FEATURE
If your organisation is expanding into new territories , one of the main areas of concern is likely to be tax . Tax compliance is one of the biggest challenges for today ’ s global organisations . For shortterm business visitors , remote workers , assignees , and permanent transfers , each work arrangement is different – and each location will come with its own set of tax laws to understand .
It ’ s not just income tax , social security and payroll that require consideration – the categories of worker listed above can also mean corporate tax and indirect tax analyses are required for full employer tax compliance in a country .
They are experts in national and regional tax laws
Whenever you dispatch an employee cross-border , it ’ s essential that you abide by national tax laws . Each country will have its own statutory requirements that are often detailed in the local language , and you will also need to keep up with changing rules and regulations , too .
Additionally , different regions and municipalities within each country will also have their own laws and tax deadlines to comply with . For example , in Mexico , new hires need to be registered with the government within five days , whereas in Spain , registration must occur before the employment begins .
When implementing a global mobility programme , you not only need to understand each of these different regulatory requirements , but you must also consider the implications of each regulation for your employees too .
Non-compliance with such laws and deadlines can result in penalties and even legal action – so enlisting the help and expertise of a global mobility partner with specialist knowledge in the national and regional and tax laws of each new market is paramount to the success of your expansion .
Some can provide advice outside of income tax , social security and payroll
With globally mobile employees , it ’ s important to look beyond employment taxes . Essentially , when an employee moves to another country , you increase the possibility of creating a permanent establishment ( PE ), and fixed establishment ( FE – for indirect taxes , e . g . VAT ). This can impact payroll withholding obligations , but more fundamentally , where a PE / FE is created it will directly impact the corporate tax and VAT reporting for the group .
Whether an employee is on a short-term assignment , a long-term contract or makes a continuous return to a certain location , depending on facts and circumstances , they can create a significant PE risk . Typically , the more senior the employee , the higher the risk . That said , moving a collection of individuals or an entire department cross border will also increase www . intelligentfin . tech
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