With travel restrictions, workplace closures, physical distancing policies and other measures to contain the novel coronavirus disease (COVID-19), many of us are now working from home.
While most us live in the same jurisdiction as our employer, a sizable minority of employees don’t. Some employees had to stay in the host jurisdictions they were in when restrictions were imposed. Others chose to relocate to their jurisdiction of nationality or elsewhere to join their families. Wherever they find themselves, most people will have to remain in place indefinitely until containment measures are relaxed. Many may choose to do so for considerably longer.
These working arrangements are often unexpected and unplanned. They may raise considerable tax compliance risks for the individuals and their employers related to (among others):
- personal tax residency status
- social security obligations
- income tax and payroll requirements
- permanent establishment determinations
- transfer pricing policies
- corporate residency determinations.
These risks may arise any time employees travel for work across borders. While the current situation has multiplied the exposures many times over, it’s also highlighting opportunities to control them through automated global mobility management systems and other leading practices.