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OECD: Tax implications for cross-border workers, other cross-border matters (COVID-19)

OECD: Tax implications for cross-border workers

The Organisation for Economic Cooperation and Development today released a report addressing the tax implications of the coronavirus (COVID-19) pandemic on cross-border workers and other related cross-border matters.

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As noted in the OECD release, many countries have put into effect stimulus packages that include measures to support employment. For example, taking on the burden of unpaid salaries on behalf of companies suffering from the economic downturn resulting from the COVID-19 pandemic. As a result of certain restrictions, many cross-border workers are unable to physically perform their duties in their country of employment. They may be required to stay at home and telework, or may be laid off because of the exceptional economic circumstances.

The OECD observed that this unusual situation is raising many tax issues—especially when there are cross-border elements in the equation, for example, when there are cross-border workers or individuals who are stranded in a country that is not their country of residence. These issues have an impact on the right to tax between countries, which is currently governed by international tax treaty rules that delineate taxing rights.

The OECD found that certain exceptional circumstances of the COVID-19 crisis call for an exceptional level of coordination and co-operation between countries, notably on tax issues, to mitigate the potentially significant compliance and administrative costs for employees and employers. The OECD encourages countries to work together to alleviate the unplanned tax implications and potential new burdens arising due to effects of the COVID-19 crisis. 

The OECD Secretariat also today released guidance on these issues following an analysis of the international tax treaty rules.

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