Global Mobility Tax Consulting

Ineo’s global tax consultancy enhances your company’s global mobility program by offering comprehensive services including expert-level policy reviews, compensation data review for proper corporate reporting, and tax gross-ups, equalization review/advice, and supporting calculations, all ensuring compliance with global tax laws. We provide additional resources such as the annual Mobility Tax Advisor Guide and Q&A Subscriptions for ongoing support.

Not complying with global tax laws for Social Security, Medicare payroll tax, and withholding can have several serious implications:

• Financial penalties: Not meeting compliance requirements can result in substantial fines, penalties, and interest charges. These can be levied by multiple jurisdictions, leading to significant financial burdens for companies.
• Legal consequences: Companies may face legal actions or lawsuits in jurisdictions where they didn’t ensure tax compliance, which can be costly and time-consuming.
• Reputational damage: Non-compliance can tarnish a company’s reputation, making it challenging to do business in affected regions or globally. It can also impact relationships with partners, stakeholders, and customers.
• Operational disruptions: Regulatory bodies may impose sanctions or restrictions on a company’s operations, affecting its ability to operate seamlessly across borders.
• Employee impact: Mobile employees might face personal tax liabilities, penalties, or legal issues if their employer doesn’t correctly handle their tax withholdings. This can lead to dissatisfaction, reduced morale, and potential loss of talent.
• Increased scrutiny: Once a company is flagged for non-compliance, it may be subjected to more frequent and rigorous audits in the future, leading to increased administrative burdens.
• Loss of business opportunities: Some clients or partners may choose not to do business with companies with a history of non-compliance, viewing them as high-risk.

Ineo ensures that mobility policies are in compliance with global tax laws by providing expert-level reviews of corporate mobility programs. Our mobility tax experts conduct a line-by-line or policy-by-policy review of each individual component from a global tax compliance perspective and offer guidance on necessary revisions. Additionally, we ensure that each and every expense category that mobile employees might incur is tax-coded correctly within the policy and review and revise gross-up policies, highlighting the differences these policies may have compared to payroll withholding laws.

Different types of international moves or assignments can have varied implications on payroll tax withholding regulations due to the diverse nature of work arrangements, durations, and jurisdictions involved.

• Short-term assignments: Typically lasting less than a year, these assignments might not change an employee’s tax residency. However, depending on the jurisdictions involved, there might be requirements to withhold taxes in both the home and host countries.
• Long-term assignments: These usually last for more than a year and can change an employee’s tax residency status. The employee might become liable for taxes in the host country while still having some tax obligations in their home country.
• Permanent transfers: When an employee moves to another country permanently, they typically become tax residents of the new host country and cease to be tax residents of their true home country. This shift affects where and how their income is taxed.
• Rotational or commuter assignments: Employees working in one country but returning to their home country frequently (e.g., every week or month) might face dual tax obligations. Both countries could claim tax on the same income, necessitating the use of tax treaties to avoid double taxation.
• Remote work or telecommuting: With the rise of remote work, employees working from a different country than their employer’s location can create complex tax situations. The employee might owe taxes in both their location of work and the company’s jurisdiction.
• Business travelers: Frequent business travelers who aren’t on formal assignments can inadvertently create tax liabilities if they exceed specific thresholds of days spent in a foreign country.

The Tax Cuts and Jobs Act (TCJA) introduced significant alterations to the U.S. tax code, affecting global mobility tax policies. Key changes include:

• The suspension of moving expense deductions
• Adjustments in individual tax rates
• A cap on the State and Local Tax (SALT) deduction
• The introduction of a transition tax on deferred foreign income and provisions to tax Global Intangible Low-Taxed Income (GILTI)
• A reduction in the corporate tax rate

These changes necessitate that global businesses or employees on global assignments reevaluate their mobility policies to ensure tax compliance and tax optimization.