navigating short term business visitors in a · pdf file... agreed upon definition for short...

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

NAVIGATING SHORT TERM BUSINESS VISITORS IN A MORE NATIONALISTIC GLOBAL ENVIRONMENT

September 2017

PRESENTERS:ANDY KELLY, BDO UK, Tax PartnerPETER WUYTS, BDO BELGIUM, Tax Partner

NAVIGATING SHORT TERM BUSINESS VISITORS IN A MORE NATIONALISTIC GLOBAL ENVIRONMENT2 2

ANDREW KELLYPartner, BDO UK

020 7893 [email protected]

PETER WUYTSPartner, BDO Belgium

+32 2 778 01 00 [email protected]

With you today…


About BDO International

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Our international figures include exclusive alliances of BDO Member Firms.


Short Term Business VisitorsWho are we talking about?• An individual who makes a work trip(s) to a different

country (than their home country) for a short duration.• Other closely related terms:

• Cross Border Workers• Commuters• Rotational Workers• Temporary Employee• Stealth Expatriate

Note: We will be focusing on STBV for this presentation.


Short Term Business VisitorsDefinition?

There is no global, agreed upon definition for short term business visitors. Nor will there be consistent treatment between all countries.

Generally defined as less than 12 months in duration (or 183 days for treaty considerations)


Short Term Business Visitors

• Moral Debate- Corporate reputation- Power of the consumer- Turning of the tide

• Compliance and a shrinking world- Automatic exchange of information/Common Reporting Standards- Accompanying legislation and practice- Newsworthy

Why is this an important issue?


Short Term Business Visitors

• Cost containment- International assignees expensive - Failed assignments/return on investment- Shorter/commuter assignments

• Policy adaptation- Overarching policy- Multiple sub-policies- Reducing cost

• Changing social trends- Dual careers- Flexible working arrangements

• Technology

Why is this an important issue?


BDO/Santa Fe global mobility surveyKey Trends

Short-term business travellers

Short-term assignments

One-way relocations (company initiated)

One-way relocations (employee initiated)

Graduate programmes

Commuter assignments

Developmental long-term assignments

-1%

+30%

+22%

+21%

+13%

+10%

+3%

+2%

Strategic long-term assignments

Net growth in assignment over next 12 months

NAVIGATING SHORT TERM BUSINESS VISITORS IN A MORE NATIONALISTIC GLOBAL ENVIRONMENT1010

Most frequent sending and receiving countries

China and India continue to be most challenging destinations

1. China – 13% (previously #1)2. India – 7% (previously #2)3. Brazil – 5% (previously #4)4. USA – 5% (previously #5)5. Russia – 4% (previously #3)

Countries sending to (% most common)

Countries sending from (% most common)

USA 16% USA 17%

China 12% UK 13%

UK 7% China 6%

Singapore 6% France 6%

France 4% Australia 5%

Germany 4% Germany 5%

UAE 4% India 3%

Hong Kong 4%

Australia 3%


Business Travellers

• Treaty exemption- 183 day myth- Other conditions – employer and who bears the cost?

• BEPS Action Plans- Action Point 7 – Preventing the artificial avoidance of permanent establishment status - Action Points 8-10 & 13 – Aligning transfer pricing outcomes with value creation


Short Term Business Visitor – Up Front Considerations

• Immigration – proper visa and work permits• Personal tax residence position & shift in tax home• Personal income and social tax exposure• Payroll tax and/or withholding obligations for the

employer and employee


Country Updates: United KingdomQuestion Response

Is the taxation of STBV’s actively pursued by your tax authorities?

Yes

Is there a day threshold before a reporting obligation arises? No, a single day can result in an obligation to withhold UK PAYE.

Is an upfront application required to alleviate an obligation to withhold income tax?

Yes, a one off application can be made for the employer so that PAYE does not need to be operated where all treaty conditions met

Is there an annual reporting requirement by the employer? Yes, to be submitted by 31 May each year

Other HMRC by concession does not generally pursue recharge if < 60 days in UK


Country Updates: NetherlandsQuestion Response (example)


Yes, in particular in relation to branch structures, need to consider the nature of the entity concerned

Is there a day threshold before a reporting obligation arises?

No, a single work day can result in an obligation to withhold NL PAYE.


No, unless the Dutch tax authorities have informed you that there is an obligation for a company, for example because of historic behaviour.

Is there an annual reporting requirement by the employer?

Yes, to be submitted by 1 February each year

Other Under certain condition it’s possible to make use of the 60-day rule in the NL. The Dutch 60-day rule is quite strict however.


Country Updates: SingaporeQuestion Response (example)


Yes

Is there a day threshold before a reporting obligation arises?

More than 60 days of employment in a calendar year


No

Is there an annual reporting requirement by the employer?

