Not So Taxing: Why immigration compliance matters more than ever
Organizations have always had tax obligations, adherence to immigration regulations, legal risks and reporting requirements when it comes to their employees’ business travel and remote working.
However, the tightening of border controls in response to Covid-19, Brexit and a growing penchant for remote working among other issues has created a perfect storm. Many countries have taken the opportunity to increase the enforcement of taxation rules for short-term business visitors, increase scrutiny of work visas, social security certificates (A1’s and CoC’s) and Posted Worker notifications in the European Union, as well as Brexit restrictions on EU-United Kingdom movements.
Non-compliance with regulations can result in fines in the millions for employers, with employee fines and potential sanctions also likely to occur, as well as reputational damage.
To comply with the increase in enforcement of these regulations and to avoid fines and sanctions, organizations need streamlined processes, full visibility of where their travelers are, how long they’ll be gone, the type of activity they are performing and, to be alerted to any compliance issues before they occur.
Tracker Software Technologies (TST) helps clients manage their traveler tax and immigration compliance. TST’s extensive rules engine has over 6 million algorithms which assess a traveler’s accumulating time at the host country, nationality, country of residence, trip purpose, destination and duration of stay at each location.
Based on the assessment, alerts are sent to identify and address any compliance issues before they occur, giving clients peace of mind that their travelers have the right documentation and other permissions to enter a country, in addition to tracking days spent in different countries for any tax requirements.
We ask Tom Crosby, Director, Consulting Services, Tracker Software Technologies why it’s more important than ever to manage compliance risks associated with business travel and remote working.
Brexit hasn’t had an impact yet
The lack of travel has slightly masked the impacts of Brexit and the now implemented Posted Worker obligations. The requirement to count days spent in the Schengen zone for the UK-based worker will become a new reality for mobile teams. This data is readily available in travel systems and travellers will look to their employers to advise them when they are approaching thresholds. Who could have thought that you would need your employees to also record their holiday travel into the EU as the Schengen requirements cover ‘days of presence’, not ‘days of work’. A month in the sun in August could potentially have significant implications on travel in the 3rd quarter.
The latest iteration of Posted Worker directive came into force in July, 2020, but with a world focused on COVID-19 there have been no real horror stories yet. They will soon come to pass. If you have not set up your processes to manage this new administrative phenomenon then this is the optimum time to do so.
It’s important to seek out a comprehensive listing of ‘activities’ from traveling employees so you can avoid unnecessary secondary processes by gleaning more detailed information from the traveller when they book their trip. If you are re-engineering the new travel process, then make it easy for the traveller to do everything on one visit to the screen or smartphone.
Remote working is on the up
Most LinkedIn timelines and blog feeds have been filled with speculative features on how remote working will prevail post-COVID. Remote workers carry the same risk attributes as business travellers. They are displaced from their normal place of work for an extended period - maybe within their same tax residence, or within a jurisdiction they have a ‘right to work’ in, but maybe not. ‘Pre-remote work request’ will become as commonplace as ‘Pre-trip request’. Employees will be asked to submit these requests under policies (still to be developed in many companies) and employers will evaluate these requests under the same variables that cause compliance issues for business travellers.
Remember that ‘Remote Work’ – is just, that – ‘work’ – so some of the grey areas around ‘meetings’ and ‘conferences’ that sometimes obfuscate business travel liabilities can’t be applied to remote workers. They are ‘working’ from day 1, so tax, immigration and posted worker obligations arise immediately.
Corporates are under scrutiny
The COVID-19 pandemic has emptied many countries coffers in supporting citizens and businesses. At the same time, many global corporates are still reporting healthy revenues. Governments will turn to corporates to secure additional tax revenues, as evidenced recently by Corporation Tax increases in the UK from 19% to 25%. There are large bills to pay for the COVID-disruption and the Corporates reporting healthy profits can expect greater scrutiny in the years to come.
To find out more about CWT's robust travel and compliance ecosystem contact [email protected]
About CWT
CWT is a Business-to-Business-for-Employees (B2B4E) travel management platform. Companies and governments rely on us to keep their people connected – anywhere, anytime, anyhow – and, across six continents, we provide their employees with innovative technology and an efficient, safe, and secure travel experience.
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