remote work
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PE Watch 2023: Year In Review
Originally published: February 2024 EY’s market leading PE Watch: 2023 in review is out (also available here: https://lnkd.in/eRMJv5jK) and I am happy to announce that I penned the section on how 2023 treated the difficult issue of remote work PEs. Scroll quickly to Section 2 to find out more. I end on a hopeful note that… Continue reading
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Work From Home
Originally published: February 2024 If someone works from a home office in a different country than their employer, can that trigger a permanent establishment (PE) subjecting the employer is to corporate tax? I’ve written on this countless times (see here: https://lnkd.in/em6mvyxX) and it’s a grey zone. Some people would really like such working arrangement, but given… Continue reading
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Complying with BEPS Substance Requirements through Remote Personnel
Originally published: November 2023 International tax rules were made in a different world, a world where profits were created by humans, sales were done locally and employees were working locally. In the BEPS project, the OECD embedded international tax deeper into these concepts of locality, as it sought to crack down on paper shifts of… Continue reading
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The UN’s solution to taxing remote work
Originally published: October 2023 This week, the UN Committee of tax experts is discussing a proposal to allow taxing remote workers in the country of their employer (https://lnkd.in/e5YMJxJU or Workstream C here: https://lnkd.in/eNrfQ2Jq). The proposal would add a new clause to the UN model convention: Art 15(4), allowing tax on employees in the residence state of the… Continue reading
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Starship Troopers & Taxing Nomads
Originally published: September 2023 In Robert Heinlein’s science fiction novel Starship Troopers (https://lnkd.in/eH2nERym), citizens only get full rights (eg rights to vote, hold public office) if they complete a Federal Service. I found myself thinking of Starship Troopers, when reading Reuven Avi-Yonah’s defence of taxation based on citizenship (regardless of residence) as path to meaningful… Continue reading
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European Commission Leaning Away From Directive on Remote Work
Originally published: August 2023 In January 2022, one of my polls showed that tax professionals thought about 5% of their peers would work remote from another country in 5 to 10 years (https://lnkd.in/e3kGm3je). It’s been 18 months and we are not on track. Instead, employers increasingly embraced ‘return to the office’ (though some show regrets https://lnkd.in/eDdFWrAu)… Continue reading
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A Better Way to Establish Tax Treaty Residence for Mobile Individuals
Originally published: June 2023 The taxation of mobile individuals continues to produce new ideas. In this article (https://lnkd.in/eR2PKH_w), Savvas Kostikidis proposes a new tie breaker rule for dual tax residency for individuals under double tax treaties (DTTs): a presumption that tax residency continues to be where it was last, provided the individual ‘remigrates’ within x years (eg… Continue reading
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Dutch tax ruling: 3 employees working from home are not a PE
Originally published: February 2023 The Dutch tax authorities issued a ruling (https://lnkd.in/ezuRyJrV) that a foreign EU company did not have a Dutch permanent establishment (PE) for having three employees who worked fully remote from their home offices in the Netherlands, as the home offices are not ‘at the disposal’ of the employer. This is a… Continue reading
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There Must Be Fifty Ways To Tax Digital Nomads
Originally published: February 2023 There must be fifty or more ways to tax digital nomads (https://lnkd.in/efzDKPZx with the title a play on Paul Simon’s song: https://lnkd.in/eS42-3-B) says Marisa Ouro, diving into the permanent establishment (PE) risks and taxation of the digital nomad itself. There’s many obstacles to ‘work from anywhere’ (WFA) on both fronts. Ouro rightly highlights the… Continue reading
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Work From Anywhere! (Well, Not Really)
Originally published: November 2022 The Wall Street Journal did a story about all the problems with international remote work (https://lnkd.in/ebFANqnH). Surprise, surprise, most problems are tax and regulatory. A few weeks ago, I wrote a suggestion how countries that want to attract remote work can fix the tax issues: unilaterally increase the ‘home office’ thresholds… Continue reading
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The real reason your work doesn’t let you remote-work from abroad, and how to fix it
Originally published: November 2022 Very excited to have written a guest blog on Dan Neidle’s Tax Policy Associates blog. It’s the first time he’s ever had a guest blog, so extra excited to be the first. I wrote about how tax policy failures prevent a remote work revolution, even in those countries that say they support… Continue reading
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Spain Introduces New Visa for Foreign Start-Ups & Digital Nomads, Reduces Taxes for Them
Originally published: November 2022 The Spanish parliament has now approved the digital nomad visa and tax breaks law. This has been in the works for quite a while. Spain hopes to attract scores of remote workers, who feed their salary into the normal Spanish economy. Some (https://lnkd.in/ex7QhsfY) fear that this will trigger a race to… Continue reading
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Portugal’s new digital nomad visa
Originally published: October 2022 Several EU countries have been actively trying to attract remote workers with special remote work visas (https://lnkd.in/erTNQT_j https://lnkd.in/eytjvc-b). Spain also couples this with reduced tax rates. Only non-EU citizens require visas to be able to stay in Spain and Portugal and even EU citizens do not appear to be flocking in massive… Continue reading
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Should countries impose exit taxes on individuals?
