When making a decision on working in a different location, whether that be crossing an international border or inter-state borders domestically, it is important for the individual to understand if and how their tax residence may be affected and the impact that has on their tax affairs. This will include the tax treatment of all employment compensation including equity plans or other incentive based employment income. Unvested awards could vest following a change in location. How will these be taxed and how should they be reported to factor time spent across jurisdictions?
TAX RESIDENCY
Similarly, how will their change in location impact their social security arrangements and where any contributions are due?
SOCIAL SECURITY
CONCESSIONS
It is possible that there may be treaty exemptions or special concessions in place to relieve any tax or social security impacts. Are these available? And what are the eligibility requirements to ensure any adverse tax impact is minimised?
FILING OBLIGATIONS
A change in location may mean increased compliance obligations, the most obvious being the requirement to file a tax return. Does the employee understand how the tax system works in the new location and importantly any filing deadlines to ensure they remain compliant?
NON-TAX CONSIDERATIONS
And beyond the tax issues there are also non-tax matters to consider. Performance of duties across time zones, performance management and employee rights are to name but a few.
CAREER STAGE
Finally, there are many generations of employees in any workforce. Their personal circumstances and the things that matter to them will differ. For example, while graduate starters may only need to concern themselves with the different tax treatment of their employment income, those closer to retirement may have more complex personal affairs. We look at this in more depth in Working from Anywhere: Private Individual.
