Digitalization, Automation, and Tax Liabilities: 3 Priorities for HR Departments Leading Remote Teams


In 2021, successfully integrating a remote workforce will mean HR departments need to focus on digitalization, automation, & tax liabilities.  Deborah Soye, IDA Ireland talks about what to watch out for as we continue to expand business to Europe and work with remote teams across the globe.

The COVID-19 pandemic necessitated an almost-overnight transition to remote work, causing Time MagazineOpens a new window to describe the Coronavirus outbreak as “the world’s largest work-from-home experiment.”

The experiment is broadly successful thanks to existing off-the-shelf technologies that allows people to communicate and collaborate in real-time. For example, many of IDA Ireland’s clients in the consumer and digital technology industry were able to transition from an office-based working model to fully remote in a number of days and have maintained this operating model successfully throughout the pandemic. 

However, remote work is anything but an aberration. According to the World Economic ForumOpens a new window , the number of permanent remote workers will double in 2021, meaning more than a third of all employees will work from coffee shops and kitchen tables rather than in-office cubicles.

Simply put, successfully integrating a remote workforce without compromise is an operational necessity for most organizations. During this time, human resources professionals are under significant strain. As the Society for Human Resources ManagementOpens a new window notes, “HR managers are trying to keep their workers productive, motivatedOpens a new window , engagedOpens a new window and connected—all factors that are moving targets in the new normalOpens a new window .”

This is especially challenging for U.S. companies with a global staff who are now grappling with a remote workforce’s legal and HR implications across foreign jurisdictions.

Here are three key considerations for HR leaders in this environment that can help foster success in organizations in the year ahead.

1.  Prioritize Digitalization

While much of our modern workflows are digital-first endeavors, physical files continue to be the primary documentation and storage method for many HR departments. Not only is this less efficient and effective than digital records, but it’s also especially problematic for a remote workforce that can’t access this information.

Cloud storage solutions provide a compelling alternative, offering HR departments a way to improve their overall workflows, including:

  • Making information easier to search and find
  • Empowering collaboration
  • Reducing costs and operational disruptions
  • Enabling scalability

A survey on the future of workOpens a new window found that 95% of employees see room for improvement in handling documents in a digital environment. For HR departments striving to keep teams productive in a remote setting, digitalization is a natural first step.

Learn More: Smarter, Faster, Better: The Digitization of Contingent Workforce Management

2. Embrace Automation and Cloud Computing

Few technologies have garnered more enthusiasm in the past several years than AI and automation. It’s time to put these innovations to work. To support thriving remote teams, HR leaders can leverage digitalization, automationOpens a new window , and cloud computing to facilitate IT cost savings, accommodate scalability, ensure security, and promote collaborationOpens a new window .

In a remote environment, these technologies hinge on cloud computing. A recent Condeco SoftwareOpens a new window survey found that CTOs see cloud computing as the most important technological change in the year ahead, identifying it as “very important” to their company’s success.

That’s why, despite facing shrinking budgets and an uncertain economic outlook, more than 40% of businessesOpens a new window are investing in technologies to support remote teams. CeADAR,Opens a new window Ireland’s Centre for Applied Data Analytics & AI is seeing new waves of industry using AI. Its director, Edward McDonnell, predicts that one of the biggest users of AI in the coming year will be the legal profession, which until this time, has been paper-based with little reliance on cloud-based documents.

Learn More: 5 Reasons to Migrate Legacy On-Premise HR Software to Next-Gen Cloud-Based HR Technology

 3. Prepare for Shifting Tax Scenarios

Louise Kelly, a tax partner with Deloitte Ireland LLP works with U.S. companies that have teams in Ireland. “When remote teams work from different jurisdictions, there can be significant tax consequences that need to be top-of-mind for HR leaders,” she told us. “For example, when employees work in different locations than their employers, they can create a taxable presence of permanent establishment (PE), potentially incurring unique tax liabilities or value-added tax (VAT) registrations. It may also undermine the group’s transfer pricing strategy and lead to more profits being allocated to multiple jurisdictions.”

In IDA’s experience, companies are becoming global earlier in their growth, so employee mobility must be considered in tandem with finances.

What’s more, for U.S. companies with operations in Europe, payroll tax obligations may vary by country.

“Payroll obligations are separate from employees’ residency rules,” commented Kelly. “For example, when international companies have, say, 10 employees in 10 countries, payroll taxes and social security contributions increase alongside financial complexity and accounting workload.”

Whether companies are accommodating newly appointed remote employees as they work abroad or expanding operations overseas, HR leaders need to prepare for shifting tax scenarios to accompany these realities.

Expect the Unexpected

For many businesses, the past year was an unplanned crash course in disruption. Long-established workflows went out the window, successful companies began to stumble, and agility received renewed importance.

While the pandemic will eventually subside, HR leaders need to continue to be agile, responding to shifting realities to support remote teams. This might include reducing salaries to account for new living scenarios – as Silicon Valley-based VMware announced this fallOpens a new window , or providing stipends to employees who move away from high-cost cities, which Stripe did for employees willing to leave New York and San FranciscoOpens a new window .

Whatever the scenario, one thing is certain. HR leaders will have to innovate to keep their workers productive, motivated, engaged, and connected. By pursuing the right priorities, they can effectively rewrite the playbook to develop and oversee their organizations as they enter the new normal.

Do you think digitalization, automation, and tax liabilities should be the top priorities for HR teams to manage remote teams? What else would you add to this list? Share your thoughts with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window .