Tax residence rules challenged by digital nomads; treaty and domicile concepts require revision to address cross-border employment.
Reliance on tax residence and the physical-presence test leaves remote employees outside source taxation when they do not establish residence or meet time thresholds. Digital nomads can provide services benefiting a jurisdiction without creating conventional presence, producing untaxed source income or concentrated taxing rights in the state of residence. Proposed responses include defining qualified residence for treaty benefits, adjusting presence thresholds, adopting redistribution mechanisms between residence and source states, and updating nexus concepts to reflect digital economic presence. (AI Summary)