Executing your remote-hybrid work strategy with an eye on tax implications

Remote-hybrid working models have increasingly become the preferred way of working for employees. In a recent survey by Grant Thornton, 79% of participants said they want more flexibility in their work location, with 69% noting an improved work-life balance when given hybrid work opportunities. The great resignation is proof that flexible working is a strategic imperative for companies looking to attract and retain talent in what was already a highly competitive market. The challenge lies in managing the tax implications that arise from allowing employees to “work anywhere”.

Considerations for executing a remote-hybrid work strategy

The tax landscape is particularly challenging for hybrid work models. From payroll withholding, social security, permanent establishment, nexus, and statutory reporting - the primary focus is centered on “where are our employees physically working?”.

Points to consider when assessing tax risks for your remote-hybrid work strategy:

• What is our geographical employee footprint?
• Where do we already have an entity?
• Who are the employees wanting to relocate - what is the nature of work they will be doing? How long do they want to be there?
• What is the regulatory environment in the given location - employment law, immigration, tax, and social security.  
• Does this confer with payroll registration and withholding obligations?
• How does this translate to cost to the business?

Consideration of these points must be assessed to gain a clear understanding of the tax implications and whether you have the capabilities to fulfill and scale remote work requests as part of your strategy.   

Scale through technology

As companies think through their policy design and processes, the need for a scalable solution will arise. Having a “remote work request” inbox or spreadsheet could quickly become unmanageable, technology will be integral for successful strategy execution. Key functionalities to consider include:

• Raising a request - having a tool in place for employees to submit requests will resolve a lot of miscommunication and provide clear visibility into where employees would like to work from.
• Triage request - different countries and states have different rules, the ability to take key learnings for individual locations and apply them to similar location requests will lessen the time it takes to build a case assignment from scratch each time. 
• Case Management -  will help to identify who should be involved in the approval process, and streamline the process so requests don’t get lost in inboxes.
• Integrates with your HCM - all data of remote work requests should reflect in your HCM system to ensure relevant documentation has been logged and been signed, IT requirements are met, ensure appropriate payroll withholding is logged, along with any other business requirements.
• Returning employees - monitoring the approaching date an employee should return, as well as ensuring they have returned within the approved timeframe, will be critical to ensure both the employee and employer are maintaining compliance rules.

Topia’s remote work solution automates the exploration, request, review, approval, and management of remote workers while ensuring your employees and business remain compliant with local regulations. 

Visit https://www.topia.com/solutions/remote-work/ to find out more!