Cross-border remote working arrangements, largely triggered by the pandemic, continue to gain traction among employers of all shapes and sizes. While at the same time, the more classic cross-border secondment and transfer of staff within multinational organisations continues to rebound strongly. It is important to note that both cases can create potentially unexpected payroll obligations for employers. Not meeting these obligations can expose the employer to significant payroll compliance risks (including penalties and interest). The approach of the end of the year should focus the mind on what payments and expenses need to be reported before the payroll closes.
In a number of jurisdictions, the fiscal authorities understand the complexity around mobile employees and target this population for review in payroll and compliance audits. Review and action are essential. Having gaps in this area is a red flag to fiscal authorities, which suggest other areas of compliance may also not be correct, leading to more scrutiny overall. Those managing and overseeing employee mobility are often uniquely placed in organisations to spot the issue (as they are aware of where employees are working) and enable compliance (as they will have access to the data and information required).
There is, of course, no substitute for real time compliance. Payroll is usually a monthly or bi-monthly process so the ideal process is to have already reviewed the reporting throughout the year. That said, in some circumstances, this isn’t always possible. A fresh review at year-end is a critical minimum risk management action. Action may be required in more than one country – the home and the host country location or in the case of remote workers, the employment and work locations.
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