With hundreds of thousands of people fleeing Ukraine in recent weeks, a significant number of those individuals are displaced and working remotely. As the scale and depth of the humanitarian impact grows, U.S. employers may be actively supporting those employees to relocate and work remotely over the coming weeks and months.

In doing so, a perhaps unanticipated consideration of this unplanned migration out of Ukraine, is the tax implications for both the company and its employees. In planning to effectively support employees, U.S. companies should consider the following tax considerations in neighboring countries as part of their exercise to facilitate employees who have moved.

• Corporate tax – Ukrainian employees working remotely in another country could create a corporate taxable presence (or a “permanent establishment” (PE) in countries where a double tax treaty exists) bringing corporate income tax and compliance obligations.
• Employer taxes – These may involve an obligation to register with the tax authorities, operate a payroll, and calculate and remit taxes in a foreign country where the employee resides. Additionally, exposure may arise to overseas employment taxes and social security contributions.
• Employee tax – An employee’s tax arrangements may become more complex if the employee becomes a tax resident in another country and/or subject to income tax on employment income. Similarly, additional reporting burdens and tax payment obligations could arise.
  
  

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