The landscape of remote work has evolved at an unprecedented pace over the past two years of the COVID-19 pandemic. Meantime, news headlines are still riddled with delayed return-to-office announcements and new hybrid work commitments.
Hybrid and remote-working models have become the norm more quickly than anyone envisioned pre-pandemic. But the shift to remote and hybrid work regimes adds layers of complexity for tax teams. Everyone will need to address the tax implications of remote working, both for the employer and the employee. And when remote working is cross-border this can be a complex picture.
Following the peak of the pandemic, employers continue to grapple with the implications of working remotely. Remote working raises a myriad tax-related issues for companies to consider and proactively address.
The pandemic challenged companies to think differently about how and where their employees work. During the crisis, some companies announced (semi) permanent flexible “work from anywhere” policies, and now we see some companies telling employees that they may not need to return to the office.
This is part of an employee-focused approach which demonstrates flexibility and support for employees who prefer to work from an alternative location. It also enables potential corporate benefits such as reducing real estate footprint and enabling access to a wider talent pool.
In this paper, we explore the questions tax leaders should ask if they are considering remote work as part of their future workforce strategy, and what they should think about next to manage this new way of working.A new reality has emerged, and tax leaders need to take a take a longer-term view to shape the future and consider four imperatives to address and manage the current and future potential tax compliance risks of working remotely on a longer-term or permanent basis to limit any tax exposures.
Deloitte’s view is that companies should develop an action plan that addresses current and future potential tax compliance risks. We believe it is essential to adopt a holistic view to enable individual cases to be controlled and assessed (from a corporate tax, employer and employee compliance perspective) and that there is appropriate tracking and identification of the type of entity that employs the individual.
With the shift to remote work and hybrid likely to outlive the pandemic, companies must look to strategies to embed resilience and agility to evolve with shifting work preferences resulting from pandemic-driven changes. This is an opportunity to rethink the future of work – including what work is and how it is delivered, who performs the work, and where it is performed – and course correct.
Deloitte is urging companies to reflect on and consider these four imperatives:
Deloitte has developed a range of services to help businesses proactively identify and address potential regulatory compliance risks. For information access Deloitte’s Business Travel Analytics.