In a new four-part series, ICAEW Insights examines what the future workplace may look like for chartered accountants and their businesses, exploring the talent, technology, wellbeing initiatives and office space that could shape the world of work in years to come. Part one examines the increasingly complex challenges presented by managing talent across international borders.
By forcing entire workforces to carry out their duties remotely in a matter of weeks, the pandemic has inadvertently posed the remote worker question to many businesses that have not previously considered it as an option - and in some cases, the answer has been unexpected.
An Institute of Directors (IoD) survey of close to a thousand company directors conducted in October 2020 discovered that nearly three quarters (74%) said they would be keeping increased home-working after coronavirus. Furthermore, more than half of those polled said their organisation intended to reduce their long-term use of workplaces.
One area that has added a further layer of complexity, from an employer’s perspective, is the increase in staff looking to work across international boundaries. While the trend presents a host of complex issues around management, wellbeing and taxation, it also presents opportunities in terms of shifting organisational mindset and changing company culture.
“An opportunity that businesses didn't necessarily feel they had a year ago”
ICAEW Insights spoke with Michelle Berners-Price, Director in KPMG’s global mobility tax team about global mobility in the post-pandemic working landscape, and what it means from a cross-border working perspective.
For Berners-Price, the adjustment in working practices brought about by COVID has driven a shift in attitudes.
“This is an opportunity businesses didn't necessarily feel they had a year ago,” she commented. “Often teams would say things like ‘it’s a bit too tricky, ‘let's not do that,’ and therefore that was the accepted position. But now there's very much a goal of ‘let's try, there's no reason we can't, let's have a look at it, see how much it costs, and then decide if we're going to go ahead’. So, a lot more enthusiasm for doing these things that are less straightforward from an employment perspective.”
Berners-Price said this presents a dilemma for employers looking to decide on their long-term plan when it comes to cross-border work. They could leverage it as a talent strategy to lead people to want to work for their organisation, or try to reduce their number of cases because the compliance burden falls on them. This decision can come with a heavy tax load to plan out.
Tax compliance issues
Income tax
“If you do work from a different country, then even from day one you could be triggering income tax and social security implications. And the employer might need to withhold taxes from the individual through a payroll. They would need to have a payroll in that location in order to be able to do so”, she said.
Corporate tax
“There could also be corporate tax implications. The individual could be creating what we call a permanent establishment of their home employer in the location that they go to. This means that the company would also have to allocate profits and pay corporate taxes in that location as well. That can actually be triggered even just by one person working in a different location, depending on their role and the sorts of activities that they carry out when they are there. Then alongside these tax bases, there's also indirect tax, so you can be triggering indirect tax in that location.”
CPD: a hybrid model of online learning
One aspect companies are trying to figure out at the moment is how to implement a system where people can work from home, but also gain that vital on-the-job learning experience. This is an area where the KPMG Director feels companies are certainly showing a preference for the hybrid model when it comes to career development.
“A lot of companies are saying if we're doing a hybrid working model, then the time when you're in your office space is the time when you should be collaborating and learning from one another”, she said. “When you're there, we want you to be in groups discussing certain topics and probably running training sessions as well, because there is a view that learning from each other is really key. And actually, people do need to be together in some of these cases to really receive the key training that's important to them.”
“Most companies didn’t have a process in place”
Berners-Price said that what's been interesting and challenging from her perspective is that most companies didn't have a process in place to manage this before the pandemic. They may have had the odd person working abroad, but weren't necessarily keeping track of them because the numbers were low. But now the numbers have risen, they’re having to come up with a process of managing them.
“I think the key thing from a mobility perspective is cross-border remote working and how the global team now feeds into the overall HR talent strategy. And this piece around where people work and how you manage the compliance obligations is really the fundamental issue that mobility teams are grappling with”, concluded Berners-Price.
Further information:
Related ICAEW Insights series: Taking remote working into account.
Related ICAEW Insights series: Getting back to business after lockdown.