Share plan tax obligations for your globally mobile workforce

While the digital economy has broken down borders, allowing companies of all sizes and across industries to reach the global marketplace, many firms still need people on the ground in key countries. They may be working on initiatives such as researching opportunities, developing emerging markets, purchasing a business, opening new operations and more. And with the popularity of remote work, many organisations now have a combination of mobile employees with a share plan, both in physical locations and working virtually.

At the same time, technology advancements have enabled improved transparency between government agencies, immigration, and tax authorities, making it easier to track employee movements between countries. With greater scrutiny on mobile workforces to ensure compliance with immigration laws, and that companies and individuals are fulfilling their international tax obligations relating to salary, employee share plans and benefits, more countries are taking a firmer stance, and it is likely that enforcement will only increase.

Global mobility considerations

When it comes to global mobility, every country has different laws and regulations for immigration, taxation and other requirements – and these continue to change.

Taxation is one of the most complex aspects of global mobility, affecting both the company and individual employees. While many countries have tax treaties with others, the length of time employees can work locally before tax obligations in a specific jurisdiction come into effect can vary by country. In addition, some countries require withholding taxes for mobile employees with a share plan, which again can differ by country. Tracking these details can be extremely complicated.

Taxation and employee share plans

Companies with mobile employees participating in employee share plans can be impacted by local taxation requirements. As an example, if a share plan participant is working in another country between the date of an equity plan grant and transaction, whether a vesting or exercise, it can affect their global tax obligations.

Taxation is one of the most complex aspects of global mobility, impacting workers participating in employee share plans

The cost of getting it wrong can mean tax reassessments and additional payments, as well as late penalties. It may also put your business under further scrutiny for global tax reporting, placing unnecessary pressure on internal resources to compile and disclose the appropriate information to tax authorities.

Companies with globally mobile employees need a strategy to address international tax obligations. To help with taxation for employee share plan participants, Computershare offers TaxConnect, available on the EquatePlus platform. The solution seamlessly connects employees with leading global tax advisors for real-time tax estimates. This helps to ensure your employees' tax liabilities are calculated accurately and comply with local tax regulations.