I was reading an article about employees who are keeping up the facade of wfh when they’ve actually moved abroad to a place where the cost of living is cheap e.g Thailand. They align their work hours, meet targets, in fact no one would be any wiser.
The article went on to mention that it’s a nightmare for companies because of the tax implications. Can someone what the actual problem is. Thanks!
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I just got out of a digital nomad situation after sorting out the shit storm that is called filing my annual income tax, so I will answer from my experience.
So from a high level perspective, when someone is working, the government that someone resides in is providing services like healthcare, welfare and security to ensure that person can work at full productivity, and to pay for that service the person’s employer withholds a portion of that person’s paycheque and pay taxes to the government.
Now imagine that employee is in a digital nomad situation without telling the employer that he moved from country A to country B. The employer is none the wiser and still paying government A to provide services, but the employee is actually located under government B’s jurisdictions and getting services for free from there. Once government B finds out, they will hold the employee, employer and government A responsible for undercutting them as a team and evading taxes. Government A and the employer will then get pissed off and hold the employee responsible for all the trouble they got dragged into that force them to smooth things over with government B.
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