Yes – tax clearance return (Form IR21) to be filed (regardless of who bears the tax)

(i) within 2 months of cancellation or expiry of Employment Pass (EP); or

(ii) by 30 June following annual review by 31 January each year where there is no Employment Pass

A certificate of home country tax residency should be filed as well with the request for exemption.

Other 60-day tax exemption rule – not applicable to entertainers and Non Resident Directors


Country Updates: United StatesQuestion Response (example)


Yes

Is there a day threshold before a reporting obligation arises? An individual becomes taxable if:

• Exceeds 90 days of presence in the United States or

• Exceeds $3,000 of US sourced income or• The individual is paid by a US employer

If applicable, Double Taxation Agreements should be reviewed to determine if the tax treaty can be applied.


Yes, a one off application can be made for the employer so that withholding does not need to be operated where all treaty conditions met (Form 8233 – Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Non-resident Alien Individual.

Is there an annual reporting requirement by the employer? No

Other The state laws may or may not follow the Federal rules.


Difficulties with Managing Short Term Business Visitors

• Companies do not have ways to systematically track frequent business visitors

• Companies do not have policies, guidelines or processes to manage frequent business visitors

• Lack of education and/or understanding of the requirements that come into play with frequent business visitors

• Nobody within the company has been designated to take responsibility for managing the frequent business visitor population. It can be very time consuming and increase administration.

• Pre-assignment consultations and/or arrival consultations do not occur


BDO QuickTrip: The App


BDO QuickTrip: HR Portal


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Compliance means different things

GM TM

Immigration Compliance

Are they travelling on the correct visa ?

Booking Tool Compliance

Are they using the company provided tool?

Duty of CareWhere are they and how can I

find them ?

Taxation ComplianceHow many days have they

spent in the UK ?

Supplier ComplianceAre they booking Marriott

when they should be booking Hilton ?

Duty of CareWhere are they and how can I

find them?

Global Mobility VS Travel Manager


Business Travellers - SummaryBusiness travellers can give rise to individual liabilities, withholding implications for the entity and compliance obligations for both the individuals and the businessBusiness travellers are a significant risk in the creation of a Permanent Establishment • Significant set-up maintenance costs and ongoing taxation obligationsWhat they do in that country could now drive a Corporation Tax Liability• It’s no longer only about a personal income tax gross up or withholding liabilityFinance and Legal will be much more involved in who is where – and what they are doing – from where do they get the data?• Do you have the data to supply ?Immigration and Revenue authorities are sharing information much more frequently to match purpose of work with Visa status• +100 Countries have signed up to AEOI principlesRevenue and Immigration authorities will/do require an ‘adequate process’ for monitoring and recording business travel – OECD draft commentary

IN SHORT - YOU CAN’T IGNORE BUSINESS TRAVELLERS - THE TAX IMPLICATIONS ARE GROWING


Thank you for your time!

Peter has more than 20 years relevant experience in assisting and advising companies and executives with respect to individual tax matters, social security and labour law, immigration, remuneration and general planning. He has served companies of all sizes (including quoted companies) and sectors.He is in charge of various international and national client engagements, dealing with international employment structures as well as local tax, social security and labour law planning. Peter has an extensive experience in the coordination of international mobility programs for clients who have a regional or global decision center in Belgium, as well as for Belgian subsidiaries of foreign headquarters. He is a specialist in Equity Incentive Plans, both in design and implementation of Belgian plans as in customizing foreign plans to fit Belgium’s specific legislation. At BDO, Peter heads up the Employment Tax and Legal Services Center of Competence and he is a member of the International Expatriate Services Center of Excellence.Peter has a hands-on client service approach and has demonstrated an added value in serving a large number of publicly quoted and private companies.

Andy is a Partner in the BDO London Expatriate tax services group, having worked within this field for over 17 years. His main focus is advising companies and individuals on the cross-border tax and social security implications of international assignments, working closely with payroll, finance and HR functions to ensure all aspects of the secondment operate in a cohesive and tax efficient manner. This assistance extends to the establishment of global assignment policies, structuring of individual assignments and remuneration packages and liaising with HMRC on individual and employer level issues. Andy has worked previously within the Big 4 prior to joining BDO in 2005.His client portfolio consists of corporations ranging for those with start up overseas operations to established international businesses with sizeable expatriate populations. Andy has an incisive insight into the issues that confront expatriates from his own experience having worked overseas in Japan for over 2 years. He is a fluent Japanese speaker. Having qualified as a US enrolled agent in 2002, Andy became a Chartered Tax Advisor in 2003.

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BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 500 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 67,700 people working out of 1,400 offices across 158 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.

© 2017 BDO USA, LLP. All rights reserved. www.bdo.com

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