Northern Ireland Chamber of Commerce and Industry Ambition Magazine

Julie Buchanan, Associate Director – Tax – Employer Solutions and Payroll Grant Thornton NI Columnist

The Perfect World For Internationally Mobile Working I nternationally mobile work – where employees operate in a different country from their employer – What are the most common challenges for internationally mobile employees?

Internationally mobile workers may need to be included on both home and host country payrolls to facilitate remittances. Double tax treaties usually determine which country has the primary taxing right, but domestic laws in both countries can require payroll withholding. Relief from double taxation may be available through payroll but, if not, employees may need to fund two lots of tax during the year and claim a repayment later. Ideally, employers should identify cross-border payroll obligations and have relevant foreign employer registrations in place. They should also quantify host country tax and social security withholding rates and apply for real-time tax credit. Initial in-country registration can be intensive, requiring local bank accounts and taxpayer identification numbers. The lead time for both can be protracted, so it is recommended that employers with visibility of pending cross-border working move their payroll set-up forward at pace. A closing thought In a perfect world, tax, social security, and payroll withholding obligations can be identified and costed well in advance of any internationally mobile working. All employer and employee registrations can be implemented, and ongoing home and host country payroll withholding can be made in real time. Global mobility isn’t just a logistical challenge; it’s a strategic opportunity. As the workforce becomes increasingly international, companies that embrace the complexity and invest in smart, compliant mobility strategies will be the ones that thrive. The future of work is borderless. Employers who treat mobility not as a headache but as a lever for growth will unlock new markets, attract top talent, and build resilient, globally fluent organisations.

Beyond host country Social Security and payroll registration requirements, organisations with internationally mobile staff must also consider the potential impact on corporate and indirect taxes when employees work outside their usual country of employment. Remote workers abroad can inadvertently create a taxable presence for their employer –known as Permanent Establishment – in the host country, potentially exposing the business to extra financial obligations and regulatory scrutiny. Similarly, the kinds of services delivered by home country employees in a foreign location should be carefully structured and monitored to avoid creating a local VAT establishment, which can result in increased cost and compliance. Data privacy and security considerations are also often overlooked. As payroll data contains sensitive personal and financial information, all cross-border transfers must comply with regulations such as GDPR. Failing to do so risks data breaches and significant fines. What drives host country tax liabilities? The key factor in determining where an income tax liability arises is the employee’s tax residency. Establishing tax residency can be complex and varies by jurisdiction. Payroll withholding is the means of collecting tax from employment earnings. In many cases, employees may be required to file tax returns in both countries, which can lead to additional liabilities or the need to claim foreign tax credits, along with the associated compliance costs of preparing these returns. Do businesses have to operate host country payroll for one employee? Payroll compliance is becoming obligatory in many countries. Each jurisdiction has its own unique tax laws, employment regulations, and reporting requirements.

is now typical, with remote and hybrid models on the rise as well as more conventional secondment arrangements. While this offers flexibility and greater access to talent, it can complicate tax, social security, and payroll compliance. As organisations explore business opportunities beyond their borders, it is timely that we remind ourselves about the compliance that is needed when managing an internationally mobile workforce. From Grant Thornton’s work with businesses in this space, we have noticed the following questions and challenges arising time and again: At what point does an organisation need to consider host country tax and payroll compliance? For most internationally mobile employees, formal agreements specify work locations and assignment specifics, allowing organisations to anticipate compliance needs. However, when mobility arises unexpectedly (due to employee decisions or business requirements), companies may miss key obligations. This can lead to retrospective registrations, payroll adjustments, tax filings in multiple countries, professional fees and potential penalties for non compliance. In a perfect world, all organisations with internationally mobile employees will structure their compliance requirements and budget for these costs in advance of any international activity. However, by the very nature of many businesses, compliance is necessarily a reactive process. This is why it is hugely important that as soon as a business becomes aware of cross-border activity, it reaches out to relevant advisors to allow for the appropriate compliance support to be put in place. Increasingly, immigration and tax authorities are sharing information, creating greater visibility over foreign company employee activity within a host country.

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