Allinial Global continues its winning growth strategy with Global Tax Network

David Kolb: GTN’s objective is one of client service. With our membership in Allinial Global, we are joining a large and well-respected association of world-class firms that can help us develop and deliver solutions to meet our clients’ needs. Our membership allows us to maintain our commitment to providing Exceptional Experience. Everyone. Everyday. Everywhere.^TM It also adds value for our employees and clients through the relationships we will build with like-minded firms.

Additionally, the structure of Allinial Global allows us to enjoy the advantages of global resources while maintaining our independent status, which enables us to continue expanding our service offerings for clients and business affiliates.

DK: GTN provides services to clients wishing to build, manage, or scale their mobility programme. Both domestically and globally, we provide proactive service, value, transparent pricing, and actionable advice to support organisational goals and successful mobility programmes.

Managing a global mobility programme is difficult. Organisations must be confident and in control, but the complexity of global tax laws can be overwhelming. Our customer service model, experienced tax professionals, and technical structure ensure that every client enjoys a simplified process that guides them through tax challenges, explains issues in plain language, and provides a detailed plan of action.

DK: The pandemic had—and continues to have—a huge impact on the global mobility market. From a tax standpoint, there is a lot to consider for employees stuck or choosing to work in a location other than where they were hired. Following is a breakdown of just some of the considerations from corporate tax, employer, and employee perspectives. For this scenario, we assume the employee’s home location is the US.

• Corporate tax
  • Will the role the employee performs in the new location create any permanent establishment issues for the US company?
  • Is there already an entity in the new lcation? If not, will the scenario result in increased corporate tax risks or challenges for required reporting and/or withholding?
  • Will any costs be recharged? What do intercompany agreements say about provision of services/movement of employees between entities?

• Employer
  • Does payroll need to be operated in the new location?
  • The individual will likely remain on the US payroll and have federal tax deducted but may also need to have host location taxes deducted. How will the company address any double withholding issues? It may be possible to stop US federal withholding, but state withholding may still be an issue depending on the employee’s state tax residency status.
  • To avoid double social security deductions, we highly recommend applying for a certificate of coverage, if applicable.
  • If tax applies in the new location, will any tax compliance support (e.g., tax equalisation, tax compliance support) be provided, or will employees be “on their own” to sort out their global tax position?

• Employee
  • The individual will need to track days of presence in the new location and check the tax rules to see how tax residency is established in the new location. Is there a tax treaty between the US and the new location? If so, it may be possible to treat the individual as a nonresident so that the individual is taxed on host location workdays only.
  • Individuals who establish tax residency in the new location may be taxed on their worldwide income. In this case, review the tax treaty to determine what is taxable, who has taxing rights, and where any credits can be claimed.

If the employee also receives equity compensation, there are additional reporting and withholding considerations for both the company and the employee.

Complex tax laws may leave companies with questions about what, where, and when to report equity compensation. Additionally, it is a time-consuming process to ensure that equity is reported correctly. It can be difficult to track and manage where all your employees are located, which actions are creating taxable events, and when you need to report on the equity compensation. Many factors come into play, including:

• Award type – Different types of awards can cause different reporting requirements.
• Company issues – Plan rules, recharge arrangements, and private rulings must be considered.
• Country-specific rules – Although some countries do not require withholding, others require partial or full withholding.
• Employee factors – Citizenship, residency in each jurisdiction, and immigration status can impact reporting requirements.
• Event timing – Different tax jurisdictions may have different laws to determine when the reporting and/or withholding is due.
• Social taxes – For international scenarios, social tax reporting and withholding rules may not mirror the rules in effect for income tax purposes. Is there relief available to mitigate double taxation (e.g., a totalization agreement between the home and host locations)?

Remote working will continue to be an important trend, with several key issues to consider when allowing employees to work from anywhere.

DK: The key to success is to have a plan. Allowing employees to work from anywhere puts both the company and the employee at risk. Risks range from health and safety, duty of care, and employee benefits and insurance to more operational aspects such as immigration, tax, payroll withholding, and social security.

Many companies are creating policies to inform their workforce of what they can and cannot do, often reflecting the company’s culture and approach. This is communicated in tandem with implementation of an operational process to manage the risk factors mentioned above.

Vital to success in managing this complex problem, your policy should contain:

• A centralised (country/region) approval and tracking process thereby monitoring approvals and cases.
• The team you require internally, and a process for assessing the necessary external guidance and resources.
• Communications that clearly outline and encourage remote working on corporate terms to manage the company’s risk.
• Process management and escalation process to map out who does what and when.

DK: Nearly every growing company with a mobile workforce has issues related to mobility tax, whether those arise from business travellers, employees working remotely, or employees crossing domestic or international borders. Additionally, regulatory authorities have made technological developments which allow for improved tracking of financial accounts, executives working in multiple locations, and a desire for increased tax revenue.

As a result, any company with employees on the move should conduct a thorough review of tax obligations in the countries, states, and provinces where their employees are working. Failure to proactively address company and employee compliance requirements could lead to audits and increased financial, reputational, and legal risks.

GTN will work closely with Allinial Global member firms to offer our expertise in this area, providing all our clients with best practices, resources, and solutions.

Finally, when GTN’s clients have a need that falls outside our mobility tax expertise, we will look to Allinial Global member firms with the knowledge and experience our clients require.

DK: More and more companies with regional mobility teams are looking for a firm that can align with their regional contacts, providing a seamless experience and a holistic approach. Our Canadian, UK, and US offices will continue to collaborate with our clients to determine which office should take the lead in managing an account and which office(s) will act in a supporting role.

We are excited to be a member of Allinial Global and look forward to this amazing opportunity to align our strengths with other best-in-class firms to provide solutions and resources that fit our clients’ needs.