Managing mobility in a world reshaped by BEPS

09 December 2016

Mobility is evolving; driven by cost pressures, changes in technology and working practices, resulting in a shift away from “traditional” mobility involving formalised, long-term assignments, towards more informal types of mobility – business travellers, international commuters, virtual workers.

This population poses particular challenges for employers:

  • Who has ownership for this population?
  • How do you identify and track these individuals?
  • Do you have policies and processes in place governing the informally mobile?

If you don’t know where your people are or what they are doing, how can you get comfortable that you are managing the associated income and corporate tax, immigration, social security and other compliance obligations?

At the same time, the regulatory environment is also changing; the base erosion and profit shifting (BEPS) recommendations will fundamentally alter the international tax landscape putting greater onus on where your people are and what value they are creating.  But are you aware of these changes?  Have you taken any steps to review your policies or processes for globally mobile employees in light of the recommendations?

Anecdotally, many of our clients were struggling with these issues and we were repeatedly asked “what is everyone else doing?” so we ran a survey to find out.  We heard from 224 organisations across 26 countries and more than 25 industry sectors.  They told us:

Many organisations don’t currently have a good handle on the informally mobile.  There is a lack of clarity around who owns this population and a lack of documented guidance governing them:

  • 17% did not know who was responsible for business travellers in their organisation,
  • Two thirds of organisations don’t have any policy in place for business travellers against 81% with short-term assignment policies and 86% with long-term assignment policies.

However, organisations recognise this weakness and want to improve; 86% want ownership of business travellers managed or optimised within 2 years.

Informal mobility that is not managed can pose corporate risks, including permanent establishment (PE) exposures and we’re expecting greater scrutiny on this as a result of BEPS.  Indeed, 24% of respondents had received a recent PE challenge from the tax authorities.  But there is work to be done to ensure organisations have the measures in place to identify or manage such risks:

  • Only a quarter currently have a framework in place to manage PE risks triggered by globally mobile employees, and
  • In only a third of organisations are the corporate tax and HR/mobility teams working closely together to manage the risks.

58% said they were aware of BEPS a year down the line from the publication of the recommendations, with those in tax or finance roles more aware than their HR or mobility counterparts.  It’s therefore important for all the key stakeholders within the business to work better with their tax colleagues to ensure knowledge transfer and collaborative development of a framework to manage the corporate risks of mobility.

  • Does this resonate with you? Are the corporate risks of mobility moving up your agenda as a result of the BEPS recommendations?
  • Have you considered whether your existing policies, processes and structures are still fit for purpose under BEPS?
  • How do you manage risks such as PE in a pragmatic way so that the threat of triggering corporate risks doesn’t become a blocker to mobility?

To discover more about the findings from our survey, visit www.pwc.co.uk/managingmobilitysurvey

 

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