Global workforces: controlling tax risks for employees and contractors

As technology and media companies go global, so the need arises for employees to work internationally too. While this can be exciting for both company and employee, the tax implications should always be considered.

Recent years have seen greater complexity in employment taxes, bringing increased challenges for payroll functions in global technology and media businesses. Employees working on overseas assignments bring particular complexities, not least because of the expense and the additional administration attached. Failure to comply with local and ”home” country regulatory and tax requirements can be particularly costly.

Technology and media companies setting out on their journey of global expansion need to avoid the many pitfalls. As a helpful starting guide, we will provide future articles covering key issues relating to:

• tax implications for employers and employees when sending individuals on assignments to the UK;
• tax implications for UK employers and employees when sending individuals on overseas assignments;
• the contractor – employee dilemma: the importance of making sure your contractor really is a contractor rather than an employee.

As will become evident, international tax rules are not always joined up. Tax liabilities can sometimes still arise both at home and overseas, for both company and employee. Alongside income tax, social security taxes must also be considered. Local and overseas reporting requirements can be burdensome.

Difficulties can also arise when establishing whether an individual working as a contractor is really a contractor, or should actually be treated as an employee. Getting this wrong can be costly.

The sensible approach for any expanding technology and media business is to plan ahead, consider the widest tax implications, and always take expert tax advice. Individual employees will also benefit from professional support, helping them to get the most from their overseas assignment, while also reducing the risk of costly compliance errors.

Contacts

Mark Ayres

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