GTN Mobility Tax Blog

In the current global business landscape, it has become increasingly common for companies to offer long-term incentives to their employees as a means of attracting, retaining, and rewarding them. However, while such incentives, including equity income, can be highly effective, they also come with inherent risks that require careful management and oversight.

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.

If your company has tax equalized assignees, you may have heard from employees who have received unexpected tax bills, have yet to settle their tax equalization payments, or are confused about how their tax liabilities were calculated. If any of these ring a bell, now is the time to re-examine the hypothetical tax positions for your mobile employees. Let’s explore some of the most frequent questions we receive and delve into our recommendations on how you can ensure a successful mobility program.

Globalization has transformed employee mobility, expanding it beyond the traditional short- or long-term assignments. Today, a mobile workforce encompasses a range of arrangements, including remote and hybrid work options, as well as short-term business travel. This shift has brought about greater flexibility in terms of how and where employees work, enabling organizations to tap into a wider pool of talent and operate more efficiently in a globalized world. And when employees have greater flexibility as to how and where they work, companies and employees alike must navigate complex reporting and filing requirements to avoid serious financial, legal, and reputational repercussions.

As companies adjust to the new reality of work and reassess their mobility programs, there is an opportunity for them to examine the costs associated with running their mobility programs and explore innovative solutions. We are witnessing a renewed interest in mobility as companies seek to adopt the best structure for their business and employees. While non-traditional forms such as remote and hybrid work are becoming more prevalent, there is also renewed interest in both short and long-term assignments. 

Tax equalization is a policy widely used by companies with mobile employees. At its core, tax equalization is a mechanism to ensure that an employee is neither better nor worse off financially, from a tax perspective, for having accepted an international assignment. However, there are many misconceptions about what exactly it means to be “tax equalized.” As one example, some companies will try to avoid the policy because they think it will automatically lead to high company costs and administration.