Global employee mobility: Managing risk and compliance

Integral to achieving an effective global mobility strategy is a keen understanding of the compliance landscape for the territories and industry sectors in which our clients operate.

Now could be the time to examine your expatriate tax program to assess whether it achieves individual tax and social security compliance and payroll reporting requirements, minimizes tax authority reviews and challenges, and manages both the individual and corporate tax and compliance risks inherent in global deployment.

Corporate (PE) tax

The international relocation of ‘employees’ on short and long-term assignments (typically anywhere from 3 months to 5 years) may create so-called permanent establishment (PE) risk for the enterprise. Companies may fail to establish or enforce guidelines designed to limit the creation of a taxable presence for the home country ‘employer’. The actual presence of the individual in a foreign jurisdiction may create an unintended taxable presence.

Corporate tax departments need to understand the structure and nature of temporary international work assignments. How many employees will be working in a particular location? What activities will they be doing? What is the duration of time in-country as well as the long-term plan for operations there? All these factors are necessary to gauge the level of enterprise tax risk by jurisdiction. Working with HR departments and monitoring this risk for global mobility programs should be a fundamental part of the corporate tax department’s risk management activities.

Immigration

A global economy requires a global business strategy, which invariably involves the need to move your most important asset -- your people -- fluidly and expeditiously across borders.

But today there’s much more to a global mobility strategy than securing work visas and residency permits and assuring unimpeded business travel -- as critical as those functions are. Business planning also requires you to take a strategic approach to immigration, which means having your finger on the pulse of pending immigration changes across multiple countries and regions -- and often having your voice heard by policymakers.

As government tax and immigration departments increasingly share information about multinationals, it makes sense to work with a legal services provider with a marquee brand, government know-how, and a global reach who can provide effective, integrated immigration and tax advice -- saving you time and expense, and streamlining processes.

Social security

Growing your business often means moving employees between countries – and that means fulfilling local social security obligations. In an environment where regulations change continuously and scrutiny from the authorities is on the rise, it’s becoming harder to get it right.

Our worldwide network of social security experts maintains close links with government authorities to keep you up to date on social security developments and to help you to reduce your risks.

Tax compliance and payroll

How multinational companies operate today:

• Navigate the intricate and dynamic nature of national and regional tax regulations;
• Control risk against a vast, global backdrop;
• Coordinate assignees' taxes; and
• Find the right technology to help manage it all.

Achieving these goals can seem daunting, but it’s not impossible. PwC’s International Assignment Services (IAS) practice helps companies address:

• Home and host country tax filing requirements
• Permanent establishment risks created by international assignees
• Global compensation reporting and payroll withholding
• Individual tax compliance risk management
• Non-resident tax filing requirements
• Cost management
• Accounting for assignment costs
• Global equity tax planning and trailing liability management
• Tax-efficient employment structures
• Technology to support accurate and timely compensation for employees working abroad

Controversy

PwC’s global tax network has the technical knowledge and practical experience to help you address your most complex tax positions and tax authority controversies. We have extensive experience resolving issues related to:

• Short-term assignees,
• Frequent business travellers,
• Tax treaty matters,
• Transfer pricing for cross-border labour, and
• Information reporting (e.g., FBARs, FATCA, Subpart F), expatriation, foreign tax credits, treaty issues, and foreign-earned income and housing exclusions.