The Importance of International Tax Assistance

by | Jul 13, 2017 | News

Global compensation management and tax compliance can both significantly impact an employee when relocating across country borders. Regardless of whether the relocation is permanent or simply a short-term assign­ment, all relocation-related expenses will likely raise tax issues in both departure and destination countries.

This is why it is critical that the potential tax exposure from relocation reimbursements be monitored so that accurate tax returns can be filed in both the old and new country locations.

U.S. Employees’ Unique Tax Obligation

U.S. citizens are required to file taxes on their global income regardless of where it was earned and in addition to the tax fil­ings required in the country of assignment. When an employee transfers out of the U.S., they must still file a U.S. Federal Income tax return. However, the U.S. does provide a foreign tax credit that can be applied to the employee’s return, which means the amount owed in the U.S. could be nothing or a neg­ligible amount, but they are still required to file.

The Importance of Tax Equalization

It is strongly suggested that you provide tax equalization for employees relocating inter­nationally. This allows your employee to pay taxes as they would in their original country, with you covering the difference. This benefit is becoming more common because it taxes people at the same amount had they never taken an assignment. You would then cover the cost of the host location tax and any ad­ditional U.S. obligation that may be incurred.

For example, let’s say you are moving an employee from the U.S. to Italy. The employ­ee has a $28,000 income tax liability to Italy, but their U.S. liability would only be $25,000. You would then pay the additional $3,000 to the Italian tax authorities on your employee’s behalf.

**It is essential that the employee remain tax compliant while on assignment or after a permanent transfer. Failure to report income accurately makes the employee liable; however, if the company does not provide any support or assistance, then you run the risk of being seen as complicit as well.

How WHR Group Can Help

WHR Group provides a complete framework for tracking all expenses associated with an employee’s assignment or permanent trans­fer across borders. The data is collected and broken down into what was paid and which country the payments originated from. All of this information is then provided to a local tax expert in the relevant countries so that the appropriate tax filings can be completed. This process ensures that the employee has filed taxes in the correct countries and that the taxable relocation expenses have been considered as well.

The Importance of Immigration Assistance

by | Jun 8, 2017 | News

Immigrating to a new country requires several steps, so it can often be difficult for an employ­ee to decide where to start after receiving their new international assignment.

Every country has its own immigration laws and requirements that will need to be followed for the employ­ee to have a successful relocation. Providing Immigration Assistance as a formal relocation benefit will help your employees get started on their move and, ultimately, reduce their stress throughout the process of settling in abroad.

Here are three tasks to have your employees complete immediately.

1. Applying for a Passport

All relocating family members will require passports for the upcoming move, which is why it should be the first item acquired.

A passport is necessary for travel, work visa applications, and school applications. Typically, this is the easiest document to obtain, but can take 6-8 weeks from the time of application to delivery; however, this timeframe can be expedited for an extra fee.

At WHR Group, the Relocation Counselor will en­sure the employee and family obtain passports in a timely manner and confirm any existing passports do not expire within the next year, in which case the employee will want to have them renewed to avoid any future issues.

2. Applying for a Work Visa

If your employee is going to perform any work in a new country, they will be required to have a work visa, even if it is just for a short-term assignment. This is arguably the most important document required in an international reloca­tion, since an employee’s ability to perform work depends on it. The employee should start the application process as soon as possible, as it can take weeks to months before the visa is approved (depending on the destination coun­try’s regulations).

The following documentation may be required for a work visa application but not limited to:

  • Passports for each family member
  • Birth and marriage certificates
  • Divorce/adoption papers
  • Additional passport photo(s)

3. Asking Questions

Moving abroad can seem like an overwhelming process, which is why your employee is going to have questions, especially if this is the first time they have relocated internationally. They should inform their Relocation Counselor of any questions, concerns, or fears as early in the process as possible. This will ensure the relocation company provides employee-specific consultative services by helping them better understand their benefits, new position, and what is required of them.

With the help of their Relocation Counselor, Destination Service Pro­vider, and your HR department, we aim to offer the employee a smooth transition into their new country.

