Since the pandemic there have been significant changes in working arrangements within professional firms. More and more return to work conversations are uncovering cross border elements, which could have potentially far reaching implications for the firm, the partners and employees.
In recent months, firms are seeing a boom in requests from its people to work all or part of their time remotely, from outside the country of their employment and on an extended or permanent basis. Much of this remote working was transient and a direct result of the travel restrictions imposed by the pandemic or returning to a country of origin in order to care for family members.
There are without doubt many positives brought about by remote and virtual work arrangements:
However, the regulatory and HR related issues may not be straight forward. Remote and virtual workers potentially gives rise to issues across a number of areas including:
Pierre is a lawyer employed by ABC LLP, a UK based law firm with no presence or offices outside the UK. He is a French national who has lived and worked in the UK.
In March 2020, with the worsening COVID-19 situation, he moved to France to be with his parents and started working remotely from his parents’ home in France.
Pierre did not think it was necessary to make his line manager aware of his change in circumstances.
In August 2021 the firm started to have conversations with their people regarding their thoughts on returning to the office.
As a result of this exercise:
Has Pierre broken his UK tax resident status?
Is Pierre now tax resident in France?
Is Pierre liable to French tax on his earnings?
Has Pierre created a branch presence for the firm in France?
Is the firm exposed to French corporate tax liabilities and reporting obligations?
First and foremost, firms need to put in place a process to establish where their people are based and for what period. Only then will the firm be able to work out what if any actions need to be taken.
Firms will be able to take advantage of the positives from their people working remotely, but at the same time manage and minimise the risks.
For more information on the issues outlined in this article or to discuss your firm’s position, get in touch with us today.
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