Globally Mobile Workers: A Guide for Tax Directors and CFOs

As the modern workforce becomes increasingly global, tax directors and CFOs face a complex web of tax, labor, and immigration laws with significant implications for their organizations.

Discover how proactive planning and coordination regarding globally mobile workers — including business travelers and remote workers — can help your organization maintain compliance and reduce risk.

Who are business travelers and remote workers?

Business travelers are employees who travel to different locations for work purposes. They may attend meetings, conferences, or work on projects in various locations. Understanding the tax and legal implications for business travelers is crucial for maintaining compliance and avoiding potential issues. 

Remote workers are those working in locations other than the location required by or beneficial to the company, often outside the employee’s “tax home,” which is the city or general area where your main place of business or work is situated.

For tax purposes, is the worker a U.S. citizen or resident — or nonresident alien?

Nonresident aliens (NRAs) have different tax and payroll requirements than U.S. citizens and residents. When business travelers or remote workers are NRAs working in the United States, additional considerations for withholding, residency or visa status, and tax treaty benefits may come into play. Employers must be aware of these factors to monitor their workforce effectively.

Why should tax directors and CFOs care about globally mobile workers?

Inconsistent tax regulations across countries can create significant challenges. Rules determining when non-resident workers are taxed — and at what point reporting and withholding obligations begin — vary widely. Achieving compliance often involves additional administrative costs and unforeseen hurdles.

Key factors include: 

• Your organization may inadvertently create a permanent establishment in a foreign jurisdiction, triggering tax implications
• Worker costs must be allocated to correct entities for tax deduction and transfer pricing purposes
• Complex reporting and withholding requirements across borders can carry significant penalties for noncompliance
• HR and payroll may overlook tax and penalty exposure and opportunities to reduce costs
• Proactive coordination and communication across various departments, such as payroll, tax, finance, HR, and mobility teams may prevent unexpected results in multiple jurisdictions

International-specific considerations of business travelers and remote workers

When business travelers and remote workers cross international borders, you must consider whether the employee's remote work creates a taxable presence for your organization in the remote work location — potentially triggering double taxation. 

Additionally, compensation adjustments may be necessary to account for cost-of-living differences, and residual taxes may be owed for services performed in prior locations for deferred compensation, equity vesting, etc. 

By understanding the specific characteristics of business travelers and remote workers, and implementing proactive policies across departments, your company can improve financial outcomes and adherence to international regulations.

Regarding the intricacies of residence termination and establishment in new locations, employers must comply with statutory requirements such as workers' compensation, minimum wage, and statutory entitlements. Furthermore, employers must verify the individual's entitlement to work in the remote work jurisdiction.

Remote worker policy considerations

When considering implementing a remote work policy, first ask:

• Do you have or need a remote work policy?
• Must a remote work location be within commuting distance?
• May employees live or work in another country?
• Will your organization cover travel costs to visit your primary business location? If so, will the travel costs be grossed-up for taxes?
• Are there eligibility restrictions, or is remote work open to all?
• Will bonuses or incentives be tied to minimum time in office?

Implementing a remote work policy

If your organization permits remote work arrangements, implement a written policy that considers:

• Employer’s consent to remote work in jurisdiction
• Employee’s obligation to update employer on moves and work locations
• Restrictions on any jurisdictions where employer doesn’t have a permanent establishment or otherwise doesn’t wish to be subject to the laws of such jurisdiction
• Explicit understanding of what the employer will and won’t pay for in connection with remote work (including travel to company location)
• Differences in treatment when employee-initiated versus employer-initiated

How CLA can help with global mobility

Reach out to our team of international tax professionals to discuss tax compliance and strategic planning regarding globally mobile workers. Our guidance and support can help you maintain compliance, reduce risks, and streamline your global mobility operations.

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