How to avoid risks in your business traveler program?
Business travel is slowly returning because, even though remote work and virtual jobs have gained ground, some companies need to place employees on projects in other states and around the world.
The dynamics remain the same, with some adjustments to HR and mobility structures to efficiently manage costs and risks.
The tax risks to which they are exposed can be many; to avoid them, it is essential:
Understand the tax rules.
Like other states, each country has its own tax reporting and withholding rules. The requirements can be variable and will depend on several factors.
– The structure of the company
– The activities performed by the employee
– Their relationship with the company (whether they are a subcontractor or an employee).
– The individual’s tax, state, and local residency.
Your organization should consider the technical requirements of the jurisdictions and have defined processes to monitor and evaluate employee reporting and withholding requirements properly.
Tax authorities can audit companies and expect companies to comply with their rules.
Consider these additional scenarios:
– It doesn’t matter if your worker is remote, hybrid, or permanent. You can always become a business traveler, which involves additional corporate reporting.
– Even if a worker is remote or temporary, they can create obligations through accrued days, so having the exact location and full days in each area is necessary.
Listed below are some tax-related concepts that we should consider:
– Compensation: Compensation could have withholdings depending on the work locations, whether you are a resident or non-resident.
– Corporate tax: Your tax position could impact the taxation of your company’s business travelers.
– Data privacy and GDPR: Handling data online must be done carefully, even more so if local regulations expose the company to different security requirements or restrictions.
– Emergency risks: Emergencies can happen at any time, either by chance or by the power of nature. Although they are not directly linked to taxes, they can generate tax issues. Consider them!
– Employment law: You may be able to apply some local benefits for your business travelers where they exceed some expectations.
– Immigration: The immigration status of your relocating employee may affect your tax situation, and it is essential to look into this before travel.
– Payroll: Mobile employees traveling for business may generate tax returns and withholdings for the employer or themselves.
Develop a tax policy for business travelers.
Consider the following points when making a tax policy:
– Define which employees will be covered by the policy.
– What tax services will the company provide to the employee?
– What will be the procedure if the employee doubts the tax increase?
If you already have a travel policy designed, you can include the tax policy and include human resources, mobility, finance, and payroll or design it independently.
Keeping business travelers informed
When the employee knows the tax risks and obligations, it will significantly increase the commitment to compliance.
Before an employee travels, he or she should be aware of the tax obligations previously known to the program manager or relocator. This will allow the employee to follow up on the workday and travel information.
Employees who know all the necessary information will avoid regulatory compliance lapses before they leave the office or commute. Preventing and creating greater awareness is the key to better employee tax planning.