Taxation of cross-border teleworkers globally and the impact on the EU

Key points

The EESC:

• stresses that over the last decade, globalisation and digitalisation have opened up new opportunities to work remotely. The COVID-19 pandemic brought about an unprecedented change in the lives of both workers and businesses, leading to an exponential rise in teleworking;

• reminds that with the new technology, the exact same work can be carried out without the need to be physically present. This also means that many more people are able to work remotely across borders and the number of cross-border teleworkers has increased drastically;

• believes that taxation of employee income as wage income in the employer's country of residence is the preferred option. Such a regime would make things simpler for employees and could also be attractive for employers. In order to compensate for loss of revenue in the employee’s country of residence, a revenue sharing mechanism would likely be required;

• proposes that the revenue authorities may divide the income between the countries by applying data on actual individual presence in the states concerned (reported by the employer to the tax authority in its country of residence, thereby acting as a one-stop shop) or using some macro-economic aggregate key.