EXPATRIATE TAX RELIEF IN A GLOBAL PANDEMIC
EXPATRIATE TAX RELIEF IN A GLOBAL PANDEMIC
We are hearing stories like this from many of our clients who are trying to unravel often complex tax equalisation and payroll arrangements that are now ineffective.
So what help are tax authorities and governments giving to help companies and workers in these situations?
Predictably the response varies widely from country to country depending on the phase of the virus outbreak in that location, the local tax regulations and that authority’s views on its priorities. The most common responses involve measures to improve cash flow such as deferring tax payments (not just wage taxes, but VAT and corporate taxes too) and some form of recognition that people are spending time in locations as a result of the virus that they would otherwise spend elsewhere.
We asked a selection of our colleagues from across the world whether:
A – Your government has agreed to any measures to relax the payment deadlines for payroll taxes in order to ease companies’ cash flow?
B – Your tax administration has agreed that days spent in the country due to exceptional circumstances (virus related) can be ignored for the purposes of residency tests, applicable social security system etc?
The responses are shown below:
Country | Payroll taxes deferred? | Exceptional days ignored? |
UK | Yes | Yes (tax) / No (social security) |
Australia | Yes | Yes (limited to 3 months) |
Canada | Yes | Yes |
Ireland | Yes | Yes (tax) / No (social security) |
Spain | No | No |
Netherland | Yes | Yes |
France | Yes | No |
Belgium | Yes | Yes |
Italy | Yes | No |
USA | Yes | No (although some states are announcing measures) |
Germany | Yes | No (tax) / Yes (social security) |
Most of the countries surveyed are making some efforts to alleviate the financial difficulties facing employers in these challenging times, but the measures vary and no single approach can be relied on. However tax authorities do seem to acknowledge that unexpected liabilities and positions will arise and they are for the most part prepared to help employees and employers to avoid the worst impact of this.
Obviously things are moving incredibly quickly and the responses of each government are being updated almost daily. Therefore while the above details were correct at the time of writing they may well have been updated since then.
The messages remain as before:
- Know where your people are
- Understand the rules and any concessions that apply locally
- Maintain close communication with your employees
- If in doubt – seek advice