With people traveling extensively for business, an employee who enters a market to perform work may come to the attention of revenue authorities seeking additional revenues to fund their governments. As immigration or work programs tighten, he says, companies are increasing their business visitor programs. The emerging trend among employees and their partners to find more agile ways of working to incorporate both partners’ career choices has fueled interest in business travel in preference to relocation.
“Organizations need to recognize that both revenue authorities and immigration authorities are looking at ways to better capture and share information on these travelers,” Parcell says. Their efforts have become more sophisticated and coordinated. He also points out that in July 2017, Australian authorities commenced a project to match 20 million visa records to identify holders who hadn’t filed their tax returns. An increasing number of countries have the tracking technology, or will quickly develop it, and the means to address these matching and short- and long-term country traffic issues. Companies seeking to mitigate immigration risk in cases like these must employ strong compliance and employee education programs.
New software solutions
Some are addressing this multi-level risk proactively through the deployment of new software solutions, Parcell notes. One example of this approach is an alliance EY recently formed with Concur, the world’s leading provider of travel, expense and invoice management solutions. Companies using the system benefit from the combination of a personal dashboard and one-to-one assistance that can highlight potential issues as they arise.
This type of approach is critical because while immigration issues must be reviewed before embarking on a trip, tax issues are triggered over time, Pond says. Only when the company and individual are advised of this possibility can they consider ways to mitigate potential tax issues, such as consolidating multiple trips to avoid permanent establishment status, which would cause the employer, as well as the employee, to have tax considerations in a particular country.
Although these issues are complex, companies can take many actions to monitor their impacts and set themselves on a course to better manage their mobility programs. Companies seeking to make the most of their mobility policies should strongly consider the following:
- Seek approaches to mitigate the impact of tax and immigration on mobility with both issues in tandem, including the use of new software solutions
- Design tax-effective compensation packages and tax equalization policies that address cross-border payroll and benefits delivery issues
- Provide comprehensive compliance support to relocated employees
- Develop a strategic approach to mobility that allows flexibility depending on country and legislative requirements
Any business seeking to be at the forefront of talent-mobility alignment can’t afford to think of tax and immigration in isolation. Those that manage these issues in tandem, while continuing to monitor and adjust their global mobility footprint — putting the right people in the right place — are those positioning themselves for success.
This article was originally published in Tax Insights on 27 August 2018.