Cross-border remote working developments

Deloitte Malta Tax Alert

16 December 2022

The European Commission position

During the months of July and August 2022, the European Commission (‘EC’) has expressed its intention to address the salient issues which Member States are facing from a fiscal perspective as a result of cross-border remote working.

On 11 August 2022, the European Commissioner for Economy, Paolo Gentiloni, informed the European Parliament that the European Commission is currently working with Member States and stakeholders to find long-term solutions for tax and social security repercussions of cross-border teleworking in the European Union. Of note is the indication of discussions between the EC and the OECD for a coordinated response.

Meanwhile, the EC guidance on the legislation applicable to cross-border remote working published during the COVID-19 pandemic and which recommended that cross-border remote working in a Member State other than the usual Member State of employment, due to COVID-19, should not lead to a change of applicable legislation, came to an end on 30 June 2022. A new guidance note on cross-border remote working in the context of social security systems came into force on 1 July 2022, setting out a common interpretation of the EU social security provisions relevant to teleworking. It inter alia establishes that national institutions must now assess the workers' situations according to such interpretation by the 31 December 2022. According to the Commissioner, changes to the legislation applicable to cross-border workers are not expected during the said 6-month period.

Tax and human capital challenges to remote working

During the Hybrid Hiccups event held earlier this year, attendees were asked to partake in a survey to ascertain the views in relation to the benefits and challenges faced by employers and employees alike in a remote working environment.

Results as to how many of the workplaces were able to effectively work remotely during COVID-19 on a temporary basis, 90% of respondents indicated that over 75% of their workforce was able to work remotely.

The majority of respondents (60%) considered the effectiveness to manage and support a remote workforce to be good, with small enhancements to employee management being welcomed to add value to the overall remote working arrangement.

As expected, over 70% of respondents expected to allow employees greater flexibility to work remotely once COVID-19 health concerns are no longer influencing physical office-based work.

This reinforces the belief and the need for a comprehensive remote working policy which provides a just balance for the needs of the business and the workforce alike, while being cautious of the fiscal and non-fiscal risk factors which remote working could give rise to, even at the level of cross-border remote working.

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