Global Mobility Tax Issues: A Complete HR Guide for 2025

These are the Global Mobility tax considerations that HR teams need to look out for – and how to address them.

28 May 2025 | By Alex Schulte

When you send employees overseas, your tax liabilities become a complicated question. But solving this problem doesn’t always have to be painful.

Modern business means managing people across borders, time zones, and tax regimes. This is no picnic for the HR teams and Global Mobility professionals tasked with keeping up with tax laws. To move teams across the world without falling foul of unseen tax obligations, cross-border specialists need clarity.

This guide breaks down everything you need to know to remain tax-efficient and compliant when working across borders.

First things first:

What is Global Mobility Tax?

It’s not a global tax. It’s the complex patchwork of tax rules you face when your employees work across borders. This includes payroll, social security, permanent establishment (PE), and residency issues.

Send someone abroad, and the taxman in more than one jurisdiction may want to know about it.

The Tax Implications of Global Mobility

Moving staff around the world on your company’s behalf widens your exposure to tax obligations. Governments often view any profits made or facilitated on their territory as taxable, even if the people generating them don’t intend to stay there long.

The main tax risks of Global Mobility include:

Permanent Establishment: If your employee works from a fixed address or makes decisions on your behalf, you might owe corporate tax in that country.
Double Taxation: Without an income tax treaty in place, employees can get taxed twice: once at home, once abroad.
Residency: Many countries tax people who stay longer than 183 days.
Social Security: Forget to get a Certificate of Coverage, and you or your staff could end up paying into two systems.
Value Added Tax (VAT): Moving personnel is sometimes taxed (like in Italy). You better watch out.
Equity: The way employee equity is taxed differs hugely.
Employee Benefits: Some countries tax employee benefits, others don’t.

The Key Risks and Their Tax Implications

Double Taxation

Employees working in another country can get taxed twice if there’s no Double Taxation Treaty (DTT) between their home country and the one where they’re working. These treaties are struck between countries to protect their citizens from tax liabilities when living or working in the other nation.

There are currently 2,500 DTTs in force globally, covering much of the developed world. But there are some odd gaps:

Germany has no DTT with Brazil or Hong Kong.
The UK has none with Paraguay.
Germany’s treaty with the UAE expired in 2021.

For airline staff and mobile workers, for whom complex cross-border arrangements are a core part of the job, tax treaties often give taxing rights to the country where the employer is managed. That’s called the Place of Effective Management (POEM), usually in Article 15(3).

Rules for HR:

Check for a DTT before deployment between home and host countries.
Review DTT content, especially Article 15. Look at where taxing rights lie, often based on the Place of Effective Management (POEM).
Be aware of gaps. Not all developed countries have treaties with each other (e.g., Germany and Brazil, the UK and Paraguay).
For mobile workers and airline staff: Double-check treaty rules, as POEM may dictate tax rights regardless of travel days.
Keep a record of treaty evaluations and payroll decision justifications for potential audits.

Expat Tax Rules

Residency usually dictates tax. Most countries follow the 183-day rule, the usual threshold for when a stay trips into taxable residency. But not all:

Switzerland taxes after 90 days.
The US taxes based on citizenship, no matter where you live.
South Africa taxes unless you’re gone for 330 days straight.

Most countries have residency thresholds to determine who is a resident of what. They consider days spent in the country, work patterns, and personal ties. Best to keep a physical copy of the results in case of an audit.

Rules for HR:

Use automated tools to monitor 183-day thresholds (or shorter rules, like 90 days in Switzerland).
Assume worldwide taxation regardless of residence (for US citizens).
Keep up with non-standard rules: E.g., South Africa requires 330 days’ absence to avoid tax.
Assess residency based on ties and work patterns. Factor in housing, family, and social links.
Maintain physical and digital records to prove non-residency or treaty protection.

Permanent Establishment (PE)

If your employee has a fixed physical presence – even a locker) – or signs contracts abroad, you might trigger PE, and with it, corporate income tax liability. Most countries follow the OECD-wide rule that PEs are time-based (usually 183 days).

Rules for HR:

Reviewing each jurisdiction’s rules (and court decisions).
Monitoring what your people actually do abroad.
Keeping detailed records to prove you didn’t create a PE.

Shadow Payroll

Shadow payrolls help you pay people from one country while meeting obligations in another. Handy, but risky.

There are different ways to run a shadow payroll, including:

Tax Equalised: Employer covers extra taxes; employee pays the same as at home.
Tax Protected: Employee pays the lower tax; employer covers the higher.
Laissez-faire: The employee handles everything. Cheap for the employer, but risky for the employee.

HR must track:

Currency rules (e.g., Brazil requires local currency).
Exchange rate swings.
Local tax quirks (Sweden is high-tax; Ireland, low).
Endless rule changes (Brazil has hundreds per year).
Delayed tax refunds (4 months in the UK, 10 in Romania, never in some countries).

Social Security

Within the EU, employees pay where they work unless they have an A1 certificate showing they’re covered at home.

