Don’t Tax Yourself on this Topic

Tapping At Xylophones… Tibia After X-ray… Tackling Autocratic Xenophobes…

The subject of TAX can lead us to all sorts of acrobatic mental avoidance — these absurd acronyms, for example.

But a general understanding of taxes is essential to living and working abroad. Or at least knowing where to go with your basic – and not so basic – questions. There are several considerations, some that involve your employer and some that will be your own responsibility.  Here are a few:

Income tax may be part of your assignment compensation discussions so that you and your employer understand your liability in both home and host locations. Be prepared to talk about issues like tax equalization, what counts as income, and deadlines in relevant jurisdictions.

-Payments into Social Security programs may need to continue even when the worker resides outside of their home country. Consult a tax expert for clarity, depending on your home and host locations.

Business travelers and remote workers can inadvertently trigger tax liability for themselves and their employers by overstaying a prescribed number of days in another location, be it a new country or even another state or province. Given the swift adoption of virtual work during the COVID-19 pandemic, regulations are evolving in this area, and it is best to consult a tax professional. Your employer may also utilize tracking tools that help everyone stay compliant.

Purchases large and small, from everyday shopping to buying a home, may be subject to unfamiliar taxes. Consider real estate taxes on property and mortgage payment deductions, as well as what may be due on any rental income from the home you left. Make note of the sales tax in your host location, which may be called Value-Added-Tax (VAT) or Goods and Services Tax (GST). Find out whether marked prices include the tax, which is 25% or higher in countries like Denmark, Croatia, and Hungary. Some countries provide VAT refund schemes for foreign buyers.

With careful planning and frank discussions with a tax expert, you can worry less about this aspect of your work travels and ensure that your employer stays compliant.


Written by Ellen Harris, GMS, Product Manager, Content Group