March 28, 2023

Teleworking From Bulgaria: Different Arrangements Have Different Consequences

March 28, 2023/ Ruchelman P.L.L.C.

Bulgaria has benefitted as a preferred remote working location for digital businesses. While it does not have a digital nomad visa for work, it has a cadre of skilled individuals working as computer engineers available to be employed by foreign based multinationals. In their article, Viara M. Todorova, a Partner of Djingov, Gouginski, Kyutchukov & Velichkov, Sofia, and Ivan Punev, a Senior Associate at Djingov, Gouginski, Kyutchukov & Velichkov, Sofia explain the specific tax issues that face a foreign company looking to engage local talent to carry on functions from Bulgaria. Several different arrangements are common, and each has its own set of employment tax obligations for the service provider and the company. Adding to the mix, the threshold of activity in Bulgaria that creates a P.E. is relatively low and the choice of arrangement can affect the outcome.

March 28, 2023

Telecommuting: Good Intentions, Bad Outcome

March 28, 2023/ Ruchelman P.L.L.C.

In 2017, the O.E.C.D. stated that the question of whether a home office constitutes a P.E. is rarely a practical issue because the majority of employees reside in the state where their employer has an office. Although that observation was undoubtedly accurate at the time, today it is safe to say that it did not age well. Paul Kraan, a Partner of Van Campen Liem, Attorneys and Tax Advisers, Amsterdam, and Mitchell Karman, an associate at Van Campen Liem, Attorneys and Tax Advisers, Amsterdam, explain the international tax implications of remote workers from a corporate income tax perspective, based on the O.E.C.D. Model Convention framework. Not surprisingly they point out ways in which the current framework arguably does not result in a desirable outcome. The article concludes with several recommendations.

March 29, 2019

The I.R.S. Approach to the Dependent Agent Concept

March 29, 2019/ Ruchelman P.L.L.C.

When foreign corporations have certain limited activities in the U.S., a question that arises is whether a taxable presence exists in the U.S. for Federal income tax purposes. A foreign corporate taxpayer with direct activities or operations in the U.S. is subject to U.S. corporate income tax and branch profits tax if it conducts a U.S. trade or business generating effectively connected income. Recently, the I.R.S. Large Business and International division published an international practice unit (“I.P.U.”) addressing the creation of a P.E. through the activities of a “dependent agent.” Fanny Karaman and Beate Erwin lead the reader through the I.P.U. and explain the four-step process that is used by the I.R.S. to evaluate whether a permanent establishment exists.