The department’s misclassification page notes the rule published on 10 January 2024 and the regulations at 29 CFR Part 795. Test outcomes turn on the whole picture rather than one factor. The fact sheet also says the legality of the 2024 rule is the subject of current litigation, that the rule remains in effect for purposes of private litigation, and that the Wage and Hour Division’s current enforcement position is set out in Field Assistance Bulletin 2025-1 (1 May 2025), so check the department’s pages when you decide. On 27 February 2026 the DOL proposed rescinding the 2024 rule and returning to the 2021 test (91 FR 9932; comments closed 28 April 2026); no final rule had been published as of 4 November 2026.

The Internal Revenue Service uses a different, common-law framework for federal tax. Its independent contractor page groups the evidence into behavioural control, financial control and the type of relationship. Under financial control it lists “who provides tools/supplies” and “whether expenses are reimbursed” among the facts to consider, and it says all information that provides evidence of the degree of control and independence must be considered.

United Kingdom: provision of equipment

HMRC’s Employment Status Manual has a page on the provision of equipment (ESM0540). It says that if the engager provides any necessary equipment, this points toward a contract of employment, and that where a worker provides essential or major equipment fundamental to the job, that is a “very strong pointer” to self-employment. It adds that the factor matters most when the equipment is fundamental to the service, and may not be decisive on its own. HMRC’s general employee guidance lists the business providing “the materials, tools and equipment” among the signs of employment. HMRC offers an online tool, Check employment status for tax, to test a particular engagement.

What this means in practice

These sources apply to the US and UK tests, not to the law of the country where an overseas contractor lives, which has its own rules. RemoteStaffingWiki’s guidance is to treat equipment as one signal among several. A laptop lent to a contractor for a short project is unlikely to decide anything alone. A kit of company hardware, a company email identity, a fixed schedule and no freedom to work for others, taken together, builds a case for employment.

For the wider picture, see the guide to misclassification, the explainer on US Department of Labor worker classification in 2026 and the misclassification risk tool.

Employees: how US tax treats equipment and allowances

This section matters mainly if your company employs the worker directly in the US, or if you want to understand the vocabulary your EOR or accountant will use. A worker employed through an EOR in another country is generally taxed under that country’s rules, so the US framework below is background, not a prediction for that worker.

Accountable plans

IRS Publication 463 describes an accountable plan: a reimbursement or allowance arrangement that meets three rules. The expenses must have a business connection, the employee must adequately account for them to the employer within a reasonable period of time, and the employee must return any excess reimbursement or allowance within a reasonable period. The publication gives time frames that are treated as reasonable: an advance within 30 days of the expense, accounting within 60 days after the expense was paid or incurred, and return of excess within 120 days. Where the rules are met, the employer should not include the reimbursements in the employee’s taxable wages (box 1 of Form W-2). See the IRS Publication 463.

Flat stipends without accounting

A fixed monthly “home-office stipend” paid with no receipts and no requirement to return unused money does not meet the accounting and return rules. Publication 463 says that amounts paid under an arrangement that does not meet one or more of the three rules are treated as a nonaccountable plan, and that the employer combines such payments with wages and reports the total in box 1 of Form W-2. In plain terms, an untracked flat allowance is usually taxable pay in the US framework. An arrangement that repays business expenses by reducing the employee’s wages is also treated as nonaccountable.

Employer-provided equipment

Equipment the employer owns and lends is a different question from cash. IRS Publication 15-B (2026) explains working condition benefits: property and services provided so the employee can perform the job, excluded to the extent the cost would be deductible as a business expense by the employee. It uses employer-provided cell phones provided primarily for noncompensatory business purposes as an example of an item the publication treats within these rules. A cash payment can qualify for a specific or prearranged business activity only if the employer requires the employee to verify its use and return any unused part. See Publication 15-B and speak to a US tax adviser for your own case.

Contractors: the stipend is part of the price

A contractor is not on your payroll, so there is no accountable plan to run. RemoteStaffingWiki’s guidance is to keep any equipment support inside the contract price, either folded into the rate or shown as a separate fee line, and to avoid reimbursing receipts one by one as if the contractor were staff. That keeps the paperwork consistent with an independent business that carries its own costs. Whether and how payments to a non-US contractor are taxed or reported depends on both countries’ rules and any tax treaty, which is outside this page.

Statutory home-working rules by country

Some countries go further than tax treatment and give the worker a legal right to equipment or to compensation for home-working costs. The table covers four countries with a statute or standard that speaks to equipment or home-working costs. It is a starting point for a conversation with your EOR, not a complete list, and each rule applies to workers who fall within that country’s remote-work or telework definition.

