World news
15 April 2020

Coronacrisis raises tax and social security issues with cross-border employment

OECD, European Commission as well as respective states continuously provide new information how to deal with tax and social security issues arising due to COVID-19 restrictions. A common attitude is that temporary changes due to the pandemic situation should not lead to significant impacts in tax and social security obligations. However, many questions remain open.

Ivana Soboličová


COVID-19 pandemic crisis is raising many issues with cross-border elements; e.g. employees stranded in a country that is not their country of residence; employees, management, or salespersons who must work from another country than it was expected or other country than the country of the company’s seat etc. The respective institutions seek responses to these questions:

  • With respect to the individuals stranded in a country other their tax residence, OECD is of the opinion that tax residence should not change due to such temporary dislocation.
  • OECD stated that temporary change of the location where employees exercise their employment because of the COVID-19 crisis should not create new Permanent establishments (“PEs”) for the employer. Similarly, temporary conclusion of contracts in the home of employees or agents because of the COVID-19 crisis should not create new PEs.
  • Cross-border workers staying in their country of residence and temporarily out of work because of the COVID-19 (receiving income due to stimulus packages) should continue to tax the income received during this no-work-period in the country where they used to exercise the employment.
  • Employees or posted workers working from home office in another EU member state than the state of their usual work should continue to be governed by the social security legislation of the member state as before COVID-19.

The information published by the institutions are of a general nature and in practice various and more complex situations arise. As an example, new employment contract started for a foreign employee during the pandemic crises where the employee cannot relocate to the country of his new employment should or should not continue to be governed by the social security legislation of the member state as before COVID-19? And how to approach taxation of work performed temporarily from a home office in other country than the country of the employer?

This is a complex and hot topic especially in case of employees working for Slovak companies from their home offices in Austria solely due to the COVID-19 situation. This has been recently addressed also by the Slovak chamber of tax advisors and Slovak-Austrian Chamber of Commerce, Slovak-German Chamber of Industry and Commerce and American Chamber of Commerce in Slovakia in a common initiative pointing out the burdens resulting from this Austrian regulation focused on taxation of Austrian tax residents working from home for employers seated outside Austria.

The institutions keep working to mitigate the unplanned implications and potential burdens arising due to the COVID-19 crisis. However, the questions could emerge quicker than the answers from the authorities. If you have any urgent topics to be discussed, please do not hesitate to contact us.


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