Navigating the complex landscape of global mobility tax compliance is no small feat for HR and mobility program managers. From understanding intricate tax treaties to managing the tax implications of your cross-border employees, staying informed is crucial to effectively oversee a company’s mobile workforce. At GTN, we strive to provide clarity and in-depth insights into the most pressing issues faced by mobility professionals.
In this “greatest hits” recap, we highlight our top 10 most popular blog articles of all time, each meticulously crafted to clear up confusion, offer new perspectives, and provide actionable guidance to help you streamline your program and mitigate risks. Whether you’re grappling with the nuances of tax equalization and hypothetical tax withholding, seeking guidance on the “183-day rule,” or wanting to better understand the tax implications of digital nomad visas, these articles are designed to equip you with the knowledge and tools necessary for success.
Join us as we revisit these essential reads that have become invaluable resources for our audience of forward-thinking mobility professionals.
What is Tax Equalization and How Does it Impact Your Mobile Employees and Your Company?
February 1, 2023 | By Raj Azad
Tax equalization is a policy widely used by companies with mobile employees. At its core, tax equalization is a mechanism to ensure that an employee is neither better nor worse off financially, from a tax perspective, for having accepted an international assignment. However, there are many misconceptions about what exactly it means to be “tax equalized.” As one example, some companies will try to avoid the policy because they think it will automatically lead to high company costs and administration.
For companies considering the use of tax equalization, it is critical to know the pros and cons of the approach; what does it really mean to apply tax equalization and what are the impacts for both the employee and organization?
By gaining a thorough understanding of the concept and implementing an appropriate policy, tax equalization can be an important tool in promoting and supporting a successful mobile workforce.
Understanding The 183-Day Rule For Income Tax Treaties
January 12, 2023 | By Rich Kuzich
Whether you manage business travelers, short-term international employees, or remote workers, you have no doubt heard about the “183-day rule.” Both globally and domestically, many tax jurisdictions expect an employer (as well as the employee) to track and report non-resident business travel. However, simply applying a “183-day” threshold does not always work to ensure tax compliance.
Here we take a deeper dive into the impact of income tax treaties on the tax cost of business travel, short-term assignments, and remote work scenarios.
An FAQ Guide to Understanding Hypothetical Tax Withholding
March 24, 2023 | By Jennifer Stein
If your company has tax equalized assignees, you may have heard from employees who received unexpected tax bills, have yet to settle their tax equalization payments, or are confused about how their tax liabilities were calculated. If any of these rings a bell, now is the time to re-examine the hypothetical tax positions for your mobile employees.
Check out this article to explore some of the most frequent questions we receive and delve into our recommendations on how you can ensure a successful mobility program.
Understanding the Tax Considerations for Digital Nomad Visas
January 26, 2024 | By Richard Leach
In recent years, the global workforce has witnessed a significant shift towards remote work and the rise of digital nomads, defined as a person who works entirely over the internet while traveling and who has no fixed place of business. As more individuals seek the freedom to work from anywhere in the world, many countries have recognized this evolving trend and responded by offering a unique solution—the “digital nomad visa.” This visa, often with less stringent requirements than traditional work visas, allows individuals to live and work in worldwide destinations of their choosing.
While obtaining the digital nomad visa takes care of the immigration requirement to enter and work in a country for a specified period, it typically does not relieve the individual from income tax and/or social security exposure, or the employer from payroll considerations.
In this article, we’ll explore the world of digital nomad visas, offering a comprehensive guide for human resource and mobility program managers. We'll cover the countries that now embrace this concept, delve into the complexities of income and social security tax implications, and shed light on corporate tax considerations employers must navigate.
Pros and Cons of Different Assignment Structures for Mobility Programs
February 23, 2023 | By Mark Tirpak
As companies adjust to the new reality of work and reassess their mobility programs, there is an opportunity for them to examine the costs associated with running their mobility programs and explore innovative solutions. We are witnessing a renewed interest in mobility as companies seek to adopt the best structure for their business and employees. While non-traditional forms such as remote and hybrid work are becoming more prevalent, there is also renewed interest in both short and long-term assignments.
Based on these evolving trends, it may be easy for organizations to overlook the use of more traditional mobility arrangements to support their business growth and talent management goals. However, long-term assignments, short-term assignments, and permanent transfers each have attributes that warrant consideration when determining the most appropriate way to meet the objectives for your company and employees.
