No one would deny that today’s workforce is becoming increasingly mobile. Geographic boundaries no longer define an employee’s work environment, instead many workers are ‘employees of the world’ – travelling between jurisdictions during the course of a year and, sometimes unknowingly, introducing a range of complex tax considerations for themselves and their company.
While technology has enabled the emergence of the mobile worker, tax legislation around the world has not maintained the same pace of transformation. Not surprisingly, this situation can create a serious disconnect that workers and their employers need to take into consideration.
Regulators are increasing their disclosure requirements and meeting this takes a serious commitment from all stakeholders to achieve heightened transparency and compliance.
For companies it means putting in place systems and processes to ensure they can accurately report on where their workers are at any point in time, how long they have been there, their state of residency, the work they are doing, and the list goes on. Without this information, effectively managing a company’s international tax obligations and ensuring its structure is fit for purpose, while allowing the flexibility to accommodate future growth, is near to impossible.
For employees it requires diligence and careful consideration of residency decisions and how they structure their personal assets. The tax implications that flow from situations such as where you maintain a residence, whether you also have a residence in another location, and how it is used during your absence when working abroad can create complicated tax situations. Not addressing these issues from the start can bring Australian workers and expats under the watchful eye of the Australian Taxation Office.
I recently attended the annual BDO Global Mobility Tax Conference in Paris and this topic was a point of discussion with my colleagues around the world. In fact, BDO member firms in Europe are developing technology to remedy the situation for their clients, developing a software program to help companies manage their employees’ whereabouts and create the transparency needed to meet their tax obligations in the most efficient way possible.
Opportunities abound for employees willing to travel, and for companies who have a workforce with such a flexible mindset to the modern work environment. The key to long term success is not forgetting about the tax implications and taking action early to ensure sustainability in both corporate and individual tax structures.
If you want to know more about how you or your company can achieve international tax effectiveness when working across borders, please contact me. By tapping into the BDO global network we can provide tailored advice regardless of the jurisdictions in question.