Guidance on Global Mobility Tax Implications

In today’s interconnected world, global mobility is becoming increasingly common, with more and more employees being assigned to work in different countries. However, with international assignments come complex tax implications and payroll reporting requirements that can be overwhelming for assignees.

It’s crucial to have a comprehensive understanding of mobility tax to remain in compliance and analyze risks effectively. Learn some of the factors that can help you successfully maintain your international workforce.

Tax planning

Mobility tax refers to the tax implications associated with employees who work across different jurisdictions, whether domestically or internationally. It encompasses various aspects, such as mobility tax compliance, payroll advisory, assignment compensation, global equity reporting, and other related compliance requirements. Administering mobility tax effectively requires a deep understanding of tax laws, regulations, and the ability to navigate complex cross-border tax issues.

When developing a tax plan for international assignments, identify effective assignment structures and consider factors like equalization costs, which helps you assess actual costs to your organization when considering whether to send an employee abroad. Keep in mind that organizations with employees working in multiple countries may be subject to tax in each country where their employees work.

Expatriate taxation compliance

Your employees may embark upon a wide range of international assignments such as permanent transfers, business travelers, short-term assignments, and long-term assignments. Tax residency rules vary by country and can be complex, but generally depend on factors such as the amount of time spent in a country and the individual’s ties to that country.

Supporting assignees throughout their assignment life cycle and helping them navigate the complexities of their new tax situation may involve:

• Preparing and reviewing expatriate tax returns and equalization settlements
• Providing year-end tax assistance and conducting gross-up calculations
• Assisting with the repatriation process and finalization of international taxes

Payroll reporting compliance

Payroll compliance can be particularly challenging due to inconsistent payroll tax laws and reporting requirements in different countries. Currency conversion and fluctuating exchange rates adds an additional layer of complexity. Your organization may benefit from working with experienced professionals who can help you develop tailored policies that align with your mobility program, organization, and mobile workforce.

Equity compensation reporting

Global equity compensation involves accurately reporting and handling equity-based compensation for employees across different countries and jurisdictions. As your organization expands globally, you may grant equity awards to your employees. Consider factors such as determining the tax implications of equity awards in different jurisdictions and understanding the social security withholding obligations triggered by these awards.

Policy development

A well-designed global tax policy for mobile employees outlines guidelines and procedures for assignment duration, compensation and benefits, tax equalization, relocation support, and repatriation. Establishing a clear and robust global policy can help your organization effectively analyze the complexities of international assignments, support mobile employees, and mitigate compliance risks.

How we can help

Don’t let the complexities of mobility tax hinder your global mobility initiatives. Reach out to our team of professionals to discuss your goals, challenges, and find the right approach for your mobility tax program. With our guidance and support, you can maintain compliance, reduce risks, and streamline your global mobility operations.