Remote Work: Permanent Establishment And Other Corporate Tax Considerations

Multinational organisations have been operating during a pandemic for six months now. Over that span many employers have increasingly accepted, and sometimes mandated, flexible working hours and remote working. In some cases, directors and employees are now working in countries outside their usual places of employment, due to travel restrictions, personal choice, operational needs or other reasons.

As working practices, travel restrictions and public health conditions continue to evolve, multinational organisations should regularly review their own employment location practices in light of certain core concepts of corporate tax residency and permanent establishment. Under the "new normal" of remote working - including cross-border remote working - organisations will face new risks related to double taxation, penalties and interest, all of which will erode margins and cash flow at a time when both are critical.