Statutory equipment and cost rules for home-based employees

Country	What the law says	Source
Spain	Law 10/2021 on remote work gives remote workers a right to adequate provision and maintenance by the company of all the means, equipment and tools needed for the work, in line with the inventory in the remote-work agreement (Article 11). Article 12 says remote work must be paid for or compensated by the company, and the worker cannot bear costs linked to equipment, tools and means for the job. Collective agreements can set the mechanism.	Ley 10/2021, de trabajo a distancia, Articles 11 and 12 (BOE)
Colombia	Law 2121 of 2021 (remote work) says the employer must provide the technological tools, instruments, equipment, connections and programs, the cost of energy and internet or telephony, and cover maintenance of the equipment. The remote worker does not receive the statutory transport allowance, except in a proportional amount when the employer requires attendance at its premises.	Ley 2121 de 2021, Article 10 and its paragraph on transport
Mexico	NOM-037-STPS-2023 (telework) is a safety and health standard. It requires employers to provide an ergonomic chair or other suitable chair, the supplies needed to do the work (for example for sending or printing information) and, where needed, ergonomic accessories, to keep a list of the computer and ergonomic equipment issued, and to document how equipment will be maintained. It does not set a cash allowance figure.	NOM-037-STPS-2023, DOF, 8 June 2023, items 5.1(k), 5.6 to 5.8, 5.12(d)
Philippines	The Telecommuting Act (Republic Act 11165) is voluntary and lets employer and employee agree terms not below minimum labour standards. It requires equal treatment with on-site staff, training on the technical equipment at the worker’s disposal and data-protection measures. The text contains no rule on who pays for equipment, internet or power, so that is for the contract.	Republic Act No. 11165, Sections 4 to 6

Always confirm the current rule with the authority or a local adviser before relying on it. Rules for contractors in these countries are separate from the employee rules shown here.

Reading the table

In Spain and Colombia the starting point favours the employee: the company supplies and pays. In Mexico the law attaches safety and ergonomic duties to the employer. In the Philippines, the statute leaves cost allocation open, so the contract carries more weight. If you plan to hire in Mexico or the Philippines, read the market guides to hiring in Mexico and hiring in the Philippines; for Colombia see hiring in Colombia.

A few practical points follow from this. An EOR will normally apply these local rules for you, but they affect your budget, so ask for the allowance rule in writing before you sign. RemoteStaffingWiki’s reading is that these rules are written for employees within each country’s remote-work definition, so ask a local adviser whether a contractor in that country could be treated as an employee before you rely on the contractor route.

Who should own the laptop?

Ownership is the question that decides most of the later questions: security, return, tax and classification. Three common models are set out below. The comparison is RemoteStaffingWiki’s own framing, not a ranking.

Three ownership models for overseas staff equipment

Model	How it works	Points to weigh
Company-owned equipment	The business or its EOR buys the device and lends it to the worker.	Gives you more control over security settings and recovery at the end. It adds shipping and customs work, and for contractors it adds a control signal. Employee equipment lists may be legally required in some countries (see the table).
Worker-owned with an allowance	The worker buys or already owns the device and receives a set sum, either one-off or monthly.	Fewer logistics. Less control over security settings. The tax treatment of the allowance follows local rules for employees and the contract price for contractors.
Worker-owned with a minimum specification	The worker uses their own device but must meet a written standard for operating system, encryption and updates.	Lower outlay, but you depend on the worker to comply, and you need a way to check. Suits low-sensitivity work better than work with customer data.

Pick the model per role, not per company. Roles that touch customer data or payment systems generally justify tighter control.

Where the worker is a contractor, RemoteStaffingWiki’s view is that the second or third model fits the relationship better, with security requirements written as outcomes (for example, encrypted storage and current updates) rather than detailed instructions on how the contractor must work. Where the worker is an employee through an EOR, the first model is common for roles with sensitive data, but check the local rules and ask the EOR who bears the cost.

Internet, power and home-office allowances

Recurring stipends for connectivity, electricity and a desk are where the legal and tax rules above bite hardest. The right design depends on the route.

Employees via EOR: ask the EOR what local law requires and how any allowance will be taxed. In Spain and Colombia the table shows a statutory starting point; in the Philippines it is a contract matter.
Contractors: set a total rate that reflects the contractor’s own costs. If you separate an equipment or connectivity component, label it as part of the fee on the invoice.
RemoteStaffingWiki’s guidance: one-off start-up funds are easier to define than monthly stipends. A single amount for a headset or a chair, with a receipt requirement for employees, is simpler to explain than a vague monthly top-up.
Write down the amount, the currency and the review date. Currency movements change what a fixed local-currency stipend is worth to you.

Avoid quoting a “standard” stipend. No single figure fits every country, and the amount that is tax-free or customary in one country has no bearing on another. Use the market guides and the cost tools to size the budget, and ask the EOR or a local adviser for the allowed amount.

Shipping, customs and returns

Sending hardware abroad turns a purchase into a cross-border shipment. The points below are RemoteStaffingWiki’s checklist, and they are general: customs rules, duties and import restrictions differ by country and by product, so confirm them with the carrier or a customs broker before you ship.

