Global mobility management with tips on the significant challenges to look out for.
2022-08-19
The world of Global Mobility is filled with an equal mix of opportunities and challenges. Experienced Global Mobility teams and Relo professionals will be well aware of some of the more frequent considerations related to assignment risk. Still, others may be reconsidering basic policy, timing, and location-based decisions to ensure the safety and security of employees.
Where should companies start?
Immigration complications
The beginning of a global mobility journey frequently starts with immigration. Immigration processes alone are often challenging but particularly difficult when the political landscape changes. A recent example concerns residence permit renewals for Russian passport holders in Latvia. Russian passport holders with residence permits for Latvia cannot renew their work permits due to the ongoing Ukraine crisis. This has led to increased long-term Latvian residents ( with Russian passports) seeking new locations and opportunities.
See article on doing business in Latvia.
Changes in legislation, the COVID-19 pandemic, and higher volumes of new arrivals have significantly created a backlog of immigration applications globally. Companies should consider the political situation of the host location when choosing which talent to send on assignment and should expect longer-than-usual immigration processing times.
See article on how to navigate the backlog in immigration services.
Insurance tax
Insurance is a crucial and costly consideration in a traditional home-based assignment (Long-Term and Short-Term Assignments). International medical insurance coverage is not only essential, particularly for those employees arriving in locations without universal medical care, limited medical facilities, or lower-quality medical coverage. A long-term assignment from Vietnam to the U.S. would require international medical coverage due to the privatised healthcare system and federal requirements.
Equally, an assignment from the U.S. to Vietnam would require the same degree of coverage to ensure that employees could receive access to English-speaking hospitals and emergency services. Organisations, therefore, need to consider the risk related to medical insurance requirements and the supporting costs to ensure a duty of care. Regarding insurance, teams should also consider other applicable elements, such as Insurance that touches many parts of renters or contents insurance in the home and host locations as well as shipping and storage insurance.
See article on considerations for employee benefits, insurance, and recruitment.
What’s next in the realms of tax?
Many organisations pay a Hardship Allowance to employees arriving in more challenging or dangerous locations. However, it’s important to note that whilst a hardship allowance might incentivize employees to enter a given area, the assistance does not ensure their safety and security. Selecting reputable vendors who can search for expat-quality housing in secure neighbourhoods or provide car and driver support is as essential as undertaking an initial security assessment of the host location and selected property.
In recent years, many organisations have moved towards paying a lumpsum directly to the employee to use in place of some or all of the policy benefits. Whilst cash lump sums allow for more employee flexibility, managed lump sums might be a better fit for some uses.
A managed lump sum allows the employee to choose what services they might need, but the funds are managed through a relocation company. This, in turn, helps to ensure that credible and vetted vendors supply the services required.
Where tax risk gets complicated
Companies should consider providing employees with tax consultation and preparation services in nearly all assignment types. However, it is also important to consider ongoing talks during an assignment before triggering repatriation. In the UK, for example, employees will no longer be required to pay capital gains tax or dividends tax on their UK assets once they have become a non-resident of the country.
However, you can live abroad for less than five years and remain a temporary non-resident (TNR). Should a British live in the UAE for four years and 11 months before returning to the UK, they would be held accountable for the tax savings made on UK dividends of capital gains since the start of their assignment. The initial sending of employees to a host location and their return should be considered carefully, with the advice of trusted professionals to mitigate risk.
Conclusion
Entering or moving employees across international jurisdictions can hold its risks; however, the rewards are often worth pursuing. Careful planning and assessment are critical. If your organisation requires any assistance concerning global mobility or help with remote workers, we can help set up an international mobility program to expand and manage your global workforce. Contact us today!
