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It can be difficult to see when extended business travelers overextend their welcome from a compliance perspective.
“The biggest challenge for organizations is to basically get their arms around the population of extended business travelers,” explains Achim Mossman, KPMG’s national director of global mobility advisory services and international executive services. The following steps can help mobility and HR professionals address this challenge:
Monitor extended business travelers and frequent fliers.
Creating an extended business travel policy is recommended but not sufficient. Mossman and Eric Halverson, eBay’s director of HR global mobility, say employees who use the policy—as well as those who are not adhering to the policy but should be—need to be monitored.
Halverson’s mobility department tracks extended business travelers and frequent fliers to ensure that their trips of less than 30 days do not creep beyond the 30-day mark. This can happen when a trip is extended or when a traveler returns to the same host country several times in a year.
For example, if a U.S.-based employee returns to the same Canadian office several times a year, none of the individual trips may cross the time threshold for Canadian taxation, but the total time of all visits may subject the employee to withholding taxes in Canada.
Beware of the 183-day fallacy.
The United States maintains treaties with many countries regarding extended business travel. These treaties generally state that business travelers are not subject to local withholding taxes unless their trips extend beyond 180 or 183 days. The key word is “generally”: Each tax treaty is different and subject to more parameters than length of stay. And, the United States does not currently have tax treaties with every country, including several in Asia.
“You often hear about 183 days, and it’s usually a myth,” explains Tom O’Connor, GPHR, director of global mobility for United Technologies Corp. “Depending on who is bearing the cost for the assignment, there may be taxability of that individual starting on day one.” O’Connor suggests that mobility professionals enlist the help of their internal corporate tax group or external tax experts on issues related to a specific home-host pairing before greenlighting a new assignment.
Understand the nature of the work. Visa and immigration “issues typically relate to what the person is doing in the country,” says Jane Malecki, vice president of international assignments for Weichert Relocation Resources.
If the nature of that work is productive and benefits the overseas entity, as opposed to sending an employee abroad for five weeks of training, “most jurisdictions will require some sort of immigration paperwork,” Mossman says. “Even though a company may avoid taxability issues on a shorter assignment, there are often immigration requirements.” For example, some countries require extended business travelers to go through a two-step work-permitting process.
Reconsider cross-cultural training.
Usually reserved for longer expatriate assignments, cross-cultural training is often not required for extended business travelers. That’s a potential problem, Malecki says. “If the person is only going to be there for two or three months, they don’t have time to make cultural mistakes.”
The author is a business writer based in Austin, Texas, who covers human resource, finance and social marketing issues.
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