In 2021, the important change was not that laptops suddenly made work mobile. People had been working across borders for years. The change was scale: remote work turned what had often been an exceptional tax and payroll problem into a normal operating question for employers, founders and internationally mobile professionals.
The old mental map assumed that home, workplace and employer were usually in the same country. Remote work separated them.
Once that happened, four questions had to be asked independently:
- Where is the individual tax resident?
- Where is the employment or personal work physically performed?
- Does the employer or company create a taxable presence in another country?
- Which payroll and social-security system applies?
The mistake was — and remains — to treat one answer as if it decided the other three.
Three key takeaways
- Remote work did not abolish geography; it multiplied relevant geographies. A person can live in one country, work for an employer in another and create legal questions in both.
- Personal residence, employer permanent establishment, payroll and social security are separate analyses. One may change without the others changing.
- The post-pandemic rules are becoming more explicit, not less factual. Later OECD guidance on home-office permanent establishments and European social-security coordination gives better frameworks, but the result still depends on actual working patterns.
What was knowable in 2021
By mid-2021, tax authorities and international organisations already understood that pandemic mobility created residence and permanent-establishment problems.
The OECD had issued updated COVID-19 treaty guidance dealing with exceptional displacement, home working and temporary changes in management. Its central caution was contextual: pandemic restrictions could create facts that looked significant under ordinary treaty rules even though they arose from extraordinary public-health measures.
That guidance did not create a permanent global exemption for remote work.
It was an attempt to apply existing treaty concepts to an abnormal period.
The underlying concepts were already familiar:
- an individual could become tax resident under domestic law because of days, homes or other connecting factors;
- employment income could be affected by where work was physically exercised;
- an employer could face permanent-establishment questions if business activity was carried on from another jurisdiction;
- payroll withholding could follow domestic rules different from treaty residence; and
- social security operated under its own coordination rules.
What changed was the number of ordinary businesses suddenly exposed to those questions.
The employee and the employer are not the same taxpayer
Consider an employee of a company in Country A who begins working for months from a home in Country B.
The employee may have a personal tax-residence issue in B.
That does not automatically mean the employer has a permanent establishment in B.
The employer may have a payroll or wage-withholding obligation even where no permanent establishment exists.
And social-security coverage can follow a separate set of rules again.
This is the structural lesson that remote work made unavoidable:
One person working from a laptop can create several legal maps at the same time.
A single slogan — “I am under 183 days”, “the company has no office there”, or “my employer is foreign” — cannot safely collapse them.
What changed after the emergency period
The pandemic eventually ceased to be a good explanation for permanent remote working.
By then, working from another country had become an intentional operating model rather than a temporary emergency.
The OECD’s 2025 update to the Model Tax Convention addressed home-office arrangements more directly. The later OECD explanation of the change makes an important distinction: working from a home in another country does not by itself mean that the employer has a place of business there.
The analysis looks at the degree of permanence and use and, in higher-use situations, whether there is a commercial reason for the individual’s presence in that jurisdiction.
That is a more useful framework for normal remote work than pandemic exceptionalism.
It is also not a universal “X days create a PE” rule.
The facts still matter.
A home office can matter without being an employer office
This is where commercial myths tend to oversimplify in both directions.
One version says:
“Home office equals permanent establishment.”
Another says:
“A private home can never be a company office.”
Neither is a safe general proposition.
The OECD framework asks whether the place is sufficiently connected with the enterprise under Article 5 principles. The employee’s personal convenience, the employer’s business needs, the frequency of use and the broader facts can matter.
The practical question is therefore not whether a laptop sits on a kitchen table.
It is whether the foreign home has become part of the way the enterprise carries on its business under the relevant treaty and domestic rules.
Social security is a different map
European coordination rules make the separation particularly visible.
Within the EU/EEA coordination framework, the basic objective is generally that only one country’s social-security legislation applies at a time.
For a person who normally works in two or more states, the location and proportion of activity can affect which system applies. The European Commission’s guidance describes, among other rules, the significance of performing a substantial part of activity in the state of residence.
Cross-border telework then required additional coordination. A framework agreement allows participating states, in specified circumstances and on request, to keep an employee within the employer-state system where cross-border telework in the residence state remains below the framework’s limit.
These are social-security rules.
They do not decide tax residence.
They do not decide permanent establishment.
They demonstrate why “remote work tax” is the wrong category: several legal systems are operating at once.
A practical scenario
Imagine a founder employed by their own operating company.
The company is established in Country A. The founder becomes entitled to live in Country B and begins spending substantial periods there, working from home, negotiating with customers and participating in management.
A sound review does not jump straight to a conclusion.
It maps the questions.
Person: Does A still regard the founder as resident? Does B now do so under its domestic rules?
Treaty: If both do, what does the A–B treaty provide for the individual?
Employment: Where are the founder’s employment duties physically exercised?
Company: Are the founder’s management activities relevant to the company’s residence or a permanent establishment?
Payroll: Do A or B impose wage withholding or employer registration requirements?
Social security: Which coordination or domestic system applies?
Evidence: Do calendars, contracts, management records and payroll reporting reflect what actually happens?
The same physical days can be relevant to several questions without producing the same legal answer.
The strongest objection: remote work is now ordinary
That is true — and it is precisely why the issue is more important.
Many occasional arrangements create little additional risk. An employee answering emails during a short trip is not the same fact pattern as a senior executive working half the year from another country.
A globally distributed business can also be designed coherently. Remote work is not itself a tax defect.
The error is assuming that normality makes location legally irrelevant.
It does not.
Remote work became ordinary faster than the legal systems built around physical presence could disappear.
Most of those systems did not disappear at all. They adapted by clarifying how old concepts apply to new working patterns.
The practical framework
A cross-border remote-work review should separate six files:
Residence file. Days, homes and other domestic-residence factors.
Treaty file. Only where competing residence or treaty treatment actually arises.
Work-location file. Where duties are physically performed and under what pattern.
Company-risk file. Management, fixed-place and agency facts relevant to corporate residence or PE.
Payroll file. Domestic employer and withholding obligations.
Social-security file. Applicable coordination rules, certificates and registrations.
This approach avoids two opposite mistakes: ignoring remote work because the business is “online”, or treating every foreign workday as a tax emergency.
The real shift since 2021 is intellectual.
The international worker no longer fits comfortably on one national map. The answer is not to pretend borders disappeared. It is to identify which border matters for which legal question.
Sources
- OECD — Updated guidance on tax treaties and the impact of the COVID-19 pandemic
- OECD — 2025 Model Tax Convention update and cross-border remote work
- OECD — Home and away: when does working remotely across borders create a taxable presence?
- European Commission — Which country’s social-security rules apply?
- EUR-Lex — Guidance concerning the Framework Agreement on cross-border telework
Disclaimer
This article provides general information only and does not constitute tax, employment, social-security or legal advice. Residence, payroll, permanent-establishment and social-security outcomes depend on domestic law, the applicable treaty or coordination instrument, the person’s working pattern and the employer’s actual facts. Current rules should be checked before a cross-border remote-work arrangement is implemented.
