A Checklist of Mobility Tax Considerations for your Work Anywhere Policy

    

Work from Home Female with Coffee

In case you missed it! We prepared a checklist that will walk you and your company through key mobility tax questions and considerations you should give thought to when implementing a work anywhere policy.

Step 1: Determine the stakeholders

When you first begin to work on this checklist, consider who should be involved in the process. Similar to any mobility policy, a remote worker or work anywhere policy will require the expertise and knowledge of many departments within your organization. Who in the organization do you talk to about your remote workforce? What departments are speaking to you about them? Answering questions such as these will help develop a core group of individuals within your organization who can ultimately help answer the critical questions outlined in the checklist.

Each corporate structure and culture is unique, but the list of departments could include:

  • Corporate Tax
  • Finance
  • Global Mobility
  • Human Resources
  • Legal
  • Payroll

This is by no means an exhaustive list of departments you should consider including. You will need to determine who within your organization oversees different aspects of your remote workforce and then bring them into the discussion.

Step 2: Complete the Work Anywhere Checklist

Once you have determined those best suited to help you answer the questions, find some time to formulate a response. The questions will take time to answer and are meant to guide a discussion with your team about the best way to move a policy forward. There are no right or wrong answers; only considerations you should keep in mind when creating and implementing a work anywhere policy. 

Download the Work Anywhere Checklist.

We are offering a free consultation to walk you through this checklist. Send an email to freeconsultation@gtn.com to schedule a time for your complimentary session.

Below is a sample of the questions found in the checklist.

Will your remote worker program be temporary (i.e., while COVID-19 restrictions are in effect), or will this policy allow for indefinite remote worker arrangements? The payroll structure for remote workers can vary significantly based on a number of factors, including whether or not the change in work location for the employee is temporary in nature or permanent. Accordingly, it is important to define what the company will allow for remote work.

Will your remote worker program allow employees to work remotely from other countries or will it be limited to remote work within their current country of employment? Allowing employees to work remotely in another country can result in increased complexity and risks for the company and employee.

Under which scenario will you allow employees to work remotely in a country that is different than their country of employment? Will it only be allowed if there are no employer reporting obligations or if the length of stay is under the employer’s threshold for reporting? Allowed if there are employer reporting obligations, but no tax withholding obligations? Will it be allowed even if the presence of the remote employee may create a permanent establishment for the company in that country?

In determining how long you will allow remote workers to work from another country, you need to be aware that the “183-day rule” is often a myth, as payroll tax obligations can sometimes occur even if there is only one workday in the country. Also, in some cases, having remote workers in another country could result in the company being deemed to have a permanent establishment in that country which could result in additional corporate administration and tax costs.

If your company will pay for the travel costs associated with an employee traveling to their physical office of employment, will your company analyze such payments to determine if any benefits are taxable? And if so, who will pay the tax costs on the taxable travel benefits—the company or the employee? The tax law in this area can be complicated. In the US for example, if an employee visits a single job location for more than 35 workdays in a calendar year and that travel pattern is expected to last for more than one year, then reimbursement of the travel costs is deemed to be taxable. Additional complexities may apply if the employee is deemed to be an itinerant.

Does your company have equity awards? If so, do you already have a process in place for tracking the trailing equity obligations? From a tax perspective, equity awards and remote employees both have their own complexity, and combined, they create an exponential level of complexity. Accordingly, your company should be prepared to increase the focus on compliance obligations if you have equity awards and remote workers.

The full checklist can be downloaded here.

Step 3: Consult with your external vendors

Once you have answered the majority of the questions, it’s time to begin developing your company’s work anywhere policy. Your external mobility vendors such as your mobility tax provider, relocation management company, and immigration firm are well versed in remote worker scenarios. And while developing full policies around this “new normal” may be unique to most, they are a good resource to help guide you through some of the considerations. These firms work with many clients of all sizes and across all industries so chances are they have worked through some of these questions and have developed best practices. Lean on them to help you develop a policy that will work for your program, your company, and your remote employees.

Just like anything else in business, it comes down to open and frequent communication. Communicate often with your mobile employees. Ensure you are aware where they are working from, whether it be from their home office, on a beach, or someplace else. And let them know what steps your organization is taking to help reduce their risk if they are working outside of their normal jurisdiction. Also, communicate often with the other stakeholders in your company. Have they learned anything new that can help guide or shape your policy? Consistent communication along with your responses to the checklist questions will help you understand the issues that should be considered in preparing a work anywhere policy, identify potential areas of tax compliance gaps that may need to be addressed, and determine the next steps for your company’s work anywhere plans.

This is a complex area which may require significant analysis. If you would like further assistance in working through the Work Anywhere Checklist, please reach out to us for a free consultation at freeconsultation@gtn.com.

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Author Brett Sipes

 
Brett is Managing Director for GTN’s Pacific region and has over 20 years of experience in providing mobility tax services. He joined GTN in 2006 and is responsible for managing all aspects of the Pacific region along with providing tax compliance and consulting to Pacific region clients. His straightforward and detail-oriented approach to answering complicated tax questions provides mobility program managers with cost-savings and simplified approaches to managing their mobility programs. bsipes@gtn.com | +1.619.758.4083
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