GTN Mobility Tax Blog

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.

Picture this.

In order to attract and retain the best talent, your company has made the decision to continue to allow employees to work from home indefinitely.

To you, the HR Manager, “home” means employees must work from the address on their paycheck, but to the employee, “home” just means they can work remotely from anywhere they choose. And some have chosen to work in another state while others have chosen to work in another country.

Your mobility tax provider has informed you that when your remote workers work outside of their Home jurisdiction, they are potentially creating reporting and withholding tax risks and compliance requirements for both themselves and the company. You now realize you need to know exactly where everyone is working so you can begin to address any potential compliance risks.

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.

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.