It's important to understand the advantages and disadvantages of traditional assignment types and permanent transfers. Check out this article to take a closer look at the benefits and drawbacks of these options.
Top 5 Reasons Why Your Auditor Should Not Be Your Mobility Tax Services Provider
October 22, 2022 | By Brett Sipes
If your auditor doubles as your company’s mobility tax services provider, you may have found benefits from this seemingly convenient arrangement.
It’s not unusual to see companies using the same firm to provide multiple kinds of accounting and tax services, especially for emerging and fast-growing companies. However, it is important to be aware of the challenges that may arise in this situation and understand why it may be beneficial to use different firms for your auditing and mobility tax needs.
By understanding your specific needs and the service limitations that can exist for audit firms, your organization will be in a better position to assess and select a vendor that will provide the experience needed for your mobility program and employees.
Understanding the Tax Risks of Business Travelers
June 20, 2024 | By Julie Chung
As businesses expand their reach across state and international borders, the tax implications of having employees travel for work becomes increasingly complex. Companies often require employees to travel for work assignments, projects, or meetings, which can inadvertently create tax reporting, withholding, and filing obligations that many organizations overlook. Surprisingly, even a short business trip lasting just a single day can potentially trigger tax compliance requirements in the visited jurisdiction.
And unfortunately, there is a lack of consistency among states and countries regarding the rules that determine when non-resident workers become subject to taxation, and at what point company reporting and withholding obligations begin. This ambiguity poses significant challenges for organizations, as achieving compliance involves administrative costs and unforeseen hurdles.
To help you understand and prepare for the tax implications of business travel, we’ve compiled the most frequently asked questions and answers we often receive regarding tax risks associated with business travelers.
A Roadmap to Effectively Manage a T+1 Settlement Cycle for Mobile Participants
April 4, 2024 | By Mandy Zeman
The Securities and Exchange Commission has introduced a new rule that significantly impacts the settlement process for popular equity plans offered to employees, such as stock-settled Restricted Stock Units subject to tax withholding, and stock option/stock appreciation right exercises involving same-day sales. As of May 28, 2024, the settlement cycle has been shortened from two business days after the transaction date (T+2) to one (T+1).
One critical aspect of the T+1 settlement cycle that companies must address is the tax implications. Not only do the equity transactions themselves need to be processed swiftly and precisely, but the associated tax reporting, withholding calculations, and deposits must also be expedited to comply with the new timeline.
Companies of all sizes face the challenge of modifying their settlement processes to accommodate T+1. While this may seem daunting for those who haven't yet explored solutions, it is a manageable undertaking with proper planning and execution. This article provides a roadmap for effectively managing tax aspects of the T+1 settlement cycle, with a focus on streamlining the process for mobile employees participating in equity plans.
Everything You Need to Know About International Tax for Your Cross-Border Employees
January 26, 2023 | By Carolyn Goldfeder
In today’s technological world, it is easier than ever for businesses to participate in the global economy using business travelers, international assignments, remote workers, or permanent transfers. However, international tax compliance for cross-border employees can present unexpected challenges for both the employee and the company.
Even a single day of work in a foreign location can trigger complex tax filings for the individual, as well as tax reporting and withholding obligations for the company in both the Home and Host countries. Failing to comply with these obligations can have serious consequences, such as unexpected tax bills, increased audit costs, financial penalties, and legal and reputational risks for the company and the employee.
Gain insights into navigating the complexities of international tax for your mobile workforce, mitigating risks, and ensuring seamless compliance across borders.
IRC Section 83(b) Considerations for Mobile Employees
January 9, 2024 | By Lynn Carbo
Equity plan program managers and participants have likely heard of an 83(b) election (“Election to include in Gross Income in Year of Transfer”), but often its application and advantages are misunderstood. Section 83 of the Internal Revenue Code (IRC) governs several tax functions when determining the tax consequences of transfers of restricted property such as equity or stock. These special rules determine whether an employee has income resulting from a transfer of property, when an employee will recognize taxable compensation, and how much taxable compensation will be recognized.
Given the complexity and potential risks, it is critical to have a full understanding of the IRC rules and to establish appropriate processes and procedures. To assist in this undertaking, discover answers to 83(b) common questions and gain insights on best practices.
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