How WHR Group Can Help

Our aim is to coordinate and manage this pro­cess with the relevant authorities on behalf of the employee, which is why we provide assis­tance and advice in securing visas/work per­mits through our approved partners. We work closely with these partners to provide a variety of methods to monitor, measure, and improve the quality of services delivered. During this process, we also work closely with HR units to ensure all paperwork and visas are compliant and all activity is recorded.

Find out More about the Benefits You Should Offer to Your International Assignees

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10 Common Myths of International Relocation

by | Apr 9, 2015 | News

Compared to U.S. domestic relocation, relocating internationally is a whole other process. Here, we’ve dispelled the top 10 myths often associated with international relocation. 

international relocation
Work visas are not required if the employee is going to work in a country for less than 30 days.
If the employee is going to perform productive work for an employer in a country where they are not eligible to work, then, regardless of the time spent, most countries will require them to obtain a work visa. While certain business trips are permitted, workers cannot technically work (exchange physical or mental labor for money) without a work visa.
Once you approve your employee's new position in the new country, it's OK for them to go there immediately and start working.
Organizational approval of the new position is only half the battle. A work visa approval grants your employee the permission to begin work in a new country immediately. Keep in mind that the visa approval process varies by country. Once the employee applies, they may have to wait weeks to months before receiving their visa to enter the country and start employment.
The employee will be able to get a very similar home in the new location.
A different location means different standards, including what is important in a home. This can mean larger outdoor spaces versus larger kitchens, or smaller everything in comparison to U.S. “norms.” Not to mention price differences: Housing issues vary around the world as economic standing, living conditions, and cultural norms come into play.
Everyone speaks English, so it will be an easy transition.
A common misconception is that English is the only language the employee will need to know, wherever they travel. Besides being wildly presumptive, it’s also completely untrue. Not everyone in every country speaks English, let alone fluently. Plus, learning a new language opens up other doors for embracing a new culture. By offering language training, you can ensure your employee is better able to acclimate to the new culture.
The employee may need to learn a new language for a smooth transition, but their family doesn’t.
Actually, relocating to a new country can often be more stressful on the family than the employee. The employee’s spouse is also leaving behind friends, family, and possibly even a career. Children, who are often seen as more resilient, can feel secluded in a new culture that they don’t understand. It is important for the company to offer language and cultural training, not only to the employee, but the family as well to ensure they are able to thrive in their new environment.
Trailing spouses leaving behind a career just need time.
Time, unfortunately, is not the heal all for this type of adjustment. Even when provided with allowances, spouses can feel lost and insecure when leaving their old career for the unknown. Not knowing the language, culture, or types of jobs available can be overwhelming and draining. Offering career support, resume building, and job coaching can help the trailing spouse find a new career path faster than when left alone, which will help them adjust to their new surroundings that much faster.
It is difficult for the employee to fit in and they often feel secluded in their new country.
Employees can feel these emotions, especially if they don’t receive any kind of cultural training. It is important that they assimilate into the new culture as soon as possible to avoid seclusion. Many employees join other outside activities that assist with meeting new people, learning the new culture, and language. The more cultural training they have, the happier they will be in their new position and new lifestyle.
Expatriates coming to the U.S. don’t need cultural training.
Yet another misconception is that expats coming to the U.S. do not need cultural training. There is a perception that the U.S. is easy to navigate, but, in fact, the U.S. is a very different culture, and visitors are often surprised about the differences they were not expecting. For instance, the way Americans conduct themselves at work, toward strangers, and even eat pizza or shake hands is not the same as the rest of the world.
Culture shock never happens when an employee is returning to their home country after an assignment.
Typically employees feel a sense of culture shock when relocating to new a new country, but it is often overlooked that they can experience these same emotions when going back to their home country. Employees will need to go through an adjustment period, just like they did when they first moved internationally. The employee made a new home in their new country, so they have to get back in the mindset of their old country being home again. A change in job role, along with family adjustments, and the new surroundings can all be overwhelming for the employee.
Offering tax equalization benefits to employees means they will not have to worry about taxes.
Tax equalization is the benefit that allows your employee to continue to pay taxes as if they hadn’t left the U.S., and the company would cover the cost of the difference from the new country. Even if you offer them this benefit, they will still need to be aware of their own tax situation since they are the ones held liable if anything were to be wrong. It is essential that employees remain tax compliant while on assignment or if they are permanently transferring to their new country.