hr seminar engineering across boundaries - brussels 22 march 2013 - tax aspects of global mobility -...
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Tax Aspects of
Global Mobility
HR Seminar Engineering Across Boundaries
22 March 2013
René Philips
Carolien Van Echelpoel
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
1
Global Mobility
Global Mobility
Assignees
Law & Regulations
Policies
Business Needs
Getting the right people to
the right place at the right
time to support the business
needs and strategy
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
2
Cross-Border Personnel Moves Are Complex
LEGAL
• Employee Contracts
• Intercompany agreements
• Labor laws
• Employment laws
• Corporate law
FINANCE
• Budgeting
• Bookkeeping
• Financial Reporting
• Accruals
• Reconciliation
• Charges
TAX
• Corporate tax
• Individual tax
• Indirect tax
• Corporate structures
BUSINESS UNIT
• Logistics
• Communication
• Quality control
• Entry Barriers
• Administrative support
• Facilities
• Security
HR
• Compensation
• Benefits
• Payroll
• Policies
• Immigration
Actions are required in the home and host location for each of the following
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
3
Trends
Increased focus on short term business travelers
Governments are becoming more aggressive in tax cases
More and more anti-abuse rules are being introduced
More transparency required by (tax) authorities
More focus on information exchange
Recent shame and blame campaigns in media
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
4
Assignment Policies & Practices - Trends
Broadening Definition of
“Family”
Seeking Competitive Advantage
Tax Equalization remains a key
benefit
Keeping Assignees Save
Maximizing the impact of
international assignments
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
5
Creating a Competitive Advantage through Forward Thinking
Forward thinking is all about assessing/managing/anticipating risk
• Constantly evolving laws and regulations
• Expectations of business
• Increasingly mobile work force
• Lack of adequate tracking/administration systems
• Increased scrutiny by tax, social security and immigration authorities
But if done well, it can turnout to be a competitive advantage in the market place
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
6
Tax Challenges for Cross-Border Personnel Moves
Unrecorded liabilities
Indirect Taxes
Permanent Establishment (PE) Exposure
Transfer Pricing
Data Privacy Immigration Compliance
Payroll Related Tax Withholding and Reporting
Financial Reporting and
Proxy Disclosure
Employment Law
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
7
It is all about anticipation and tracking
Organizations with a global workforce struggle to manage unrecorded liabilities
associated with:
● Failure to accrue
– Expatriate taxes
– Pension costs
– Social tax costs
● Failure to track business travelers and short-term assignment lasting beyond
treaty relief periods
● Charging compensation costs to the host for short-term assignments
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
8
Budgeting & Assignment Approval
International Assignment
Process
Process Objectives Risk
Assignment Cost Estimate • Ensure cost is budgeted, cost
is minimized and corporate/
individual tax issues are
addressed
• Ensure polices are followed
• Ensure approval for
assignment cost and which
division will bear cost
• Establish accrual for
assignment costs
• Violation of corporate tax
policies and procedures
• Exposure of corporate entity
to law in a jurisdiction where a
business entity has not be
established
• Tax issues for both the
company (PE) and the
employee
• Exposure to tax penalties and
interest
• Unexpected cost due to non-
compliance
• Legal issues
• Bad publicity/reputational
damage
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
9
Immigration
International Assignment
Process
Process Objectives Risk
Immigration • Ensure application with
local government to legally
work in country
• Ensure application of
family (non-working) to
reside in country legally
• Employee begins working
in country prior to
obtaining work permit.
Family begins residency
before obtaining proper
authorization
• Bad press and possible
ban to establish business
• Imprisonment or ban from
ever working/entering in
country
• Tax costs are higher than
expected due to incorrect
work permit
• Immigration costs are
higher than expected
© 2013 KPMG Tax & Legal Advisers civil CVBA, a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
All rights reserved.
10
Immigration
• Common pattern but requirements differ from country to country
• The length of the trip, the scope of the activities and the personal situation
of the assignee are decisive for the type of document
• Do not rely on what may seemed like the quick solutions in the past
• Process is often longer than expected
–medical examination often required
–authenticated public documents, translated in local languages
–accompanying family members
• Authorities are more actively enforcing prohibitions against unlawful
employment - important to obey the spirit as well as the letter of the law
PLANNING AHEAD
Thank you
René Philips
Global Head of International Executive Services
+32 2 708 3807
Carolien Van Echelpoel
Executive Manager
+32 2 708 4796
© 2013, KPMG Tax & Legal Advisers civil CVBA, a
member firm of the KPMG network of independent
member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All
rights reserved
The KPMG name, logo and ‘cutting through complexity’
are registered trademarks or trademarks of KPMG
International Cooperative (KPMG International)