April 15, 2020

COVID-19 – A Case for Action #3 – Timing is Everything

This is part of a special Global Mobility Tax client alert series – sharing stories and situations we are encountering in these extraordinary times.

The COVID-19 global pandemic calls for quick action based on government directives in the interest of public health and safety. In this environment, arriving at practical mobility solutions can be challenging. Here’s how Global Mobility Tax has supported mobility programs in recent weeks: 

Action #3: Treaty Exemption Achieved 

Recently departed tax equalized employee not returning to his current assignment in China. 

Chinese tax implication – The employee is now expected to be treaty exempt in China for 2020.

ACTION: Adjust the Chinese payroll to reverse prior months’ reporting

IMPACT: The employee can attend to his personal affairs

SAVINGS: Refund of the Chinese taxes paid YTD to the Company.Claiming refunds of Chinese taxes after the fact is a lengthy and uncertain process; the quick action of the reversal of payroll reporting saved this company $15,000 in tax equalization gross-ups and $10,000 in administrative, payroll, and filing fees. 

US tax implication – The employee is incurring a US tax liability while working in the US

ACTION: Timely shutoff of hypothetical tax withholding and restart US federal/state tax withholding

IMPACT: Minimized payroll disruption and helping employee to be paid in properly for federal taxes, as if he had never left

SAVINGS: Estimated tax penalties and payroll reporting penalties of up to 20% are avoided. 

How can we help you? 

We’re Here For You

For 15 years, Global Mobility Tax, has been assisting startups and early growth companies to navigate the tax implications of a global workforce. We provide strategy, consulting, and tax services to organizations and individuals that relocate internationally.

Contact us for any of your global mobility questions or concerns.

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