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Hybrid work: Nordic border commuters face income tax headache

Hybrid work: Nordic border commuters face income tax headache

| Text: Fayme Alm, photo: Johan Wessman/News Øresund

Hybrid work became a solution for many companies during the Corona pandemic. But people commuting across borders risked being taxed in a different country because they were working from home. The Nordic Border Barriers Council is on the case.

Hybrid work will remain a challenge for Nordic border region labour markets for as long as it is limited by current national legislation and bilateral agreements. An upgrade is necessary and urgent.

That is why barriers rather than opportunities were the main topic of debate during a seminar about the borderless labour market organised by Øresunddirekt and Øresundsinstitutett on 24 November. One of the speakers was Evan Lynnerup, a Zealand regional council member for Left, Denmark's Liberal Party. He put it like this: 

“What comes out of the talking shops? We spend a lot of time talking and we also allocate money. But is there any concrete action here? All of our national governments need to address this. What does the Corona pandemic mean for various agreements? Commuters need concrete answers and solutions to the problems,” he said.

Photo: News Øresund - Sofie PaisleyElin C. Larsson, HR-direktör för Novo Nordisk i Sverige håller mikrofonen.

Elin C Larsson, HR Director at Novo Nordisk and the third person from left, raised the question of how difficult it is for employers to be informed about all the new rules  affecting commuters. Here with  moderator Trine Grönlund, Kenneth Ekberg, senior advisor Malmö City, Evan Lynnerup, Zealand regional council member for Venstre and Tue David Bak, CEO for Greater Copenhagen. Photo: News Øresund - Sofie Paisley.

The county governor of Skåne had invited the participants to this physical seminar at her official residence in Malmö. There was a local focus, but only to a point. Different speakers time and again pointed to the urgent need for new and joint solutions for all of the Nordic border regions.

Difficult for workers and employers

The problems became obvious to more people due to the Corona pandemic. The media has heard from border commuters how difficult it has been during the pandemic to decipher tax rules in relation to hybrid work.

In normal times, they want to have the same opportunity to work from home as their colleagues who live in the country where the job is located. The opportunity to work from home has increased a lot thanks to technology, but legislation and bilateral agreements covering border region labour markets lag behind.

The problems with hybrid work concern not only border commuters but also companies that are looking to hire staff. Elin C Larsen, head of HR at Novo Nordisk in Sweden, was among those who called for manageable regulations which would allow employers to treat all employees the same whether or not they are commuting. 

Today, all border commuters – or those who are considering working across a border – must interpret and deal with information about taxation and social insurance from four different authorities – two in their home country and two in the country where they work. 

This situation can be really discouraging and as a result, employers might not attract the best suited candidates when they are trying to recruit staff. Others might stop commuting across borders and look for work in their home country instead.

From a different perspective

The increased interest in the barriers that exist in the border region labour markets could also be seen as an opportunity for change, argued Sven-Erik Bucht, the Swedish representative at the Border Barriers Council.  

Photo: Anders Löwdin/Socialdemokraterna

Sven-Erik Bucht, former Minister of Rural Affairs and now the Swedish representative at the Border Barriers Council.  Photo: Anders Löwdin, Socialdemokraterna.

“It is time for a fresh start. This issue has never had as much attention as during Corona. There is a momentum here that we need to keep,” he told the seminar.

That is also what is happening. Last spring, the Nordic Council of Ministers asked former Finnish government minister Jan-Erik Enestam to carry out a strategic review in order to strengthen the Nordic civil crisis preparedness based on what has been learned from the Corona pandemic and with a view to strengthening the Nordic cooperation.

Identifying problems and recommendations

The review identifies 12 problems and recommendations. Number 9 deals with cross-border hybrid work and the need to modernise legislation and bilateral agreements.

“Enestam’s report is much appreciated. Now it is important to decide which of his recommendations can be implemented quickly. Preferably on a prime ministerial level,” Kimmo Sasi told the Nordic Labour Journal. A former Finnish MP, Sasi chairs the Border Barrier Council during 2021.  

Kimmo Sasi

Kimmo Sasi chairs the Border Barrier Council during 2021.  Photo Johannes Jansson/

Since spring 2020, the organisation has prioritised the Corona-related border barriers identified by Info Norden and the Nordic information services. They have created a database containing some 120 border barriers to date. Also, many of the rules that were introduced as Nordic borders closed can be reinterpreted. Sometimes misunderstandings could be solved when authorities clarified issues,” says Kimmo Sasi. 

Urgent need for solutions

The situation is less positive when it comes to other issues. Surveys of Nordic border region citizens have uncovered desperation and worries for the future. If the same national restrictions are reintroduced, people are not sure they will want to work in the country on the other side of the border, says Kimmo Sasi.

The Border Barriers Council has therefore produced a set of concrete examples for the Nordic finance ministers of what needs to be done. 

“One of the things we propose is changing the double taxation agreement on income during a crisis situation like the pandemic, when working from home means working in a different country from your workplace,” says Kimmo Sasi.

He concludes in the same way as Evan Lynnerup:

“The consequences of the national restrictions triggered by the Corona pandemic allow us to clearly see how important the Nordic cooperation is. We have got some concrete improvements and we now have proposals for how to take things forward and do not need to debate this anymore.”

Filed under:
Close(d) borders

The ferry only takes a few minutes between Swedish Helsingborg and Danish Helsingør, and many people live in one country and works in the other. When the Corona pandemic broke those who could work from home did so, but they now risk having to pay tax in the country of residence, instead of the country where they are employed. 


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