Originally published: September 2022 You may think it’s inconsistent of me to vote mostly against personal income taxes on former residents. After all, I argued this week that a personal income tax system that purely relies on tax residence could work out unbalanced on a global skill if individuals start moving a lot. But: –… Continue reading
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Lejania
Originally published: September 2022 Discussions on the tax impact of cross border remote working spark a lot of interest (https://lnkd.in/gmbp7u_N). Many don’t like that tax is a roadblock for innovation. Tax authorities are – as always – worried that being too lenient opens the door for abuse, so most taking a tough line to protect… Continue reading
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Austrian PE case
Originally published: September 2022 Could a home office of a ‘work from anywhere’ employee be a permanent establishment (PE) of the employer? If so, the employer may have to figure out how much profits can be allocated to it and pay CIT on it, which can quickly get complicated. That’s why proponents of the new… Continue reading
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What corporate tax policy would support ‘work from anywhere’?
Originally published: July 2022 Work on questions like these is only just starting to come out. The COVID era guidance on remote work and permanent establishments (PEs) was quite lenient, but limited in scope to situations where remote work was beyond the control of the people involved. This no longer applies. Initial signs show that… Continue reading
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Home office in Denmark constituted permanent establishment
Originally published: May 2022 Tax rules continue to be a roadblock for ‘work from anywhere’. COVID era guidance by the OECD interpreted existing permanent establishment (PE) rules quite leniently and concluded that – in most cases – employees working from a home office in another country did not trigger a taxable presence for the employer… Continue reading
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Top earners relocate for lower taxes – but simply lowering income tax rates might not be a winning strategy
Originally published: May 2022 Can lowering tax rates trigger so much additional economic activity (and thereby taxable income) that the tax reduction ‘pays for itself’? In theory, yes, but it seems the facts would need to be quite extreme for that to happen. For instance, lowering a very high tax rate (eg 90%) a little… Continue reading
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Interesting Spanish case about a live in nanny
Originally posted: April 2022 Interesting Spanish case (in Spanish) about a live in nanny that travels the world with the host family, never staying anywhere long enough to establish tax residence. Although that fact pattern sounds quite intriguing from a tax academic perspective, the outcome actually appears quite simple. Residence is determined by local rules… Continue reading
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Airbnb tells employees they can work remote forever
Originally posted: April 2022 Airbnb has rolled out remote working from anywhere policy to 170 countries. The key interesting question is how Airbnb manages the tax position on this in a global cross border context and there are only limited hints in the reporting on that. Even within a global context, 90 days (not in… Continue reading
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Overseas
Originally posted: April 2022 Back in January, we were thinking that the OECD global minimum tax would significantly curtail tax competition on corporate taxes and we started talking about a possible new race to the bottom in personal taxes. The idea was that countries had an incentive to lower their personal income tax rates to… Continue reading
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Spain proposes improvements to tax treatment of carried interest and inpatriates regime
Originally posted: February 2022 The Spanish law that would limit personal tax on remote workers to (effectively) 24% in most cases clears another hurdle and moves to Parliament. There is a lot of reason to be following this bill closely as it could result in a significant escalation in personal income tax competition for remote… Continue reading
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Clandestino
Originally posted: January 2022 It seems everyone’s waiting impatiently to see how remote work will affect the tax landscape. Will PE risks derail the trend to remote work? Will there be a race to the bottom to attract remote workers? Will this force multilateral action? The questions have been debated a lot, but 2022 might… Continue reading
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Interesting Spanish tax ruling about remote working and PE risks
