Remote Work: New Tax Challenges For HR

remote work taxes

Deloitte Tax and Worldwide ERC (Employee Relocation Council) released a study on remote work, employees’ relocation, and tax policy. The study found that employers only allow relocations where the company has already offices for tax purposes. 

Deloitte surveyed 122 corporate human resources mobility professionals about the impact of remote work on the distributed workforce and taxation. First, 54% of employers don’t allow employees to move to locations where the company doesn’t have offices. Secondly, 36% of the respondents address the situation case-by-case. Finally, 9.9% allow it as a part of the organization’s corporate location strategy.

HR Challenges And Remote Work Policies

After a year of pandemic, numbers related to remote work change consistently. Around 64 to 72% of respondents are expanding work-from-anywhere policy based on national boundaries, tax jurisdictions, and corporate offices. According to the survey, 40.2% of corporate HR mobility specialists implement and establish a tracking tax system for remote workers, and 34.4% are working on risk assessment. Looking at remote work trends, 64.8% of respondents adjust HR functions to expand remote work options. 

Most companies are setting up hybrid models to allow both physical and distributed work. When it comes to tax reporting and withholding, HR departments must set up explicit policies to deal with remote work and hybrid forms of work. “Some of this is going to come down to establishing clear HR policies, which really bridge that gap between onsite, hybrid, and remote, and then positively enhancing or utilizing technology tied to the working environment,” said Deloitte Tax partner Ed Hannibal.

Compensation is a crucial factor, and more employees prefer a pay cut to relocate and work from home. On the employer’s side, 32% of respondents would adjust total rewards based on the individual performance, reviewing salary, variable compensation, and location.

As Hannibal states, “The whole regulatory aspect of remote working is really important,” said Ed Hannibal, a partner at Deloitte Tax. “First of all, it’s determining the potential tax implications or benefits that are going to be created by workforce locations and mitigate any other reporting requirements.” 

While remote work trends are still impacting the workforce, tax systems are becoming a priority for companies and the HR department. 

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