Outside the EU, it’s murkier, so:

Check for Totalisation Agreements (like DTTs, but for social security).
Get a Certificate of Coverage or A1 form.
Update the certificate if work patterns change; otherwise, it’s invalid – a detail often overlooked in mobility tax programs.

But this gets complicated for work outside the EU.

Since the CJEU’s landmark decision in 2019, residency-based social security contributions apply if:

The employer is in the EEA
The employee is a resident of the EEA
And the country of business is outside the EEA.

Rules for HR:

Look for Totalisation Agreements to prevent double contributions.
Secure a Certificate of Coverage (or A1): This is proof of coverage under the home country’s social security policy.
Update certificates with role/location changes

Taxation of Employee Benefits and Allowances

Employee benefits like housing allowances, relocation support, and education costs are often (unexpectedly) taxable.

The problem is that what’s tax-free in one country might be fully taxable in another. Some jurisdictions tax relocation perks, others don’t. Australia and New Zealand both tax employee perks (paid by the employer), while Italy offers an exemption for up to €258.23 per year.

As for relocation costs, the US taxes all relocation benefits while only the first £8,000 is tax-free in the UK.

Rules for HR:

Review each part of the compensation package for host-country taxability before the assignment begins.
Take advantage of local tax concessions if available, such as tax-free per diems or special expat tax regimes.
If there are no concessions, consider grossing up key benefits.
Document which benefits are offered and whether they’ll be tax-supported.
Consider having your tax provider prepare a cost projection, including taxes on salary and benefits, at the start of the assignment. This helps you understand the full cost and spot tax-heavy benefits early.

Equity Compensation Challenges for Mobile Employees

Equity compensation, like stock options, RSUs, and stock purchase plans, adds complexity when employees move between countries. Unlike salary, equity often spans multiple tax years and jurisdictions.

Each country has its own view on when and how to tax equity. The trouble is that tax treaties rarely cover equity in detail. Instead, you rely on domestic rules and foreign tax credits, which don’t always line up. Without planning, double taxation is a real risk.

To stay on top of this, focus on:

Tracking workdays and income sources. This means from where the employee worked, from grant to vest or exercise.
Withholding and reporting obligations. Some countries require tax to be withheld on equity income, even if it originated elsewhere.
Timing mismatches. Some countries tax an RSU at vesting, another at share delivery, and another at sale. These mismatches create cash flow issues and make foreign tax credits hard to claim.
Arrival and departure tax rules. Some countries apply “exit taxes” on equity when an employee leaves. The UK taxes equity at the point of exercise.

Rules for HR:

Always review equity awards with a tax expert before an international move.
Track employees with equity; even a simple spreadsheet can help as an interim option.
If possible, time equity events before or after the assignment to simplify things.
If equity is taxed during the assignment, consider whether to gross up the tax.
Check local law: some countries restrict employee equity plans due to securities rules or currency controls.

VAT Considerations on Global Assignments

VAT (Value-Added Tax) might be a consumption tax, not an income tax. But it still shows up when you recharge costs between entities, or when employees incur cross-border expenses.

Here’s how VAT can affect assignments:

Intercompany recharges. If the home entity recharges the host entity for an employee’s salary or benefits, that’s often considered a taxable service. In Europe, this is increasingly enforced. Italy recently confirmed that seconding staff is a VAT-taxable service, even at cost. EU courts have backed this view.
Expense reimbursements. If an employee travels for work and incurs VAT on meals, hotels, or taxis, the company may be able to reclaim that VAT, especially within the EU.
Relocation services. Movers, destination services, and relocation firms charge VAT. Check whether it can be reclaimed as a business expense.

Rules for HR:

Avoid recharges for short-term assignments if possible. Sometimes it’s simpler to let the home entity absorb the cost.
If you must recharge, do it with VAT. Know the local rules. For example, EU companies must generally charge VAT on recharges, but non-EU companies may be subject to reverse charge rules.
Budget for VAT if it’s not recoverable.
Talk to VAT specialists before structuring assignments, especially as more countries adopt the “secondment equals VAT” view.

Watch Our Panel Discussion on the Challenges Around Tax Compliance

Real World Scenarios

Remote Workers

Remote working, which has become increasingly common, comes with its own risks. If mobile employees spend over 183 days in one place, they could become a tax resident, even if still tied to their home country tax residency.

To manage remote workers in a tax-efficient way:

Do a residence test (and keep a copy).
Use compliance tools to track thresholds. AI compliance assistants are a good place to start.
Watch for new rules like the EU’s 2023 framework that allows home-country social security if less than 50% of work is abroad.

Relocations

Even relocations come with tax issues. Some jurisdictions tax relocation perks, others don’t. For example:

US: All relocation benefits are taxable.
UK: First £8,000 is tax-free if it’s for storage, travel or moving.

Set a mobility program in stone. Spell out what’s covered. Communicate clearly. Most importantly, make sure the same applies to everyone. Favouritism kills morale.

Posted Workers (EU)

If you send someone from one EU country to another:

They must earn the same as locals.
Pay tax where they live (unless under 183 days).
With an A1, social security stays at home for up to 24 months.

