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.

What does this mean for the business and the employee?

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-focussed 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.

The practical steps to roll out a remote work strategy

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.

Here are four actionable steps:

The future workforce

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:

• Balance the interest in work from anywhere policies and or remote working with potential compliance implications. Every time an employee crosses a domestic or international border to work, their movement can trigger HR, immigration, payroll and tax ramifications.
• Pay more attention to the data to determine the tax exposure (payroll, withholding, etc.) when employees are working from locations different from their home offices.
• Focus on having the right digital solutions in place to assist with managing tax compliance concerns. These can help identify where employees are working and enable triage and informed decision-making. Technology tools that track and analyse remote worker locations and educate employees on actions to mitigate risk can help organisations sustain a successful remote work strategy.
  

• Flex global mobility support and start thinking about who is best positioned to establish, lead and manage the strategy and implementation of a remote work programme and policies. Global mobility may be uniquely positioned to lead from the front, given its experience with global talent strategies and mobility, planning and deployment, and co-ordinating across similar stakeholders.

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.