GTN Mobility Tax Blog

As organizations compete for talent, flexible work arrangements are no longer a perk, they are an expectation. However, while employees gain flexibility, employers may take on new and often unseen compliance risks.

To you, the HR manager, “home” means employees should work from the address reflected in company records and payroll systems. But to the employee, “home” may simply mean they can work remotely from anywhere they choose. Some employees may choose to work from another state, while others may spend their time working internationally.

When employees relocate across borders, whether internationally or within the US, they can face major tax complexities. A move from a low-tax location to a high-tax location, for example, can significantly increase their tax liability. Beyond this, they may face challenges related to the sale or rental of a home, moving expenses for state reporting purposes, residency issues, and a range of other tax considerations they may not be prepared to handle on their own.

Managing a mobile workforce, especially at a time when business travel is high, presents unique challenges for equity compensation programs. When employees work across multiple jurisdictions, the complexity of tax reporting and withholding requirements increases exponentially. Success depends on effective collaboration between your equity, HR, and payroll teams.

In today’s technological world, it is easier than ever for businesses to participate in the global economy through the use of business travelers, international assignments, remote workers, or one-way transfers. However, international tax compliance for cross-border employees can present unexpected challenges for both the employee and the company. Even a single day of work in a foreign location can trigger complex tax filings for the individual, as well as tax reporting and withholding obligations for the company in the Home and Host countries. Failing to comply with these obligations can have serious consequences, such as unexpected tax bills, increased audit costs, financial penalties, and legal and reputational risks for the company and the employee.

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 remote work requests continue to roll in and the future of work is one that embraces a mobile workforce, C-suite executives are pushing to offer remote work as a valuable incentive to retain and attract talent. While a drive to offer this employee incentive has already realized advantages for companies, it has also come with many challenges and compliance requirements that still need to be addressed.