Law360 Quotes Elizabeth Stevens on How Global Telework Could Change International Tax Policy

Law360 Tax Authority

Determining the scope of global remote work will be crucial for a coming Organization for Economic Cooperation and Development project regarding tax issues stemming from the workforce trend, but that may not be easy to do.

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More guidance is needed about when an employee's home office, self-rented co-working space or "corner table at the neighborhood Starbucks" counts as a permanent establishment of the worker's employer, said Elizabeth Stevens, a Member of Caplin & Drysdale.

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The tax policy and technical issues now in the pillars formally landed on the OECD's plate in 2012 as part of the base erosion and profit shifting project, and from late 2018 to early 2019 work on them moved "at an extremely rapid pace," Caplin's Stevens said. That happened because of building political pressure, which she said is immense now, to quickly find a solution to "certain perceived flaws in the existing international tax architecture."

Stevens said she understood Perez-Navarro to mean the opportunity exists to "avoid the pressure-cooker environment of Pillars One and Two." Further, she interpreted Perez-Navarro as pushing to start addressing tax policy issues regarding global worker mobility now before governments and the public dial up the pressure for a solution.

"They might produce some sort of model treaty language and/or model legislation or model regulation related to global worker mobility," Stevens said. Domestic politics ultimately "directs the work," but the OECD could produce something nations could then enact unilaterally or bilaterally, or multilaterally if an instrument were developed to do so, the attorney said. She also said the current scale of remote work doesn't limit its potential future scale.

"The principles are not affected by the number of individuals to whom it applies," Stevens said. "The amount of resources [that tax administrations choose] to throw at this might be affected by the number of people."

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