GTN Mobility Tax Blog

Attracting and retaining skilled workers in today’s tight labor market takes more than a competitive salary. Many companies find they can meet their employment needs and their employees’ incentive preferences by offering a portion of their compensation as equity.

You likely know by now that employees who receive equity-based compensation, and who relocate—domestically or internationally—during the life of the award, create tax withholding and reporting obligations.

Still, when it comes to equity reporting and withholding, companies do not always address the risk with their mobile workforce. Often this comes down to a lack of manpower, information, or technology. 

So, how do you move from the stage of recognizing the problem to finding and implementing a solution?

When it comes to payroll reporting and withholding for equity compensation, companies don't always realize they may be non-compliant if they have a mobile workforce. These companies may be unaware of the rules in the various jurisdictions their employees have worked, and they may not have processes in place to allow for the tracking of employees. For these reasons, the payroll reporting and withholding, related to equity income, may be handled as if the individual had only worked in one location. However, this approach is often not appropriate for mobile employees working in multiple locations since reporting and withholding rules can vary for each jurisdiction.

The provision of long-term incentives, such as stock options and other equity compensation, to employees who work in multiple locations has always been challenging. Because not all jurisdictions treat equity income in the same manner for tax purposes, companies can face many uncertainties when trying to understand their reporting and withholding obligations. Mobile employees can face complex tax filings and even double taxation.