Third-country nationals? Much trickier. Each country interprets the rules differently. In Germany, they get full protection. In Ireland, not necessarily.

Secondments

Secondments often create PE risk if:

The host company pays a salary or directs work.
The international assignee does meaningful work (like deal-making or IP management).
The secondment lasts over 183 days.

You may also face:

Social security in both jurisdictions (without an A1 or Certificate).
Dual tax residency issues.
Transfer pricing risks (if the employee adds real value).

You can reduce your risk by:

Clarifying reporting lines.
Limiting time abroad.
Documenting everything.
Keeping employees on non-commercial tasks.

Globally Dispersed Teams

A scattered team results in a messy web of juxtaposed tax obligations. In short:

PE risk in multiple places
Payroll in multiple currencies
A constant compliance headache

Maintaining compliance with one jurisdiction is risky enough. Multiply that risk by the number of jurisdictions a company operates in, and you get the picture.

You can fix it by:

Setting up legal entities where needed
Or using an Employer of Record (EOR) to handle everything

But remember: countries are increasingly taking a dim legal view of EORs and treating teams as their original employer’s responsibility. We would recommend talking to a travel compliance specialist for advice (we’re always here for support).

Regional Tax Rules

Different countries will apply different tax rules,

United States

Federal tax: applies no matter where your employee is.
Foreign Earned Income Exclusion (FEIE): helps offset tax.
State tax: varies. Some states want their cut even if you’ve left.
Social Security (FICA): may apply unless a Totalisation Agreement says otherwise.
Consider claiming foreign tax credits to avoid double income-based taxation.

United Kingdom

PAYE: covers income tax and National Insurance.
Statutory Residence Test (SRT): determines UK tax status.
Split-year treatment: possible if the move happens mid-year.

European Union

Posted Workers Directive: ensures fair treatment.
A1 Certificates: prevent double social security charges. Valid for 24 months (if extended).

What Happens If You Get It Wrong?

Tax audits: painful, expensive, and time-consuming.
Double taxation: you might pay corporate and personal taxes twice.
Immigration risk: you could lose your licence to sponsor visas.

Best Practices for Global Workforce Management

Global Mobility tax is a moving target. You’re juggling income tax, payroll, social security, corporate tax, and even VAT. To stay compliant and cost-efficient, you need to be proactive, strategic, and tech-savvy. Here’s how.

Track Employee Movement Smartly

Where people work (and for how long) drives tax risk. Track it using the new breed of dedicated mobility platforms, logging days in real time.

Example: If someone hits 170 days in a country, the system alerts you, so you can plan for possible residency or withholding rules before tax trouble starts.

Keep Up with the Rules

Tax laws evolve constantly, especially post-COVID. Many countries were lenient on remote work during the pandemic, but that grace period is over.

Governments now use tech (even social media and smartphone data) to catch unreported and non-compliant work. You need to stay vigilant to these risks.

Subscribe to tax alerts
Use legal databases
Partner with providers that push updates to you. Some platforms even use AI to scan and flag rule changes for your team, saving hours of manual research.

Use AI and Automation to Lighten the Load

AI is changing the game. It can:

Automate data entry across payrolls
Reconcile tax reports
Run hypothetical tax calculations
Flag anomalies in travel patterns
Ingest and apply country-specific tax rules
Power chatbots that answer basic employee questions (“What’s the per diem in Germany?”)

Familiarise yourself with the best AI tools on the market to make your tax equalization efforts seamless.

Set Clear Policies and Communicate Them

A policy only works if people follow it.

Document the big stuff: tax equalisation/protection, what the company will and won’t pay for, pre-approval for long business trips, etc.

Then educate everyone, not just HR. Train business leads and travelling employees. A quick guide or FAQ for mobile workers (“If you’re abroad for 30+ days, tell HR”) makes a real difference. Preventing tax issues is always cheaper than fixing them.

Call in the Experts When It Counts

Don’t go it alone.

Global Mobility tax consultants exist for a reason. Use them for:

Multi-country tax filings
Expat tax advice
Year-end equalisation calcs
Trailing liabilities
Tax dispute resolution

They’ve got the systems and the expertise. It’s usually more cost-effective than trying to handle complex cases in-house.

Plan Assignments with Tax in Mind

Tax should factor into every plan for both short and long-term assignments .

Time start/end dates around tax year cut-offs when possible. In some cases, that alone can keep an employee under key thresholds.

Finally, agree on tax reimbursements early. If the employee’s picking up any tax burden, make that crystal clear at the offer stage and put it in writing.

Why a Travel Compliance Assistant Can Free Up Your Time

Centuro Global’s AI-powered Travel Compliance Assistant lets you plug in your employee’s travel info and get a real-time report on visa, tax, and legal obligations. It scans passports, job history, compensation, and flags risk before it happens. In a word, seamless Global Mobility tax services in the palm of your hand.

You get fast, tailored advice. Your employee will know what to do. And your legal team can get things done fast – vital for any kind of common cross-border assignment.

Book a free demo today to start getting on top of your cross-border tax obligations.