Tax and compliance issues your company should consider when forming a "Work from Anywhere" human resources policy
September 30, 2020
You may have seen a few articles, webinars, surveys, and other commentaries lately on the concept of ‘Work from Anywhere’. ‘Work from Anywhere’ arrangements give employees the flexibility to choose where they live and work. Employees may also decide how many days a week they spend in the office under this policy. While this human resources policy has been trending up over the past several years, the COVID-19 pandemic has further compelled companies to consider forming a ‘Work from Anywhere’ policy.
During shelter-in-place orders, employees may be telecommuting in places they do not typically live and work. While this type of policy may benefit both the company and employee, it also triggers new potential compliance issues. This is due to the unique tax laws and reporting requirements in each location. As a result, these employees can prompt a host of tax issues and payroll obligations.
If you work in Human Resources or Finance, you may have heard about this. For those that haven’t- many countries initially issued some relief for companies and individuals during the first stages of the COVID-19 pandemic. However, these exceptions were for a limited time and individuals are now surpassing original exceptions. When forming your ‘Work from Anywhere’ policy we have compiled the following things to consider.
- Cost. Implementing a ‘Work from Anywhere’ policy can give employees the flexibility to work when and where they are most productive. But there may be a cost increase in administrative, payroll obligations, and tax implications. Decide what states/countries your company can comply with vs. those which might to too great of an expense.
- Location, location, location. By understanding where the company operates in relation to where employees are living and working, you can determine and compare your possible corporate and payroll obligations.
- Relocation timing. It is best to monitor or track when your employee moved locations or is planning to move locations.
- Current state of affairs. For this consideration, you will need to review your company’s current stage and determine whether a work location has already triggered corporate tax and payroll responsibilities.
- Reporting. Ensure employee income is reported accurately and tax withholdings are based on where the employee is working, not just where they are a tax resident.
- Employee knowledge. Include employees in your ‘Work from Anywhere’ policy by educating them on filing requirements and residency rules for each location. Provide tax assistance, if necessary.
By utilizing these 6 considerations when you are forming your ‘Work from Anywhere’ HR policy, you can help your company avoid unexpected penalties and increased tax costs.
If you need assistance in forming your unique ‘Work from Anywhere’ policy, contact us at firstname.lastname@example.org to schedule a complimentary consultation. We can help with a full range of services and solutions to assist companies develop ‘Work from Anywhere’ policies.
By Erika Beddow
Erika Beddow, EA, is a Business Development Manager at Global Mobility Tax, LLP (GMT). Erika has over 20 years’ experience in public accounting with the last 12 years specializing in the Global Mobility industry. She has worked with various clients from Fortune 500 companies and Startups throughout her career. In her role, she enjoys helping others navigate complex situations while mitigating risks, identifying value create opportunities, and building new relationships.
Global Mobility Tax, LLP is a CPA firm providing strategy, consulting, and individual tax services to organizations and their employees relocating globally. By teaming with a network of international tax providers, Global Mobility Tax clients benefit from a global service approach to managing tax and compliance requirements around the world.