Technology, growth in remote work, and global opportunities are empowering more and more people to take jobs across international and domestic borders. But as you award your cross-border employees with equity-based compensation, your tax compliance risk may be skyrocketing.
Luckily there are ways to navigate these mobile equity challenges while keeping your company and employees tax compliant.
Mobile Equity Compensation Challenges
Equity income is an important part of the compensation and talent management strategy for many companies. Providing equity income to employees can assist in attracting new talent as well as in motivating and retaining current employees.
Due to the nature of equity compensation, companies can directly reward employees for business growth over specified periods of time. Depending on the type of award, the employee may receive compensation when they earn the right to receive a benefit (at the time of “vest”) or when they decide to buy or sell stock at a specified price (at the time of “exercise”). By design, the right to receive, buy, or sell the equity may take place over several years, further helping to align employee goals with long-term strategies and providing the company with an important retention tool for key employees.
However, the same characteristics that make equity income such a valuable part of a compensation strategy could also lead to tax compliance challenges for both the employee and the employer. This is especially true when the equity income is provided to mobile employees who work in multiple domestic or international locations.
What key questions should you ask to understand how equity is impacting your mobility program? How do you identify the most pressing factors causing mobile equity challenges? How can you craft an effective mobile equity plan?
Check out the infographic below to find out: