GTN Mobility Tax Blog

Global mobility programs play a vital role in supporting business growth and talent strategies. As companies navigate an interconnected world, the complexities of managing cross-border assignments, transfers, and business travel have grown significantly. Heightened regulatory scrutiny, evolving compliance requirements, and financial pressures continue to push organizations to refine their approaches to managing mobile assignments.

In today's interconnected world, the complexities of managing a global workforce extend far beyond cultural differences and time zones. One of the most intricate challenges facing multinational companies is the nuanced task of international payroll administration.

Picture this: You're a global mobility manager, and you've just wrapped up preparations for your top performer, Susan, to take on a strategic assignment from the United States to Germany. The logistics are in place—her household goods are en route, her work permit is secured, and her cost-of-living allowance is calculated. You're feeling confident until Susan poses a question that catches you off guard: “Will I be paid in dollars or euros?”

Has this happened to you? Your company has a mobile workforce spread out over multiple jurisdictions, and you realize you need help with the mobility tax complexities that come with having employees working outside of their usual location. So, you reach out to a well-known, large accounting firm offering an impressive list of services, technology, and experts, and who may already be providing corporate tax services to your company. 

Let’s face it, many people find taxes to be intimidating, time consuming, and confusing. Why else would so many people procrastinate when it comes to filing their taxes? Then, add in the intricacies when taxpayers are dealing with multiple tax jurisdictions—due to an international transfer, international assignment, business travel, or even remote work—and the complexities skyrocket. When employees work outside of their Home location, delivering timely communications can go a long way in managing risks and providing an exceptional employee experience—helping you retain top talent and providing essential duty of care to your workforce. Below, we outline key items you should be discussing with your remote workers, business travelers, and/or international transferees or assignees.

As the year is drawing to a close, global mobility and payroll teams are focused on US W-2 reporting, specifically to make sure global compensation and expense reimbursements, such as tax reimbursements, housing, and tax preparation services, have been reported appropriately for their mobile employees on long-term assignments. While this focus is crucial, it often overshadows a critical aspect of payroll reporting compliance. In the rush to ensure the tax efficiency of international assignments, there's a tendency to overlook the nuances of reporting for permanent transfers.

When a mobile employee relocates across borders, whether internationally or domestically within the US, they soon discover that their tax situation has become far more complex as a result of the move. If that employee is moving from a low-tax location to a high-tax one, they could potentially face a major increase in tax liability. Additionally, they may also encounter tax issues related to the sale or rental of their home, moving expenses for state reporting purposes, state residency issues, and a number of other issues they may not be prepared to handle on their own.