Basics
Basics
General Principles of Income Taxation
Basics
As a Global Mobility professional, it is not your task to map out the tax consequences, but it is your responsibility to make the business aware of the risks that may be triggered by international assignments, including extended business visits.
The harsh reality is that an employee's presence abroad can have both corporate and personal income tax implications. The financial impact of (unforeseen) tax liabilities, additional costs and non-compliance damages on the company's profitability can be substantial. Add reputational and financial damage as a result of blacklisting to the equation, and the outcome is even more worrying. In other words, the stakes are high.
In this section of the Navigator, we will take you through several tax-related issues that you should be aware of.
How to determine the Tax Residence of the Employee?
Checklists:
-
Understanding Tax Residence
-
Determining the Tax Residence(s)
-
Avoiding Double Tax Residences
-
The Compliance File
-
Flowcharts
The primary consideration when assessing income tax implications is the determination of the employee's tax residence.
After all, an individual's tax residence dictates which national tax laws and tax treaties apply, potentially regarding their woldwide income regardless of where it is earned.
The roadmap in this section will show you how to determine the employee's tax residence(s) and eliminate the consequences of multiple residences.
How to Avoid Double Income Tax for the Employee?
Checklists:
-
Understanding Double Taxation for employees
-
The Concept of Employer
-
The Concept of Permanent Establishment
-
Avoiding Double Taxation
When managing cross-border employment, it's crucial to consider the potential for personal income tax obligations in the host country. This often introduces the risk of double taxation, as both the home and host countries may be entitled to levy personal income tax on wages related to work performed abroad.
This Roadmap will walk you through the key concepts of Personal Income Taxation in an international context.
How to Avoid Double Income Tax for the Employer?
Checklists:
-
Understanding Double Taxation for employers
-
The Concept of Employer
-
The Concept of Permanent Establishment
-
The Concept of Transfer Pricing
-
Avoiding Double Taxation
Employees on a cross-border assignment have become a serious liability not only in terms of personal income tax risks but also corporate tax risks.
After all, the country where business activities occur seeks to levy corporate income tax on profits earned within its borders by establishing a "taxable presence" that might subject the company to taxation as a non-resident entity.
This Roadmap will help you to support Corporate Tax stakeholders mitigating the risks of cross-border labor mobility.