Remote Work And Tax Implications For Cross-Border Companies

The hybrid and work-from-home models are now firmly entrenched in modern business practices. While working remotely within the same jurisdiction as the company's main office has limited tax implications, the situation grows complex when an employee's home office is in another country. In these cases, it's essential to assess whether the foreign location establishes a "permanent establishment" for the company.

International Guidance

The OECD Model Tax Convention and most double tax treaties do not specifically address remote work in foreign locations. However, the OECD commentary suggests that a PE may exist if an employee's home is used regularly and at the employer's direction to conduct business activities. This implies that a PE could be recognized even when the employer doesn't directly provide the office space.