Following RSM’s webinar on the Future of Global Mobility our presenters and panelists discussed a range of topics raised by the audience.
What are RSM’s top recommendations for inclusion in 2021 international assignment policies and procedures?
As Jane Wood of RSM Australia explains, “it is challenging to include all possibilities within a global company’s international assignment policies and procedures, particularly when so much can occur unexpectedly, for instance an employee is stuck in another country and is unable to return home”.
However, as a guide Jane suggests:
“Policies should address more than just tax consequences, and should also consider:
- The employer’s obligations regarding the health and safety of employees plus making sure that emergency procedures are in place and/or families are protected, and
- Remuneration structuring and planning is likely to need to be reconsidered because of the impacts of the pandemic, further complicating the tax position”.
Frank Casciaro of RSM Canada recommends:
- “As more virtual work assignments take place companies must ensure that there is clarity regarding both job descriptions for employees and how the related costs of the assignment will be split between the employee and employer,
- Understand the home and host country tax obligations for employers and employees, and determine if tax equalization is to be offered (so that the employee does not have any additional tax costs), and
- Review medical benefit polices and pension plans for virtual assignments – in many cases employers are looking for the same plans for local and foreign employees. However, in some cases these may not be allowed in a specific country where the employee is working”.
Is Tax Equalization still going to be applicable in the new environment?
Frank Casciaro of RSM Canada advises that, based on his experience, “this is likely to continue because even in the case of virtual assignments, if tax costs are higher in the remote employee’s home country and the policy is to ensure such employees have the same benefits as local employees tax equalisation will still be required to ensure that the “true costs” of the assignment are recognised by the business”.
How do global companies track all the data that is required for compliance purposes (i.e., travel itineraries, salary information or other costs, etc.)?
Jo Webber of RSM UK discusses her experience with clients.
“Our observations to date are that organisations, even though there is not currently much international travelling, are looking at and are seeking our advice on their processes and systems for tracking international travel. This is particularly the case as global business travel and remote working are likely to become an integrated part of future international assignments. The current pause in international travel due to the pandemic has given business more opportunity and time to review matters. This is reinforced by the experience of how essential it is from a health and safety perspective to track where people are”.
Jo continues, “In terms of how you track – we see two possibilities for capturing data, being Post-travel and Pre-travel.
- In case of Post travel, we see a range of travel provider documents in a specific format, time sheets and calendars completed by the employee or via online external provider calendars, after which we run an assessment on a regular basis.
- In case of Pre travel – which we see a bit more of nowadays – employers run all key assessments before travel and highlight possible risks beforehand (e.g. immigration issues, the EU Posted Workers Directive etc.,) To track this data, advisors use more specialized business traveler technology solutions (e.g., in our case RSM Pinpoint).
Overall, we see a blend of tracking data, focusing on systems and processes that are already in place and adapting them to capture global remote workers’ data as well.”
Many countries have implemented COVID-19 related tax measures to provide relief to their residents. Are any of these measures geared specifically towards foreign employees “stuck” in a foreign country due to travel restrictions and related quarantines?
Kenny Ransquin of RSM Belgium advises, “In the EU these (relief) measures differ per country and many countries implemented their own measures for matters ranging from company tax, to withholding tax arrangements and social security.
Generally, these vary from country to country, and many measures were introduced in 2020 as a response to the pandemic, so generally these measures have been wound back, so it is critical that employers check the details”.
How have you seen organisations deal with global remote/global hybrid working, both in terms of retrospective issues and managing this on a go forward basis?
Brian James from RSM Netherlands explains, “What stands out is that we have seen an increased desire from employees to want to work “at home” because they are more comfortable to work from their home country and be with their families, rather than undertaking remote work in the host country where the employer is based.
The expectations are that we will see more and more of these types of arrangements. However, this also brings challenges for the employer e.g., in terms of registration in and new tax obligations.
Over the last 18 months, organisations have adjusted to this trend, and are now looking to work with employees in a more structured manner to decide how, when and in what circumstances they may require employees to return to the host country”.
Jo Webber continues,
“Similar to Brian it’s a hot topic currently, employees desire to work from/go back to their home country to be with their families/ or choose to work from a country where they have a holiday home or elsewhere that they would like to work from.
It is a challenge for employers to track all this data and to find out who has been working remotely and from where. In retrospective cases, once data is gathered the next stage is to decide whether to undertake risk assessments to check everything has been covered (e.g., tax, social security, permanent establishment, Posted Worker’s Directive, any special Covid rules etc.,).
These risk assessments can cover the entire population for the duration or, as we see more frequently, more segmented checks (e.g., choose individuals who are most likely to create tax risks, such as sales individuals or senior executives with international responsibilities).
On a Go forward basis – the next stage will be for organisations to decide on their overall strategy. This will cover the extent to which they will allow remote working, what the policies should be and how the information is to be communicated. This will provide the basis for approval and assessment of cases along with analysis of the related costs involved with the remote working. Finally tracking the data (this is generally done most effectively via global business travel technology) will be essential.