CapRelo Blog

What Are the Risk Areas of Business Travel?

Posted by Amy Mergler on Wed, Dec 13, 2017

business traveler.pngThe time and financial constraints associated with rotational or long-term assignments are pressuring many companies to solve their need for global talent mobility with short-term business travel. However, according to research by BAL Corporate Immigration, more than 80 percent of companies do not have formal policies in place to manage, support and monitor their traveling employees. If your company plans to use business travel as a global mobility option, it would make sense to have the global mobility team or a global mobility management company manage this function for compliance and efficiency. A lack of management and oversight places individual employees and companies at risk in the following areas:

Immigration

Every country has its own visa requirements and restrictions. These specify how long business travelers may stay and what types of activities they may engage in when traveling on specific visa types. For example, a company may issue a business visitor visa that permits stays of up to 30 days for conferences, meetings and training. In general, a breach of these restrictions consists of extending a visit without renewing a visa or engaging in business activities that could be construed as gainful employment or providing services that directly benefit a client company. Unfortunately, managers and employees aren’t always informed about visa restrictions. This can result in ad hoc extensions of short-term visits or business travelers unwittingly participating in business activities that are prohibited.

It’s important to understand the precise conditions for each visa and each country. Especially since an increasing number of countries are tightening border controls, keeping accurate records is key to avoiding penalties for both individuals and employers.

Tax Compliance

Business travel can have significant consequences for tax compliance. The duration of an employee’s visit, the types of professional activities in which he or she engages during that visit and factors pertaining to remuneration need to be assessed to determine whether there’s a reporting requirement in the host country. If so, does this reporting requirement pertain to the employee, the employer or both?

Additionally, employers must be aware of the tax implications of and what creates a Permanent Establishment (PE) in a host country. Tests for determining whether a PE exists will vary by country, but generally the type of work performed and the length of time operating in the host country will be taken into account. It’s important to research and understand the host country’s Permanent Establishment laws to ensure compliance and minimize tax liability risk.

The international tax regulation and compliance landscape is complex. Moreover, considering current political changes in the U.S. and Europe, tax regulation and compliance are likely to keep developing for the foreseeable future. Employers need to ensure they’re always up to date on taxation thresholds and international treaties so they can take action to comply with reporting requirements for their employees and the corporation.

Compensation

Many managers assume that sending employees overseas has no impact on those workers’ salaries. However, this can be a potential pitfall for both the company and its workforce. Depending on a business traveler’s visa and the length of the stay in the host country, payroll could very well be affected. Employers might have to assume the payroll obligations of the host country, for example by meeting local taxation and social security obligations.

Navigating payroll for business travelers can become an incredibly complicated matter for HR departments to manage.

Privacy

Most companies establish some form of tracking for business travelers. This is intended to provide legal, HR, payroll and accounting departments with the information necessary to meet immigration, tax reporting and payroll requirements. Tracking data about flights, hotel bookings, rental cars and business expenses charged to a corporate credit card is generally considered to be a normal business practice that doesn’t affect a business traveler’s privacy. However, other tracking methods, such as GPS tracking data and/or collecting data from employee-owned devices can be construed as an infringement on an employee’s right to privacy. This is particularly important in areas like Europe, where individuals enjoy more privacy protection than in the U.S. However, even some U.S. companies find their need to track data conflicting with their corporate privacy policies.

Safety

Safety for the business traveler has also become a major concern, as we see rising numbers of terror threats, natural disasters, diseases and other potential dangers. It’s essential for employers to ensure their traveling employees’ safety and well-being. The employer must know where every traveling employee is at all times, and be able to reach them. This can be done by itinerary or by using GPS tracking technology.

BASE EROSION AND PROFIT SHARING

Base Erosion and Profit Sharing (BEPS) is a tax planning strategy used by multinational companies where they report or shift profits or income to low-tax or no-tax locations to avoid paying taxes elsewhere. Currently, there is a focus on tax rules and regulations to ensure that profits are taxed where economic activities generating the profits are performed. This has translated into a need for employers to not only track business travelers from a safety perspective, but also from a “purpose perspective.” For example, if an employee traveled to a different country for training, when no profit was generated, there would be no tax liability; however a sales employee traveling to finalize the signing of a new contract may result in the company being required to pay tax on the contract in the country of signing.

Download Our Guide to Managing Business Travelers

Topics: business travlers, business traveler management

March Relocation Survey

Posted by Amy Mergler on Fri, Mar 17, 2017

Thinking about changing your relocation program or just curious about what other organizations are doing? Each month, we'll feature a short survey and share our findings along with the next survey the following month. Below are the results for last month's survey and this month's survey questions.

February Survey Results

1. What are your biggest employee relocation costs? (Choose all that apply)

Real Estate: 60%
Household Goods: 100%
Tax Gross-Up: 20%
Family Expenses: 20%
Temporary Living: 40%
Miscellaneous Expenses: 0%

2. Which employee relocation budget challenges does your company face? (Choose all that apply)

Uncertainty of the number of employees needing relocation services: 60%
Predicting the number and type of exceptions to your relocation policy: 40%
Inflationary factors that may increase costs: 0%
Policies with home selling assistance involve timing uncertainties and potential shortfalls in selling prices: 20% 

3. What measures has your company undertaken to control employee relocation costs? (Choose all that apply)

Set clear policy parameters: 40%
Established reimbursement maximums: 0%
Changed the method of expense reimbursement: 0%
Minimized policy exceptions: 40%
Reduced temporary housing duration and house hunting trips: 40%
Used core/flex relocation packages: 0%
Established tiered relocation packages: 100%
Used technology to track/manage relocation expenses: 0%

 

This month's survey addresses Business Traveler Management and Tracking.  

Create your own user feedback survey

Topics: global mobility, business travlers, business traveler management

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