If your organisation is expanding into new territories, one of the main areas of concern is likely to be tax. Tax compliance is one of the biggest challenges for today’s global organisations. In the modern world, each work arrangement is different - and each location will come with its own set of tax laws to understand and challenges to overcome.

If your organisation is expanding into new territories, one of the main areas of concern is likely to be tax.

Tax compliance is one of the biggest challenges for today’s global organisations. In the modern world, each work arrangement is different - and each location will come with its own set of tax laws to understand and challenges to overcome.

From payroll and tax filings to social security registration, tax issues vary hugely in every country - and non-compliance can lead to problems for your business. So, what’s the solution?

If you’re struggling to manage tax legislations in different locations, read on to find out how a global mobility partner can help take the pressure off…

5 ways a global mobility partner can help with international tax legislations

1. They are experts in national and regional tax laws

Whenever you dispatch an employee to a new location, it’s essential that you abide by national tax laws. Each country will have its own statutory requirements that are often detailed in the local language, and you will also need to keep up with changing rules and regulations, too.

If that wasn't enough, different regions and municipalities within each country will also have their own laws and tax deadlines to comply with. For example, in Mexico, new hires need to be registered with the government within five days, whereas in Spain, registration must occur before the employment begins.

When implementing a global mobility programme, you not only need to understand each of these different regulatory requirements, but you must also consider the implications of each regulation for your employees too.

Non-compliance with such laws and deadlines can result in penalties and even legal action - so enlisting the help and expertise of a global mobility partner with specialist knowledge in the national and regional and tax laws of each new market is paramount to the success of your expansion.

2. They can provide permanent establishment risk advice

With globally mobile employees, it’s important to be aware of the risk of permanent establishment. Essentially, when an employee moves to another country, you increase the possibility of creating a permanent establishment (PE), which can have several tax implications for your organisation.

Whether an employee is on a short-term assignment, a long-term contract, or makes a continuous return to a certain location, they can create a significant PE risk which could result in the requirement to register the company as a taxpayer, file local country returns, and pay corporate and income taxes.

Failure to pay such taxes could lead to interest, penalties, and other sanctions, such as an increased reputational risk. As such, it’s essential to remain as vigilant as possible and enlist the help of an expert global mobility partner to mitigate these risks.

3. They stay up to date with the changing tax landscape

In an ideal world, compliance would be a one-time concern. However, unfortunately, one of the key aspects of compliance is that it is always evolving - in fact, some tax regulation changes are made every year!

It’s vital to keep up with these rules in all the countries your business operates in. What’s more, regulators will expect you to implement these new laws immediately, which means time is of the essence.

Essentially, if your organisation is going to remain tax compliant in each location, you need to be as proactive as possible so you can stay ahead of the game. With so much else to think about at any one time, keeping track of such changes can be an immense challenge.

This is where it pays to work with global mobility companies, who can help ensure that you stay on top of any changes to existing tax laws and regulations and make sure that your organisation continues to comply.

4. They can help create tax-effective compensation packages

Another important aspect of implementing a successful global mobility programme is ensuring that your organisation provides tax-effective compensation packages for your employees.

For example, if you are sending employees to a location with a high personal tax rate, such as China, you will need to consider how you will manage the tax impact on those employees by creating a benefits package that offsets the personal tax rate.

This is more complicated than it sounds: there are many considerations involved in creating tax-effective compensation packages, from the possibility of offering tax-equalisation policies to providing other tax-free allowances and ensuring that pay levels remain competitive for the location.

If you are struggling to put together a suitable package, a global mobility partner will be able to advise on all aspects of tax-effective compensation packages and help to create a package that works for everyone involved.

5. They will help you to strategically plan

Thorough, strategic planning is imperative for a successful global mobility programme if you are going to ensure the correct tax evaluation of each employee, follow the statutory requirements and filing obligations of each country, and mitigate risk.

With so much to consider, it’s important to effectively plan for such matters. When you enlist the help of a global mobility partner, you can rest assured that they will be familiar with the different tax rules and regulations in each country and will work closely with you to plan effectively, provide the correct tax guidance, and create suitable strategy to ensure everything runs as smoothly as possible.

How activpayroll can help with tax legislations in different markets

Any organisation expanding internationally faces employment tax compliance related challenges as well as significant opportunities for expansion and growth.

At activpayroll, our global mobility team has a wealth of experience in helping our clients expand into new markets whilst ensuring they remain tax compliant in each location.

Drawing on our industry-leading experience and knowledge, we will help you to identify, mitigate, and resolve payroll and tax problems which could otherwise have severe implications in terms of additional taxation demands, penalties, interest charges, and loss of customer confidence.

If you’re interested to find out more about our global mobility services, contact our team today to find out how our expert team can help you to maximise the efficiency of your global operations.

By scaling, streamlining, or ensuring your people are taken care of, we bring absolute clarity to your global business.

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