The Impact of Tax Treaties on International Mobility Work in Ukraine

During the time of the COVID-19 pandemic, “homework” became one of the most used expressions to describe the daily routine of people around the world. The International Labor Organisation (ILO) defined “homework” as “work carried out by a person, to be referred to as a homeworker, (i) in his home or in other premises of his choice other than the workplace of the employer; (ii) for remuneration; (iii) which results in a product or service as specified by the employer irrespective of who provides the equipment, materials, or other inputs used”.

The 2-year period of adjusting to the new realities of homework inevitably triggered another phenomenon that is even more prevalent post-pandemic: the mobility of workers. The period of quarantine and isolation, interestingly enough, demonstrated how formal the current borders are between countries. The Internet enabled employees to return home to their families but continue working for foreign employers. Despite the pandemic appearing to be over, the trend for an increased mobility of work persists. Many people have reconsidered their value systems and the role of family, personal life and work-life balance within these systems. It made a strong impact on their new work habits and preferences. The mobility of workers during globalization and restrictions to mobility during the pandemic are two diametrically opposite phenomena. Yet, the period of the pandemic – during which many workers faced travel restrictions – shed light on the scale of inappropriateness of the “physical presence” criterion in the globalized world.

In international taxation of personal and corporate income, mobility of workers was one of the key challenges. The rules that have been linking the tax jurisdiction to the physical place of performance of work both for personal and corporate income taxes are going through a conceptual crisis. The international tax community has been attempting to fix the existing law by implementing minor modifications and exceptions. Nevertheless, there are still no groundbreaking reforms on domestic or international levels to fundamentally change the system, which is not suitable for highly mobile workers.
This chapter will analyse the practical experience of Ukraine in dealing with the issues of workers’ mobility for personal and corporate tax purposes. Among other questions, the discussion will focus on the regulatory responses of Ukraine to the mobility limitations of workers during the COVID-19 pandemic.