Death in service, marijuana, family rights & criminal convictions: Commonly overlooked aspects of international assignments
Four global mobility experts from across the Alliott Group network gave a presentation at the Forum for Expatriate Management's EMEA Summit in London between 20-21 November 2019.
Too often employers consider only commercial factors when making decisions about international employee transfers. However, there are many other issues which are often overlooked and should be on any employer’s checklist. Our Global Mobility experts will explore some of these in our insight session summarised below.
Death in service
Presented by: Luc Lamy, Tax Consult, Belgium
One aspect of international assignments that is rarely touched upon is what happens when an assignee dies while on assignment. Here are a few of the tax and civil issues that may come into play in such a scenario:
- Personal Income Tax Return: Anyone who falls within the scope of a country’s income tax is required to file a tax return. When this person dies, the obligation to file a tax return is usually passed on to their heirs.
- Inheritance laws: Any (international) succession has two aspects: a civil and a tax aspect.
At the EU level, successions are civilly devolved under the law designated by a Regulation. The law of the deceased’s last habitual residence will apply if he has not opted for the law of his State (art. 21-22). There is a general lack of international coordination of tax policies on the treatment of cross-border successions. Cases of international double taxation are therefore frequent, meaning that the situation could quickly turn into a disaster for the heirs of the executive who died during international assignments.
- Survivor’s financial support When a person dies, the surviving relatives may have the right to claim survivors’ benefits.
The EU has adopted a Regulation on this. This Regulation does not force States to adopt survivor’s benefits but coordinates their granting when States actually adopted them.
Taxing international assignments
Presented by: David Gibbs, Alliotts, UK
There are various aspects to consider when it comes to taxing international assignments. Front of mind for assignees are the tax breaks and benefits that they and their family members are entitled to. Common questions to consider here are:
- Which family members can be paid for tax free?
- What travel costs can be claimed?
- What about accommodation expenses and benefits in kind?
The length of an assignment is key when it comes to taxation. Short Term Business Visitors (STBV) who come to the UK for less than 183 days on a short-term contract from their overseas employer may be exempt from applying PAYE. If certain conditions are met and agreement is reached with HMRC, the costs are borne overseas and not in the UK which means PAYE is not applied. Alternatively, for one or two employees, employers might consider applying for a NT tax code to apply to a UK payroll paying the employees.
On the other hand, individuals that are in the UK for more than 183 days are automatically UK resident for tax purposes. The initial requirement is that the assignee declare worldwide income and pay UK tax on this to HMRC. However, they may be able to apply for a remittance basis of tax which means they only pay tax on income and gains remitted to the UK, but there are costs involved in doing this so it is not straightforward
Presented by: Graeme Kirk, Ellisons Solicitors, UK
Visas can be a complicated business rife with pitfalls. Here are some of the commonly overlooked issues seen by our experts:
- Does the employee have any previous criminal convictions? If so, what and when?
- Does the employee have any previous adverse immigration history anywhere in the world, e.g. visa refusals?
- Will the visa you are obtaining potentially enable the employee to apply for permanent residence rights? This is often an issue of concern to the employee and is often not raised by the employer. If the answer is no, has this been discussed with the employee
- Can the employee enter the country to which they are being transferred as a business visitor or do they require a work visa? Get it wrong and your employee might be stopped from entering or required to return to the home country to apply for a different visa.
Melissa Vangeen, Head of Immigration at Sherrards Solicitors, comments: “The price of a failed assignment can be huge. It’s expensive to send someone to work abroad, only to bring them back a few months later. Our experts find that businesses don’t always factor the length of time it takes to deal with immigration compliance and vetting into planning international moves. Budgeting is also an issue that arises time and again: costs such as the Immigrations Skills Charge and the Immigration Health Surcharge are often overlooked so it is important to know exactly what your outlay will be. It is also vital to understand the visa category that has been proposed and the terms and conditions that apply, remembering that each country has its own documentary requirements that individuals are expected to obtain, usually prior to entering the country.”
Family is key
Presented by: Graeme Kirk, Ellisons Solicitors, UK
Often overlooked when it comes to an international assignment are the factors that may seem of secondary importance to the employer but are front of mind for the employee. One such example is the status of the assignee’s family members.
One of the key deciding factors for any employee choosing whether or not to accept an international assignment is what rights their loved ones will have. Despite this, our experts find that employers routinely overlook these more personal questions in favour of seemingly more pressing commercial factors.
Essential questions that need to be asked include:
- What family does the employee wish to bring with them?
- Can they do so? Do they have to be married?
- Are they allowed to work?
- What are the tax implications?
The wrong answers to these questions, or not answering them at all, may result in the employee refusing the transfer.
Presented by: Kathie Gaber, Masuda Funai, USA
Recent changes in marijuana laws in the United States have resulted in a complicated dichotomy that is causing confusion for foreign nationals and employers.
More than half of the states in the U.S. have now legalized the use of marijuana for recreational and/or medical purposes. However, under Federal law, the manufacturing, cultivation, distribution, dispensing, possession, importation and exportation of marijuana and other controlled substances, as well as the selling or importing of drug paraphernalia which includes any items which are intended for ingesting and inhaling marijuana, is illegal.
This sets up an interesting scenario for foreign nationals who seek admission to, or other immigration benefits, from the U.S. and we are seeing heightened focus and scrutiny on drug use particularly by the U.S. Customs and Border Protection (USCIS) Officers during an applicant’s admission process to the U.S.
Regarding marijuana in the workplace, employers are still permitted to have reasonable zero tolerance or drug-free workplace policies provided they are applied in a nondiscriminatory manner and comply with a specific state’s drug testing law(s) and any right to privacy statute or similar law.