Importer of record. Someone has to be legally responsible for clearing the goods into the destination country. Decide in writing who that is, and who pays any duties or taxes at the border.
Value and documentation. Ask the carrier what documents are required, and keep records of serial numbers and values.
Delay and loss. Plan for the worker to start without the device for a period, and agree what they will use in the meantime. Insurance for the shipment is a cost to compare with buying locally.
Buying locally. In many cases the worker can buy a device in their own country and be reimbursed or paid an allowance, which avoids customs altogether. Compare warranty and tax treatment with shipping.
Return at the end. Agree how and at whose cost equipment comes back, or is wiped and kept, and by when. Plan the return shipment as carefully as the outbound one.

Security basics for devices overseas

Equipment is also the front door to your data. The guide to data security when outsourcing covers the wider topic. For devices specifically, RemoteStaffingWiki’s baseline is as follows.

Full-disk encryption turned on, so a lost or stolen device does not expose files.
Device management for company-owned machines, so you can enforce updates, screen locks and remote wipe. For worker-owned devices, use a lighter approach such as managed accounts and multi-factor sign-in rather than control of the whole device.
Separate work and personal profiles where a device is shared with family or used for personal browsing.
Access through company accounts, not personal ones, so access can be removed on exit without touching private data.
A written lost-or-stolen procedure with a named contact and a short reporting window.

In the Philippines, the Telecommuting Act makes the employer responsible for taking appropriate measures to protect data used and processed by the telecommuting employee, and says the employee must protect confidential and proprietary information. That is a useful reminder that data protection duties often sit with the business, whoever owns the hardware.

What to put in the contract

Whatever the route, write the equipment terms down. This list works for an employee contract (through your EOR) or a contractor agreement. Ask your lawyer or EOR to adapt the wording to local law.

Ownership. State who owns each item, and that company-owned items remain the company’s property.
Specification and inventory. List the equipment issued, with serial numbers. Spain’s law refers to an inventory in the remote-work agreement, and Mexico’s standard expects a list of the equipment issued, so the habit is widely useful.
Cost allocation. Say who pays for the device, repairs, internet and power, and the amount and currency of any allowance.
Care and use. Use for the work only (or limits on personal use), reasonable care, and prompt reporting of damage, loss or theft.
Security requirements. Encryption, updates, accounts, no sharing of the device, and the incident procedure.
Return of equipment. Timing, method, who pays shipping, and a data-wipe step. Check local rules before deducting anything from final pay for unreturned items.
Review date. A date to revisit the allowance and the specification.

A contractor agreement should also say that the contractor is responsible for their own tools and costs unless the price says otherwise. That wording does not make someone a contractor if the real arrangement points to employment, but it records the intention.

A short checklist before you onboard

Decide the route first (EOR employee or contractor), because it sets who owns the equipment question.
For an employee, ask the EOR for the local rule on equipment and home-working costs in writing.
For a contractor, keep any equipment support inside the agreed price and out of a pattern that looks like staff supply.
Choose one ownership model and write the inventory and return terms into the contract.
Settle shipping, the importer of record and customs responsibility before the device leaves.
Apply the security baseline before anyone touches company data.
Set a review date and a single owner in your business for equipment questions.

To size the overall budget, use the cost to hire a virtual assistant guide and the remote hiring cost calculator.

Sources

US Department of Labor, Wage and Hour Division, Fact Sheet 13: https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship

US Department of Labor, Misclassification of Employees as Independent Contractors Under the FLSA: https://www.dol.gov/agencies/whd/flsa/misclassification

Internal Revenue Service, Independent contractor (self-employed) or employee?: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Internal Revenue Service, Publication 463 (2025): https://www.irs.gov/publications/p463

Internal Revenue Service, Publication 15-B (2026): https://www.irs.gov/publications/p15b

HMRC, Employment Status Manual ESM0540, Provision of equipment: https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0540

GOV.UK, Employment status: Employee: https://www.gov.uk/employment-status/employee

GOV.UK, Check employment status for tax: https://www.gov.uk/guidance/check-employment-status-for-tax

Spain, Ley 10/2021, de 9 de julio, de trabajo a distancia (BOE-A-2021-11472): https://www.boe.es/buscar/act.php?id=BOE-A-2021-11472

Colombia, Ley 2121 de 2021 (trabajo remoto): https://www.unidadvictimas.gov.co/wp-content/uploads/Documentos/ley/Ley_2121_2021.pdf

Mexico, NOM-037-STPS-2023, Teletrabajo (DOF, 8 June 2023): https://platiica.economia.gob.mx/wp-content/uploads/sites/2/PDF_Normas_Publicas/NOM-037-STPS-2023.pdf

Philippines, Republic Act No. 11165 (Telecommuting Act): https://lawphil.net/statutes/repacts/ra2018/ra_11165_2018.html

RemoteStaffingWiki (internal): Employer of record, Independent contractor, Misclassification, How to pay international contractors, Data security when outsourcing

References checked on 4 November 2026. This page is general information, not legal or tax advice. Allowance, tax and classification rules depend on the country, the contract and the facts, so confirm them with a qualified adviser.

Equipment and Stipends for Overseas Remote Staff