Personal taxation for a borderless workforce

The world of work has undergone profound changes and international tax law principles are struggling to keep up with this evolution. Work from home rates are now far above pre-2020 levels, according to the University of Chicago’s Becker Friedman Institute 2025 working paper, and remote work offers continue to rise across multiple economies. Remote work, including cross-border job opportunities, has become a permanent and growing feature of global labour markets.

Late last year, the Organisation for Economic Co-operation and Development (OECD) launched a landmark public consultation on the global mobility of individuals. The consultation was an indicative acknowledgement that the existing international tax framework is increasingly misaligned with the realities of hybrid work, cross-border remote arrangements, digital nomadism and fragmented workforce structures.

The growing prevalence of cross-border remote work and digital nomadism challenges, among other things, the traditional personal income tax framework, which has historically presumed a stable employee presence in a single source jurisdiction with clear residency ties.

Cross-border work complicates tax residency

An individual might choose to work in two countries and simultaneously satisfy the residency criterion of both countries where the work was performed. This could result in a tax burden on the said individual from both countries. In such a situation, if there is a tax treaty between the two countries, the various tests under article 4(2) of the OECD/UN Model are applied to resolve the tax conflict.

Determining tax residence requires a factual analysis, especially when assessing the centre of vital interests and balancing an individual’s economic and personal relations with a particular country. The rise in global mobility has complicated the application of the tie-breaker rules in article4(2), while evolving social concepts, such as unmarried partnerships and the reluctance to have a geographically fixed home, further challenge traditional interpretations of family ties and the centre of vital interests. While article 4(2)(d)’s mandatory competent authority agreement provision addresses such impasses effectively in principle, mutual agreement procedures remain protracted and expensive in practice.

Additionally, many digital nomads, who frequently relocate across multiple countries, may fail to meet the standard 183-day threshold for tax residency in any single jurisdiction in a calendar year. This absence of identifiable tax residence makes it nearly impossible to apply a tax treaty, thereby exposing such nomads to elevated taxation, as all the jurisdictions from which the person would source their income would want to apply their national tax law provisions.

Modernise tax residency for nomads

As remote work cements itself in the global economy, the gap between traditional tax architecture and modern forms of mobility will only widen. The challenge therefore hinges on whether lawmakers can modernise residency rules before mobility outpaces them. Practical, nomad-friendly regimes can turn a regulatory hurdle into economic opportunities.

Another more ambitious solution that treaty countries can consider incorporating within their bilateral tax frameworks is the possible introduction of a provision like article 15(3) of the present OECD model. The principle behind allocating taxing rights only to the state of residence under article 15(3) is that the place of work principle is difficult to apply in cases where employees work aboard a ship or aircraft that is operated across several jurisdictions. The same logic applies to digital nomads adopting the work from anywhere model, whose workspaces are similarly fluid and spread across jurisdictions. Extending exclusive residence-state taxation to such income can restore certainty, pre-empt the risk of double taxation that nomads currently face and realign the tax architecture with how a global independent workforce shall operate to make the regime dynamic, forward looking and resilient.

Mukesh Butani is the managing partner and Varun Gakhar is an associate with the tax policy team at BMR Legal Advocates