The provision of long-term incentives, such as stock options and other equity compensation, to employees who work in multiple locations has always been challenging. Because not all jurisdictions treat equity income in the same manner for tax purposes, companies can face many uncertainties when trying to understand their reporting and withholding obligations. Mobile employees can face complex tax filings and even double taxation.
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You likely know by now that employees who receive equity-based compensation, and who relocate—either domestically or internationally—during the life of the award, create tax withholding and reporting obligations. Still, when it comes to equity reporting and withholding, companies do not always act to address the risk with their mobile workforce. Often this comes down to a lack of staffing, information, or technology. So how do you move from the stage of recognizing the problem to finding and implementing a solution?
Attracting and retaining skilled workers in today’s tight labor market takes more than a competitive salary. Many companies find they can meet their employment needs and their employees’ incentive preferences by offering a portion of their compensation as equity.