BDO in Uruguay – Cra. Mariana Bertone – [email protected]
Work from anywhere: The new reality?
The concept of working to and from any country had already had its impulses with the explosion of the digital age, but the Covid-19 pandemic further accelerated it to unprecedented rates. As regions began to lock down, many people were unable to return to their country of work or locally to their regular place of work. Some chose to leave their place of work and return to their country of origin to work and be with their families. Others were stranded in their host location, and many people scheduled to start work in a different jurisdiction did so virtually from their home location.
This way, Remote work has become a necessity in many industries, and as technology has improved to support it, some employees have found that they can do their jobs from anywhere. In addition, employers recognized the opportunity to hire from anywhere by providing access to a broader talent pool.
A common question facing businesses today is whether employees can continue to work from anywhere, extending the new prospect of more agile work arrangements well into the future, and do employers want to support this? Employees may have a variety of reasons for wanting to work remotely, but neither they nor their employer may be fully aware of the compliance obligations and the risks that may arise.
employee problems
The future of work and working from anywhere are some of the most common issues facing employers and their employees today.
Many employees will have seen comments in the media about employers allowing their employees to “work from anywhere.” Job visa offers in idyllic locations, encouraging relocation to work in a “sunny and friendly environment” may appeal to some, but what should employees consider when applying for remote work?
The fact of living and working in different jurisdictions leads to analyzing where your personal income will be taxed, as well as your pensions, your assets and investments.
The employee will face questions such as, what will be their corresponding fiscal residence, and therefore, where will the source of their income be, as well as which social security organization they must contribute to.
Employer Issues
Media reports have indicated that some employers will allow their staff to “work from anywhere”, while others have been more cautious, alluding to hybrid approaches or even suggesting a complete return to face-to-face mode. Allowing staff to “work from anywhere” can be a compelling proposition, but what should employers consider when receiving a request for remote work, particularly those in a different domestic or international location?
Some of the common issues that the employer will need to consider when granting a remote work request will be Assess the location of social security costs, income tax, payroll, and compliance obligations.
In addition, an employer should be alert to the potential impact of an employee performing duties outside of their home location in terms of potential compliance obligations and tax costs associated with creating a corporate presence in another country, potential earnings attributions, or tax filing obligations in a different country where you have incorporated your company.
On the other hand, the employer should consider when granting a remote work request: regulatory requirements, legal issues, data protection and security, insurance, to name a few.
Conclution
There are still many issues to be defined in terms of legislation, but without a doubt that this new modality is here to stay, and therefore and how much, the different jurisdictions must adapt their regulations considering the fiscal and non-fiscal implications, thus adapting to the new reality. .
Once again reality proposes us to rethink whether we should adapt the regulations, prompting us to think if digital nomads will have their own tax perspective.
