New Tax Risks of Remote Work in 2023

The growing popularity of remote work has made it unclear when doing a little bit of work while on vacation qualifies as a taxable stay. By the end of 2023, the Organization for Economic Cooperation and Development (OECD) intends to have completed its analysis of whether it needs to modify international tax regulations to cover “workcations” and cross-border remote employment. Potential issues have come up during discussions, ranging from staff requests for flexibility to concern from some nations over the possibility of reopening cross-border tax disputes. Before the boom in remote work expands even further, tax officials want to get ahead of the curve.

Businesses are battling double taxation risks and compliance issues as Zoom culture continues to rule offices around the world. Businesses and employees are currently dealing with a confusing maze of complicated rules regarding when a worker must pay tax if they are working abroad for extended periods of time. The OECD is preparing a scoping note to outline the tax issues and scenarios that nations and businesses are facing with respect to remote working for later in 2023. It will then discuss with its members which tax issues related to remote working it should concentrate on.

The rise of remote working has made it harder to determine where people and companies should be taxed on earned income, and the distinctions are important because falling afoul of the rules means paying tax in two places at once or being subject to a fine. The OECD and national tax authorities are grappling with these questions and aiming to develop clearer rules on how long people can work abroad before falling into another country’s tax net. Companies are worried about the potential nasty surprises from foreign tax authorities, particularly if executives are making key decisions and deals from somewhere other than their home jurisdiction.