In this new regular slot as GPA’s resident global mobility tax expert, I’m excited to explore key areas of global mobility tax to help inform you of the vast array of payroll issues that can arise from globally mobile employees.
I’ll be highlighting and providing comments on global mobility tax developments across the world that may affect the operation of payroll.
In addition, case studies and war stories from myself and members will feature as they are often a great way for us all to learn!
It’s not easy…
Having worked in global mobility for nearly 23 years, I have come to love global mobility tax as a professional friend. However, I recognise the pain it can cause too, not least for payroll.
Global mobility tax can often be frustratingly inaccessible, nuanced and complex for tax advisers and payroll specialists alike. Getting to the right place on payroll can sometimes be like nailing jelly to the wall.
This is not surprising since global mobility tax for employees involves melding the rules across several different areas (including tax residence, income tax and social security) and across two or more different countries (with each country having its own very different rules).
On top of this, you then have the agreements between countries that can affect the position (as well as helping manage the interaction between tax systems). These agreements include the OECD double tax treaties, reciprocal social security agreements and EU social security directives from intra-EU moves.
Of course, this is all before you’ve even considered the specific operational payroll rules in the relevant countries or, dare I say, where and how the employee wants to be paid.
The times, they are a-changin’…
There is also a changing and constantly evolving landscape for payroll to deal with. Who would have thought two years ago that one of the biggest single issues we would be facing today in this space is a huge increase in globally remote workers?
For the first time ever, even organisations that have never considered themselves ‘international’ are having to work out how they can payroll someone working at home from France, India, Canada or another foreign country.
Beyond this, the last decade has seen a proliferation of ‘off-payroll workers’ including gig economy workers, platform workers, part-timers, agency workers and the self-employed generally.
When it comes to global mobility tax, this presents an extra layer of complexity for payroll. Working out whether someone should be on payroll or not is hard enough but then consider the fact that each country has its own different rules for determining employment status. When such people are posted from one country to another to work, which country’s rules apply?
Despite the pandemic, we are likely to see a continued increase in short term business visitors globally. This category poses ongoing challenges for payroll, not least in terms of trying to track where people are working and then having to quickly determine whether payroll obligations have been triggered across multiple countries.
Finally, the rules continue to change and evolve globally regarding ‘traditional assignments’ and there is always the perennial and complex areas of share incentive arrangements and pensions tax for globally mobile employees. Never a dull moment!
Keep it simple
I prefer to explain things in a simple, straightforward way, there is no point in getting bogged down in tax jargon if it only leads to confusion. But please reach out if there are any terms you need clarity on or anything you would like to look at in further depth.
Let’s share
I’d love to hear your feedback and learn what matters to you. If there is an area of global mobility tax that you’d particularly like me to write on, please drop me a line at lee@globalpayrollassociation.com.
In this new regular slot as GPA’s resident global mobility tax expert, I’m excited to explore key areas of global mobility tax to help inform you of the vast array of payroll issues that can arise from globally mobile employees.
I’ll be highlighting and providing comments on global mobility tax developments across the world that may affect the operation of payroll.
In addition, case studies and war stories from myself and members will feature as they are often a great way for us all to learn!
It’s not easy…
Having worked in global mobility for nearly 23 years, I have come to love global mobility tax as a professional friend. However, I recognise the pain it can cause too, not least for payroll.
Global mobility tax can often be frustratingly inaccessible, nuanced and complex for tax advisers and payroll specialists alike. Getting to the right place on payroll can sometimes be like nailing jelly to the wall.
This is not surprising since global mobility tax for employees involves melding the rules across several different areas (including tax residence, income tax and social security) and across two or more different countries (with each country having its own very different rules).
On top of this, you then have the agreements between countries that can affect the position (as well as helping manage the interaction between tax systems). These agreements include the OECD double tax treaties, reciprocal social security agreements and EU social security directives from intra-EU moves.
Of course, this is all before you’ve even considered the specific operational payroll rules in the relevant countries or, dare I say, where and how the employee wants to be paid.
The times, they are a-changin’…
There is also a changing and constantly evolving landscape for payroll to deal with. Who would have thought two years ago that one of the biggest single issues we would be facing today in this space is a huge increase in globally remote workers?
For the first time ever, even organisations that have never considered themselves ‘international’ are having to work out how they can payroll someone working at home from France, India, Canada or another foreign country.
Beyond this, the last decade has seen a proliferation of ‘off-payroll workers’ including gig economy workers, platform workers, part-timers, agency workers and the self-employed generally.
When it comes to global mobility tax, this presents an extra layer of complexity for payroll. Working out whether someone should be on payroll or not is hard enough but then consider the fact that each country has its own different rules for determining employment status. When such people are posted from one country to another to work, which country’s rules apply?
Despite the pandemic, we are likely to see a continued increase in short term business visitors globally. This category poses ongoing challenges for payroll, not least in terms of trying to track where people are working and then having to quickly determine whether payroll obligations have been triggered across multiple countries.
Finally, the rules continue to change and evolve globally regarding ‘traditional assignments’ and there is always the perennial and complex areas of share incentive arrangements and pensions tax for globally mobile employees. Never a dull moment!
Keep it simple
I prefer to explain things in a simple, straightforward way, there is no point in getting bogged down in tax jargon if it only leads to confusion. But please reach out if there are any terms you need clarity on or anything you would like to look at in further depth.
Let’s share
I’d love to hear your feedback and learn what matters to you. If there is an area of global mobility tax that you’d particularly like me to write on, please drop me a line at lee@globalpayrollassociation.com.