August 7, 2021
Why Global Mobility Tax Services Are An Essential Mobility Program Core Service
When discussing flexible global mobility programs and which services to include in them, global mobility tax issues can often be overlooked or offered as part of the flex service. Global companies are quickly realizing why they shouldn’t allow tax services in mobility programs to be an afterthought.
Ideally, for proper global mobility planning payroll and taxation should be a consideration in every stage of the assignment lifecycle. Leaving taxes in the hands of mobile employees could lead to profit loss due to tax illiteracy, compliance issues, increased actual costs, penalties, and overall damage to company reputation.
The Future of Mobility Program Planning Is Flexibility
Global mobility is extremely important with the globalization of markets. While technology has made virtual collaboration possible, some projects will always require a physical presence from the company within the client’s local market. This combined with placing the right talent in the right market is what can make employee relocation so important.
Pre-planning for assignments is becoming increasingly personal and flexible, representing a larger evolution of customer preferences for more choice, flexibility, speed, and convenience. While this increase in flexibility is making mobility easier for both the company and employees, some company planning aspects are still vital to ensuring talent can focus on a successful global assignment. Flexible policies such as lump sums, B2Me, and other flexible arrangements may not be the most cost advantageous policy for every relocation. Planning ahead can provide potential tax-saving information early in the decision phase of any assignment.
Due to the potential tax risks for both the company and employee, it only makes sense that tax is a core service offering for any flexible mobility program.
Below are a few reasons why tax should be a core service in any mobility program.
Local Tax Knowledge Is A Must
Most people are not natural tax experts. Even if they do understand their taxes in a typical year at home, global tax rules and implementation of those rules vary internationally.
By default, most people have no idea about the tax complexities in a foreign country. Once it is time to prepare taxes, these multi-layer taxation systems may cause employees to consult a tax specialist.
While abroad employees may not be able to judge who to turn to for tax advice. The best thing to do before relocating is to consult a tax specialist knowledgeable in global mobility tax.
Corporate-Level Non-Compliance And Unintentional Tax Risks
A simple tax filing mistake could lead to major non-compliance, fines, and penalties for both an employee and their company. Tax is challenging and leaves opportunities for error when it’s not matched with solid global tax experience.
For the employee, this could damage their professional reputation and even hurt morale. On the other hand, the employing company could harm their reputation and goodwill. In the end, they may lose valuable talent, resources, and opportunities.
All of this could be helped by providing employees with global mobility tax services from the start of a relocation.
Global Mobility Tax Services Save At The Corporate-Level
Reputation, morale, and goodwill aside, improper payroll reporting and tax filing could be costly to the employee and employer. The company could save tax dollars by making global tax a core service in most relocations.
Tax compliance errors can lead to fines and penalties which could take months or even years to resolve. Allocated to every relocated employee, costs can add up. The stress is enough for employees to want to steer clear of foreign assignments altogether. Add that to the cost of time an employee spends worrying about tax while on assignment (or after they return).
By evaluating tax as a core service to your next flexible mobility plan, you save your company time and money.
Partner With Global Tax Experts
Global assignments and international tax can be complex topics. There are many different pieces and issues to deal with when it comes to cross-border taxation. A sample of factors to consider has been mentioned here.
Erika Beddow, EA
Erika is the Business Development Manager at GLOMOTAX and joined the team in 2016. She has more than 20 years of experience in public accounting with more than 10 years specializing in global mobility. Erika shares a unique experience with many of our clients as she has lived in many different places across the US and abroad. She enjoys helping people navigate complex tax situations while mitigating risks, identifying opportunities, and building strong partnerships.
Erika is a member of the Worldwide ERC and the Greater Washington Employee Relocation Council.
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.