Remote working from foreign jurisdictions has become increasingly popular during the Covid-19 pandemic. Despite the lockdown rules being relaxed in most jurisdictions, it appears that employers should not expect the workplace to return to the way it was before the pandemic.
For personal reasons, growing numbers of employees are choosing to relocate to other jurisdictions while remaining with their current employers, says Aneria Bouwer, senior consultant in the tax practice at Bowmans South Africa.
“The interest of a foreign tax authority may be triggered by something as apparently harmless as the employee having business cards bearing the South African company’s name and the address of his or her home office in the host country. “South African employers also sometimes fail to realise that they could still have an employees’ tax withholding obligation in South Africa.”However, it is difficult to say definitively if and when such risks will actually materialise without taking the specific facts into account, said Bouwer.
“Would the employer still be obliged to withhold employees’ tax in the country where the employer is tax resident and/or is there a risk that it would also have to register as an employer in the foreign jurisdiction?”During April 2020, the Secretariat of the Organisation for Economic Cooperation and Development issued guidance regarding the interpretation of tax treaty concepts such as POEM and permanent establishments during the Covid-19 pandemic, when people were literally stranded overseas.
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