global Tax COVID-19: 3 Important Questions for Global Mobility Professionals June 02, 2020 The answers to 3 questions are building blocks for global mobility professionals to understand their employer tax and social security and withholding obligations..read on. Like many Global Mobility professionals, you have addressed the most immediate need arising from the Coronavirus pandemic: ensuring the safety and well-being of your employees and their families. You continue to be in regular communication with your employees, you continue to flex policies to address your employees’ needs as part of your duty of care and you continue to take precautionary measures to ensure your employees’ safety and business continuity. Your focus now turns to what next? Ad hoc arrangements—added cost For many organizations, the global lockdown has resulted in strained budgets and unexpected costs. One new significant cost risk exposure for organizations is the employer tax and social security obligations arising from the ad hoc arrangements employers have put in place. Failure to meet these employer obligations can result in significant avoidable penalties and interest costs. For example, while work-from-home policies are being advocated and implemented widely during this time, the fact is this can cause you as an employer to have an unanticipated tax and social security withholding and reporting obligation. It is this increased cost exposure, uncertainty and unease that is now giving some Global Mobility professionals sleepless nights. 3 important questions to consider To start to manage this risk and to cut through this confusion there are three pieces of information you need to know: Where are your employees, i.e., which country and/or State?How long have they been there, i.e., if this is a new arrangement, when did it start?What are they doing, i.e., are they working from home or in a different office, are they not working?The answers to these questions are building blocks to give you clarity on your employer tax and social security withholding and reporting obligations and what needs to be done to manage them. These answers will act as a guide in determining where you need to focus your energies and what action plans you need to put in place. Step 1 Step 2 Step 3 Discovery Analysis Implementation Where are your employees? How long have they been there? What are they doing? Identify “high risk” employees Identify relevant countries Identify local employer obligations Collate compensation information Determine tax treatment Prepare reporting KLR’s International Tax Services team has extensive experience in managing and advising on employer’s international tax and social security withholding and reporting obligations. We can guide you through the discovery, analysis and implementation phases to provide you with the peace of mind and confidence that your employer obligations are being appropriately managed.