Originally posted: January 2022 Interesting Spanish tax ruling about remote working and PE risks. A UK company has a senior employee (but without authority to sign contracts) stranded in Spain during COVID-19 lockdowns. After the lockdowns end, the employee refuses to return to the UK, instead preferring to work remotely. The UK company disagrees and… Continue reading
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Remote work
Originally posted: January 2022 Around half of you expect more than 5% of people with similar roles to work 100% remotely from another country in a few years time. People in consulting / advisory roles were less likely to think this. In fact, there were only 2 non-advisers who voted below 1%. The vast majority… Continue reading
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Spanish government draft bill
Originally posted: January 2022 Curious to see if these proposed incentives in Spain would work. The golden rule is that tax incentives cannot create a start up friendly environment alone. Quick takes:– CIT rules only kick in once the start up starts making profits, but the start up will likely still be using up losses… Continue reading
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Los Youtubers, Andorra y el IRPF
Originally posted: January 2022 Interesting study (in Spanish) about taxation of Spanish youtubers that migrated to Andorra for tax reasons. In very simplified terms, the Spanish tax system does not seem well prepared to ensure continuing taxation on this group. The practical implications are much wider than just youtubers as it touches on the very… Continue reading
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Carbon Taxes, Billionaires’ Taxes on Horizon: OECD Tax Head
Originally posted: December 2021 OECD will probably be busy with OECD Pillar 1 and Pillar 2 for most of next year, but they are already looking ahead. The new topics that could dominate the tax headlines for 2022-2024 are carbon taxes and billionaires’ taxes. I can see how the stars could align for a carbon… Continue reading
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How a remote work boom and city exodus might reshape rural America
Originally posted: August 2021 Before the pandemic, there was a lot of talk about how globalisation created winners in the cities in the developed world (where cost of living ballooned out of control) while leaving behind large rural and semi-rural areas of the western world (eg former industrial strongholds). Nowhere was this divide more in… Continue reading
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Global race to attract high earners threatens governments’ tax revenues
Originally posted: August 2021 This story has been out there for a few months but slowly the mainstream media is starting to pick it up. New employee mobility creates all the conditions for tax competition on personal income taxes (which has already started to happen). https://www.ft.com/content/ed3a61b2-aa75-46a2-94f4-8fedb5d692a9 Obvious disclaimers: this is not advice. These views are… Continue reading
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The Impact of Digitalisation on Personal Income Taxes
Originally posted: June 2021 Excellent article on the impact of remote working on personal income tax (PIT) policy (from Rita de la Feria and Giorgia Maffini). Now that remote work has become more standard, people could in theory work from anywhere. Countries could try to attract high income makers by PIT incentives. And as the world is focusing… Continue reading
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Updated guidance on tax treaties and the impact of the COVID-19 pandemic
Originally posted: May 2021 In April 2020, the OECD issued guidance on how COVID-19 related travel restrictions would impact various cross border allocations of taxing rights. This guidance could mostly be summarized as ‘most allocation rules are based on where activities ordinarily, habitually or usually take place and that place will not be effected by… Continue reading
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Deutsche Bank Research: Tax home workers ‘to help those who cannot’
Originally posted: November 2020 Should those WFH pay more tax? A DB report suggests so, so that those who are privileged can help those that can’t WFH. This may come as a surprise. I know many people that can’t wait to get back to the office and that don’t see WFH as a privilege (unless… Continue reading
About Me
I am Leonard, an experienced M&A Tax and International Tax expert. I write about tax on LinkedIn and Twitter sometimes (but mostly LinkedIn). People liked the posts, but there were too many of them to keep track of. So, now they are on a blog for future reference.
Obvious disclaimers on all my posts: this is not advice. These views are my own and do not necessarily represent my employer.
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LinkedIn profile: https://www.linkedin.com/in/leendertwagenaar/