Over the past year, businesses have seen a dramatic shift towards remote work as a result of measures taken to reduce the risk of COVID-19 spread. Many have shifted the emphasis on where work is done to a prioritization of how work is done. As a result, employers and employees are coming to terms with a mobile workforce as the norm, rather than the exception.
Here is what you need to know if your workforce has shifted to remote work as a result of the pandemic:
Tax Consequences to Consider
Although remote work has been a net positive from an employee health standpoint, shifting to a remote workforce may come with multiple unforeseen and undesirable tax consequences. Employers may notice additional complex rules and laws that exist for a mobile workforce both domestically and abroad.
1. Remote Work Abroad
Situations may arise where employees choose to work outside the United States or were forced to remain overseas as a result of quarantine measures instituted in 2020. It is important to remember that an employee performing their work duties in a foreign country can generate multiple tax issues of both foreign and domestic obligations for the employer.
2. Foreign and Domestic Tax Laws May Apply
It is becoming increasingly important for employers to review their foreign footprint in the context of existing tax laws and treaties to determine the tax implications for both themselves and their employees. Employers and employees that have seen these shifts in their workforce during the pandemic should start to take action now.
Becoming more informed regarding the risks and tax obligations involved will aid in taking early actions to address them. The Anderson ZurMuehlen International Tax Team is pleased to be a resource to you. If you have questions regarding how remote working may affect you or your business, please contact us.
This article was written by Ryan Dixon, a CPA and International Team member in our Helena office.