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International mobility planning

Peter Legge Peter Legge

A growing number of businesses throughout the world are enjoying an increase in cross border trading. With this we have seen an increase in the number of internationally mobile employees.

Of course this is not a new development in Northern Ireland, with many companies operating across the UK and Irish border (and further afield) for years and this trend is likely to continue as the global market increases.

Whilst the opportunities arising from having an internationally mobile workforce are immense, the tax and social security costs in the various jurisdictions can be prohibitive.

The good news is that by undertaking pre-emptive tax planning, the impact on local businesses may be minimised.

In our experience, the best way to manage an internationally mobile workforce is to plan early taking into consideration the following three steps to success.

Businesses should implement an international mobility policy. This will align international assignments with the company’s strategy and business goals. It is important to consider the financial implications at this stage, e.g. the employee’s remuneration package.

Tax implications should be considered. Every jurisdiction has its own regulations and tax rules, which should be understood and complied with before sending employees overseas.

For example, when an overseas employee comes to work in the UK, UK PAYE obligations arise from the day they arrive. In our experience, many employers are not aware of this and are not operating payroll correctly on overseas workers. 

A good planning opportunity is to apply to HMRC for a Short Term Business Visitor Agreement. This can prove invaluable as it can relax the payroll obligations for employees coming to the UK for up to 183 days (provided certain conditions are met). This should reduce the UK tax and administrative burden for employers.

The social security obligations should also be considered carefully. Generally, workers on a temporary assignment should only pay social security in their home country, however if the correct applications are not made, social security charges may arise in both countries.

Tax reliefs for overseas workers coming to work in the UK are also available. For example, travel costs may be exempt from tax. Businesses should make the most of these reliefs, as they offer savings and can help attract employees.

Communicate the policy and support overseas workers. It is in the business’ best interests to ensure that employees are fully engaged and adding optimum value to the project. Employees should not be worried about their tax or residency position, and instead remain focused on the task in hand.

We find that having the policies in place will help the finance and HR teams deal with assignments in an efficient manner.

Global mobility forms part of a strong business strategy, and should be encouraged.

By implementing a global mobility policy and considering the tax issues early, the process should be much more manageable. There are many tax reliefs and exemptions available, and with the right advice, the true benefits of a globally mobile workforce can be enjoyed.