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.
The Role of a Mobility Tax Services Firm.
A mobility tax services firm’s job is to apply domestic and international tax laws and treaties in a manner that allows the company and its mobile employees to meet their global tax reporting and payment obligations while proactively managing tax risks and costs. Mobility tax firms help individuals and their companies navigate the tax complexities that result from working outside of the Home location.
Mobility tax services firms assist their clients by helping them to structure their cross-border employment scenarios in a tax-efficient manner through tax planning and policy implementation. They also assist with tax and payroll compliance matters in the Home and Host locations. A mobility tax services firm provides guidance for employers on the development and implementation of policies and procedures that are appropriate for the company and its employees, and provides education and support that helps prevent unexpected tax assessments, penalties, and interest.
The services provided by a mobility tax services firm may include creative assignment planning and compensation structuring, mobility tax and assignment cost projections, global equity consulting, and business traveler and remote worker compliance. Firms also offer support for individuals such as Home and Host country tax counseling sessions, tax return preparation, and preparation of calculations to assist in applying the company’s tax reimbursement policy (e.g., a “tax equalization” calculation if the policy is to keep the employee in a tax neutral position while on an international assignment).
Mobility Tax Specialists Stay on Top of the Changing Tax Landscape.
Even companies employing large tax departments often find that they are unable to stay on top of the constantly changing tax laws and regulations affecting mobile employees in both their Home and Host locations. These companies turn to mobility tax services firms for additional guidance. That is why firms specializing in mobility taxes have overseas offices or affiliates in nearly all of the countries and territories with businesses that are actively involved in the global economy.
Assessing the mobility tax issues that can arise when a company decides to move employees overseas requires a firm with a perspective of the international tax landscape. The firm must also be able to provide holistic advice that takes into account the tax rules for the jurisdictions associated with a given mobility scenario.
A firm specializing in mobility tax can guide companies and their mobile employees through the process of becoming tax compliant in Host locations while ensuring mobile employees continue to fulfill their tax and reporting responsibilities in their Home countries. The mobility tax firm does this by staying up to date on the various compliance issues employers face when utilizing mobile employees and by maintaining established partnerships with tax firms operating in the Host location.
Mobility Tax Professionals Know What Questions to Ask.
The mobility tax firm’s international cooperating offices will prepare the mobile employee’s returns to be filed in the Host country, so it is important that they are involved in the planning process. They have worked with mobile employees in the past, so they are familiar with the nuances of the Host country’s tax code as it applies to mobile employees and know how to ask the right questions so that the mobile employee’s tax situation can be settled in the most efficient manner possible.
The international cooperating offices will also ensure that a company is not adopting a “one-size-fits-all” approach to its mobile employees in a Host country when a more nuanced approach is necessary. For example, two mobile employees may be doing the same job in a Host country, but they may be facing very different tax situations if they are citizens or residents of different Home countries. A mobility tax specialist will work closely with its overseas affiliates to provide the employer with tax guidance specific to each employee’s situation, both in the Host country and in their Home country.
Find a Provider to Help Proactively Manage Tax Risks and Costs.
When a company decides to relocate their employees overseas, navigating the tax implications can be a complex and daunting task. A mobility tax services firm can provide the necessary guidance and support to ensure companies and mobile employees meet their global tax reporting and payment obligations while proactively managing tax risks and costs. We invite your company to schedule a free consultation with our firm to discuss your mobility tax needs and learn how we can help you structure your cross-border employment scenarios in a tax-efficient manner. Schedule a free consultation today and take the first step towards minimizing unexpected tax liabilities and ensuring compliance for your mobile employees.