OVER THE PAST FEW WEEKS, we’ve all been on lockdown. We’ve been working from home and travelling was totally out of the question. In this context, we’ve had to make do with what we had, trying our best. For some jobs, teleworking is not an option at all, for others more so. Working from home and remotely has replaced working in a workplace. Is signing up to join a meeting remotely different from being physically present? The surprising answer is that it does matter in a number of cases. Especially in matters of international taxation, but it is also important for individuals and companies.

NATIONALITY is generally not a criterion for determining the country in which individuals and companies must pay tax. In the case of tax residence, it is, however. For individuals, this is where they reside most of the time and where most of their interests converge. Physical presence plays a major role in this respect. After the Second World War, a number of trials were held in the Netherlands to decide whether a person’s incarceration in a German concentration camp implied that the prisoner’s country of residence had changed. Even now, we can expect some notable cases, in which discussions about residence may arise as a result of a longer or forced stay in another country.

“Our tax administration needs to take a clear stance on how it will interpret this fiscal crisis.”

TAX RESIDENCE is also attributed to companies. One of the most important criteria for companies is the location of their board and that of their executive bodies. Traditionally, physical presence is the basis of assumptions. Recently, a number of companies got in trouble with the tax authorities concerning their tax residence. They were unable to provide sufficient evidence that the directors and shareholders were physically present at the boards of directors and general meeting where they are required to be present according to the minutes. Consequently, if videoconferencing is the new normal, the definitions used to determine tax residence will need to be updated.

YET, THERE ARE STILL pressing issues concerning physical presence. A resident is taxed on his or her worldwide income, even if he or she works in another country. There is an important exception to this rule: the 183-day rule. If an employee works physically in a particular country for more than 183 days, he/she is subject to that country’s taxes for that income. Physical presence in the country where the taxpayer works is a key concept when interpreting the 183-day rule. If working from home and teleworking become the new normal, it will be necessary to give a new interpretation to the rule agreed between the employer and the employee.

This implies mitigation of both an acute and structural need. We urgently need to consider how to interpret the limitations of the COVID-19 crisis, preferably in accordance with the rules that other countries have already introduced. At the very least, our tax administration needs to take a clear stance on how it will interpret this fiscal crisis.

And more structurally, if teleworking becomes the new normal, our national and international policymakers will have their work cut out for them. However, despite the inspiration and effort they will have to demonstrate to do this, there is good news for them. Whether ministers are physically present in parliament or in their cabinet when they work, or they are teleworking, their income is always taxable in Belgium. No matter where they work, even when they are abroad. This is neatly and very clearly laid down in the international double taxation treaties.