GLOBAL PAYROLL MAGAZINE
45
Outdated tax and social security rules? The tax, social security and payroll rules (including the numerous global double tax treaties and social security agreements) were largely written in the 20th Century when globally remote work was a rare exception and certainly long before video calls were invented. As such, the compliance position for employers can be clunky, nuanced and complex when applied to someone who is working overseas in one country for an employer in another country. There have been moves to address the position, with proposals by the UN Tax Committee and the European Economic and Social Committee. However, these proposals are very much in their early stages and, due to the number of countries that would need to agree to them, are likely to take many years to implement. So, for the time being, employers are stuck with managing globally remote workers under the current rules.
That said, many employers have introduced policies which enable globally remote working on a limited basis (e.g. by limiting the time that employees can spend working overseas working remotely or limiting the countries in which employees can work). Whether for new recruits or existing employees, employers have also agreed in specific and limited cases to enable some employees to work remotely overseas on a permanent basis.
What does this mean for payroll?
Temporary globally remote work For payroll, globally remote doesn’t always mean change is required in the country where the employer is based. For example, in most cases where employees are only working remotely overseas for a temporary period (i.e. a few weeks or months), employees will normally remain subject to home country tax and social security withholding and so the ‘home country’ payroll will normally remain unchanged.
Made with FlippingBook Annual report maker