This article was written by ReloTalent for Global Mobility Insider.
The world is continually getting smaller as innovations in communication and technology bridge the wide gaps between nations. Why then, are global relocations becoming more and more difficult? Unfortunately, although improvements have eliminated many areas of difference between nations, it is the ever-expanding regulatory issues that really affect the challenges associated with global mobility. Although at first thought you may expect countries with more developed systems and processes to be easier to work with you would be wrong. As nations develop, they tend to introduce new regulations and compliance requirements in all aspects of law, but especially in the areas of immigration and taxation.
These often-stricter rules are designed to provide more control over a country’s economic structure but have the side effect of creating many difficulties for those working in the relocation industry. It is not only the increased complexity around immigration too, as constantly shifting global tax regulations also provide ongoing struggles for even the best human resources professionals. This week GMI takes a look at the key areas of complexity in global mobility compliance.
Companies used to be able to hold relatively lax attitudes when it came to obeying immigration laws with their clients, instead choosing to focus the majority of their efforts on confirming to their home regulations. In a post 9/11 world, however, the poorly defined government rules and regulations around immigration which facilitated these attitudes are no more, and businesses are becoming acutely aware of how important these laws have become when it comes to operating abroad, and staffing these positions.
Nowadays, immigration regulations around the world are always evolving and shifting, as governments realise that these rules do not only protect borders and local workforces but also considerably aid the monitoring of economic inputs such as tax and social security. Not only is the issue of immigration tied together with the hot-topic of national security, but it’s also directly linked to the generation of government revenue, the real thing that can drive policy, and punishment.
With all of this increased pressure around immigration, it is important to remember that as global mobility professionals, we must ensure compliance in these areas, for both our company and our assignees. To get around these regulations, some businesses have been moving more of their expats onto short-term assignments, or classing them as “extended business travellers”. Although a lot of these cases are acceptable, many are causing severe compliance issues for their employers, as managers are quite often ignorant as to the immigration and tax status of their employees. It is crucial that the correct business visa is attributed to staff whenever is necessary, no matter the work involved, as there can be severe penalties potentially levied at all parties involved in breaches of these laws.
Some countries have straightforward tax calculations for all aspects of a business’ income and outgoings, others, however, are not at all. More developed nations tend to enforce taxation laws which are full of caveats, exceptions and loopholes, and this is not even mentioning the wide variation in tax years around the world. Not only is the compliance work for these regulations challenging in of itself, but working with expats who spread their time and work across countries bring the difficulties to an entirely new level.
As laws, totalization agreements, requirements and benefits can be so different between states; it is essential to find a way to efficiently track all of these separate issues for each of your clients’ accounts to ensure full compliance across regions. This can be a nightmare for companies of all sizes, as small business lack the workforce, and larger ones have incredibly complex webs of workers across the globe. In these situations, seeking outside help is often the best option.
The current technology offerings appearing for the global mobility sector provide support for tracking these kinds of taxation issues alongside many of the other challenges which arise during the relocation lifecycle. Other options include turning to specialist tax consultancy firms which have substantial expertise in this sector, although this choice also carries a significant cost. However you choose to handle these difficulties, taking a proactive approach to compliance in this area will take you far, especially if you’re always keeping up with the latest changes to global tax regulations.
Although the previous two points of complexity for compliance have been around for longer, data privacy and security is currently becoming one of the most significant areas of issue. Think about how complicated the web of colleagues, clients and service partners is for each relocation and the amount of personal data that is potentially shared at each stage. Each of the service providers needs different data on the assignee, from marital status, age and address, to medical and criminal history; it’s easy to see why so many global mobility professionals slip-up in this area.
With data protection laws rapidly tightening across the globe, it is essential to get the assignee’s unambiguous and informed consent before sharing any of their personal data. This is especially important if you are dealing with the European Union (EU) in any capacity, as their laws are stringent when it comes to compliance with this issue. In 2018 the EU will start to follow the new General Data Protection Regulation (GDPR), which strengthens the current laws and adds additional penalties for those who fall foul. The knock-on effect of this new regulation is that many countries will be taking on parts of the new law into their own, to ensure that they can do business with the EU in the future. As such, be prepared to abide by these new rules, even if you are not currently performing any business directly inside the region.
For those who do not fully abide by the new GDPR rules, the recompense demanded by the EU can easily run into millions of Euros, with a maximum fine of €20 million or 4% of global annual turnover, whichever is largest. Companies that are subjected to an audit will need to show extensive and accurate records of every part of their business in which private data is involved. As such, companies need to accept full accountability for the customer data once it is in their hands, with careful records kept of all data processing and transfers. There are many technology and software solution available for global mobility professionals which can go a long way to ensuring GDPR compliance, but the laws come into full force on the 25th May 2018, so act soon.