Cross-Border Mobility on the Rise
Global business travel is booming again, but with this increase comes a slew of tax complexities. Governments are stepping up their data-sharing capabilities which is increasing the possibility of compliance issues for business travelers. Even short stays in a country can trigger tax liabilities, making business travel increasingly complex to manage. For businesses, it’s critical to understand these risks and how to manage them effectively.
Here’s everything you need to know about the tax risks involved with global business travel, how to stay compliant while supporting your global workforce and how the Equus Compliance Engine can help.
Top 3 Tax Risks of Business Travel
Business travelers and employers face three major tax risks:
- Personal Income Tax – Short-term work in a foreign country can trigger unexpected tax obligations.
- Social Security Contributions – Employers and employees may be liable for social security payments abroad.
- Permanent Establishment (PE) – Frequent business travel can create corporate tax obligations in the destination country.
Understanding these risks helps companies ensure compliance while supporting their global workforce.
1. Personal Income Tax
Did you know that most countries tax employment income based on where the work is physically performed? Income tax treaties can sometime eliminate these taxes, and the rules often revolve around a 183-day presence threshold, making treaty awareness especially useful for business travelers.
Other factors, that impact tax liability:
- Recharging Costs: Recharging salary costs to the host location could inadvertently impact tax liability.
- Permanent Establishment risks: Even short assignments could mean big problems.
The Solution
The Equus Compliance Engine evaluates income tax treaties across 155 countries, helping businesses anticipate and manage risks for their mobile workforce With the Equus compliance engine you can stay ahead of compliance concerns.
2. Social Security Obligations
Cross-border business travel may trigger social security obligations for both the employee and employer. Contributions are typically required in the country where the work is performed. However, bilateral or multilateral social security agreements can sometimes exempt employees from double contributions.
How the Equus Compliance Engine Helps:
- Monitors bilateral and multilateral agreements across 125 countries.
- Flags opportunities to minimize compliance risks
With these insights, the Equus Compliance Engine gives you all the information you need to reduce your compliance risk.
3. Permanent Establishment (PE)
As a result of sending employees on business trips to another country, a company can inadvertently create a Permanent Establishment (PE) in the host country, resulting in corporate tax liabilities and filing requirements.
Top Risk Factors:
- Maintaining a fixed place of business in the host country.
- Business travelers acting as dependent agents authorized to sign contracts.
- Providing services for extended periods that may trigger PE services in the destination.
How to manage:
The Equus Compliance Engine effectively analyzes international tax treaties to identify and assess potential PE risks as a result of business travel, ensuring your business avoids costly consequences.
Take Control of Business Travel Tax Risks
Managing tax risks doesn’t have to be daunting. Anticipating risks and proactively managing compliance can empower your organization and deep disruptions at bay. The Equus Compliance Engine offers robust tools that simplify risk assessments by incorporating data from over:
- 3,500 income tax treaties
- 1,200 social security agreements
- Coverage for 160+ countries.
Managing tax risks and ensuring compliance is easy with the Equus Compliance Engine.
Next Steps with Equus:
Take the uncertainty out of managing risk. Here’s how you can get started with Equus today:
Ensure compliance – Click here to learn more about the Equus Compliance Engine.
Request a demo – Request a demo to see how the Equus Compliance Engine can help your organization manage tax risks.Â
Get expert support – Contact us to craft a smart and compliant business travel tax strategy for your organization. Â
