Taxes and the Rise of New Work Arrangements
Taxes and the Rise of New Work Arrangements

Author(s): Elena Nešovska Kjoseva
Subject(s): Law, Constitution, Jurisprudence
Published by: Правни факултет Универзитета у Источном Сарајеву
Keywords: Remote work; Teleworking; Work-from-home; Freelancers; Income tax; Tax policy;
Summary/Abstract: The year 2020 will be memorized as the beginning of the "new normality". Soon after the spread of the COVID-19 pandemic, governments worldwide introduced a number of economic legislative adjustments, mainly in the area of labor law and taxation, to protect citizens and ensure their health and safety at work. Besides health, social and economic difficulties, the question of taxation of the workers has arisen. This situation forced both workers and employers to start changing the traditional view of what was previously understood as working space, working hours and routine. Although, the concept of teleworking has slowly but surely gained importance over the years, the COVID-19 pandemic has brought remote working to the forefront of working life. Additionally, the intensive digitalization of everyday life has facilitated work from home or alternative worksites outside the employer's premises. The impact of increased remote work can be substantial and and remote work has the potential to fundamentally revolutionize where, how, when and why people work. Regarding taxes, countries have a right to tax within their borders, However, the new work arrangements fundamentally sever the geographic link between the locations of the employer and the employee. As a result, countries may disagree about whether remote work occurs "within" their borders for tax purposes, concerning either the employer's location or the worker's place where the economic activity takes place. This indicates that traditional tax rules, which assume that people work on the employer's premises, are outdated and no longer applicable. There is a clear need for structural tax reforms in order to adapt tax systems to the changing world of work. However, countries should keep in mind that a "one-size-fits-all" tax system does not exist, so country-specific circumstances should be considered when adjusting the tax rules to contemporary work arrangements.

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