Redefining locations of work and introducing bespoke remote or flexible working arrangements have impacted where employees work, both within the UK and overseas. It has accelerated and transformed how organisations view talent management. With many businesses now able to extend their reach of their workforce, ‘working from anywhere’ is considered to be a current and exciting trend for many employers and employees. Understanding how to manage global talent, however, is key to the success of this working model.
Businesses need to ensure that they implement proper controls and governance, especially as they can no longer rely on temporary concessions introduced at the start of the COVID-19 pandemic from global tax authorities. The rules surrounding international business travel, including cross border and remote working arrangements, need to be understood to ensure compliance with international tax and social security rules. Poor governance can expose employers and their workforce to unexpected host country tax withholdings, social security costs and additional administration, as well as corporate tax consequences, all of which can disrupt the flexible working experience.
By sharing our knowledge and access to current market insights, our team of Employer Solutions experts can support your business with developing and enhancing your remote working framework. Please get in touch with us to arrange a discussion if this is relevant to you.
What can you expect in 2023?
Remote working will continue
- Employers will need to continue accommodating remote working requests while managing a multitude of tax and people related risk factors in host countries.
- Organisations should develop effective remote working policy documents, including clear guidelines and expectations for worker arrangements, as well as safeguarding all parties from commercial risks and authority intervention.
A resurgence in ‘traditional’ assignments / posting to an overseas office
- Global mobility compliance can be driven by both business-led factors and personal factors. These are two trends that need to be managed separately: whereas business-led postings are more likely to benefit the corporate group as a whole and therefore be the commercially obvious choice, the importance of attracting and retaining key talent (in the form of accommodating remote working arrangements) should not be underestimated.
- Organisations should ensure that they have governance frameworks in place for both individuals and businesses. These policies need to be clear about the responsibilities taken on by the individual and employer, and can vary depending on both the location and the reasons for choosing that location.
Increased focus on compliance with social security rules
- The EU-UK Trade and Cooperation Agreement (TCA) was signed on 30 December 2020, just over two years ago. The TCA reduced the number of years a posted worker and their employer could remain paying home country social security from three years to two years. This means post-Brexit postings within the EU / EEA now need to be re-evaluated to consider either repatriation or enrolment in the host country social security.
- Organisations should be aware that there are complex interactions between home and host social security rules. It will be necessary to ensure posted or multi-state workers pay social security to the appropriate authority, and mitigate double social security contributions where possible.
More business travel
- We have seen more business travel in 2022 and this trend is set to continue.
- Since the COVID-19 pandemic, there has been an increased duty of care on employers to track the global whereabouts of their employees. With tax, social security and immigration authorities becoming more joined up, we have seen authorities become more aware of and better able to detect business travel. This requires employers to be more pro-active in their reporting and disclosure practices.
- Organisations should ensure they track business travellers and identify any risks based on the host countries involved and seniority of business travellers.
Increased uncertainty on the payroll treatment of international off-payroll workers
- In the UK, ‘IR35’legislation introduced rules for medium and large sized companies to determine the employment status of their off-payroll workers and those operating through their own personal service company. Separate rules govern self-employed workers and those operating through an intermediary.
- International tax authorities are now also active in this area meaning employers should ensure they have a robust framework in place to correctly assess and document the employment status of their workforce on a global level.
At Evelyn Partners, we would be delighted to discuss your business goals for 2023 and how our team can support you with managing and optimising your cross-border policies to ensure global tax compliance and reporting obligations are met.
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By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2023/24.