‘We notice that employees are increasingly working in other countries. This might be because their employer has decided to do business on the international market or because the employees no longer need to be at the office to do their job. The latter has become much more common since the corona crisis.’ Tamara van den Broek, Senior Manager Employment Advisory at Baker Tilly, discusses how she and her colleagues assist these employees. ‘As soon as an employee is set to work in a different country, you need to check the consequences. Right from day one, or preferably beforehand.‘
Employers often think they have arranged everything properly. Salaries are paid, tax returns are submitted and paid in time and all the employment contracts are in order. Moreover, the employee spends fewer than 183 days in another country and surely that always means everything is fine? ‘Unfortunately, it’s usually slightly more complicated than that. The 183-day rule, for example,’ Tamara explains. ‘In short, the rule says that an employee continues to pay tax in their ‘country of residence’ as long as their employment in another country doesn’t exceed 183 days within a specific 12-month period. Yet this rule doesn’t always apply.’ Countries make arrangements on taxing rights for employees working in another country, in tax treaties. ‘The 183-day rule isn’t included in some treaties or it may be applied differently. You need to check the tax situation under the other country’s laws and legislation and then determine what role the tax treaty plays in this respect. Furthermore, as an employee you need to take more into account than just wage taxes. Labour law, for instance, and social security.’
Proactive attitude
Sitting back and waiting to see what happens is therefore not an option. In many cases, the employer needs to act even before the employee starts work in another country. Different employment rules sometimes apply right from the start. Tamara regularly receives questions from businesses about these issues. ‘The rules are complex and can also change regularly. Companies that want to do business in other countries absolutely need to focus on all their obligations as an employer.’ Mapping the consequences and requirements in advance enables the company to identify any risks. This helps prevent problems such as fines or missed deadlines and registrations. ‘Yet it’s about more than just complying with the rules,’ Tamara stresses. ‘As an employer you have a duty to take care of your personnel. This includes ensuring that all the aspects of working in another country are taken care of.’
Global Mobility: a comprehensive range of services
Tamara and her team advise their clients on Global Mobility, a broad specialist area. For instance, she advises employers on labour law and wage taxes but also on remuneration policies, HR and social security. ‘Sometimes I analyse and map the foreign registration requirements for an employer. On other occasions we sit down with a client’s HR officers to go through the employment conditions. Or we coordinate international payroll administration and help draft a policy to keep track of working days. Anything related to good employment practices in an international context can come up. And,’ she adds, ‘that includes optimisation. Both for the employer and for the employee. International employment may lead to obligations but sometimes also offers opportunities: you may be able to allocate a higher tax-free expense allowance in another country, for example. That reduces the overall costs for the employer, without the employee losing out.’
Strong international network
As there is so much overlap with legislation in other countries, Tamara and her team work closely with other Global Mobility experts in the worldwide Baker Tilly International network. ‘We constantly keep each other updated on local developments. New legislation, foreign payroll or compliance issues: together we have all the expertise we need. We are the point of contact for our clients but where necessary we can count on the local expertise of our network partners. That is very convenient for our clients: just leave international payroll coordination to us. We help employers arrange their HR matters properly all around the world.’
Keen to find out more about international growth? Our experts outline a number of important aspects you need to consider. Read more here or contact one of our consultants today.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
