The United Nations’ tax sub-committee is considering revising Article 15 of the UN Model tax convention to address the reduction of the tax base in the country where an employer is based, when an employee is carrying out their duties in another country. The proposed new sub-para (4) would allow the country where the employer is resident to tax the remuneration of the non-resident employee, irrespective of whether the employer has a permanent establishment in the other country.
Reponding to the proposals, Mike Lavan, director of global mobility and employment taxes at KPMG in the UK, suggests that the change could give rise to the unusual situation where the country where the employer is resident taxes employees who have never performed their employment duties in that country. Lavan also notes that the proposal could represent a practical solution where the flow of tax revenue from remote workers is broadly equal between two countries, but is less likely to be adopted by countries who stand to lose out.
The United Nations’ tax sub-committee is considering revising Article 15 of the UN Model tax convention to address the reduction of the tax base in the country where an employer is based, when an employee is carrying out their duties in another country. The proposed new sub-para (4) would allow the country where the employer is resident to tax the remuneration of the non-resident employee, irrespective of whether the employer has a permanent establishment in the other country.
Reponding to the proposals, Mike Lavan, director of global mobility and employment taxes at KPMG in the UK, suggests that the change could give rise to the unusual situation where the country where the employer is resident taxes employees who have never performed their employment duties in that country. Lavan also notes that the proposal could represent a practical solution where the flow of tax revenue from remote workers is broadly equal between two countries, but is less likely to be adopted by countries who stand to lose out.
