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 draw stakeholders' attention to unforeseen tax liabilties triggered by cross-border employment. After all, 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 walk you through several tax-related issues that your stakeholders be aware of.
How to determine the Employee's Primary Tax Residence?
Checklists:
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Understanding Tax Residence
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Determining the Primary Tax Residence
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The Compliance File
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Flowcharts
An employee's country of Tax Residence is a critical factor for both the employee and the employer. This designation dictates where the employee's worldwide income is subject to income taxation (regardless of where it is earned), and also plays a role to determine the employer's potential tax withholding obligations.
This section provides a roadmap to help you determine an employee's Primary Tax Residence and navigate the complexities that arise from multiple residences.
How to Avoid Double Taxation on Personal Income?
Checklists:
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Understanding Personal Income Taxation
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Double Personal Tax Avoidance
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The 183-day Rule
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The Legal vs Economic Employer
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The Permanent Establishment
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Double Tax Relief
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Navigating Practice Challenges
Cross-border employment introduces a critical challenge: managing personal income tax. A significant risk is double taxation, where both home and host countries may claim the right to tax earnings for work performed in the host country and impose compliance requirements on the employer.
This roadmap will guide you through the essential concepts of international personal income taxation, helping you navigate this complex landscape.
How to Avoid Double Taxation on Corporate Income?
Checklists:
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Understanding Corporate Income Taxation
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The Concept of Permanent Establishment
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The Dependent Agent PE
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Double Corporate Tax Avoidance
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BEPS Reporting
Cross-border employment can lead to unforeseen corporate tax liabilities, potentially resulting in a company's profits being taxed more than once. This happens when an employee establishes a 'taxable presence' (Permanent Establishment) in the host country.
This roadmap provides guidance for understanding Corporate Income Tax interests and the urgency to effectively mitigate the risks associated with cross-border labor mobility.
The 50% Threshold - Remote Working & PE Risk
In 2025, the OECD released new guidance surrounding the definition and interpretation of a "fixed place of business PE," particularly in light of the increasing prevalence of cross-border remote work.
A key factor in determining if remote work creates a permanent establishment (PE) is the amount of time an employee spends working remotely. Specifically, if an employee works from home (or another relevant place) for less than 50% of their total working time over any twelve-month period beginning or ending in a fiscal year, that location is generally not considered a permanent establishment.