Peter Graham and Charles Pirat

What makes business travel compliance essential?

In recent years governments around the world have sought to make employers more responsible for ensuring their business travellers remain compliant with immigration, social security and tax laws. They have done this through the introduction of new regulatory measures designed to both encourage compliance and penalise non-compliance.

And at the same time, governments have developed a range of new technical solutions which allow them to capture travel data in advance of travel analyse large amounts of data in real time, share it between different governments. Consequently, their enforcement of the regulations is far easier and more effective than it has ever been before.

Most recently, the entire world has been impacted by the effects of the COVID-19 pandemic and employers are having to take additional steps to ensure that their business travellers are safe. They need to know where their business travellers are and where they’ve been during this time. On top of existing immigration, social security, and tax compliance issues most countries have looked at temporary border closures, mandatory quarantine scheme as well as test and vaccination certificates being requires for entry.

Making the business case for compliance
 

IMMIGRATION

Issues
Increased emphasis has been placed on immigration compliance by initiatives to protect national workforces, along with increased border security, due to the current geopolitical climate.

Penalties and risks
• Refusal of entry for not having the correct visa.
• Fines for entry without the correct visa.
• Ban of future entry for individual and other travellers from the organisation.
• Arrest and detention/removal from the country for overstaying.
• Watch listing of organisation or individual causing visa/entry problems for future travellers from the organisation.

Mitigations
• Review travel activity before it takes place to prevent non-compliance with immigration law.
• Track visa expiry dates and ensure those travellers have returned when they should.
• Consider introducing business travel approval process to ensure above is done.

TAX

Issues
There has been a major shift over the last 10 years in how global corporations pay tax. Several years ago, the OECD created a new series of guidelines for national governments to implement some corporate taxation regulations and we are starting already to see the impacts.

Penalties and risks
• Fines.
• Permanent establishment risks.
• Base erosion and profit shifting (BEPS).
• Withholding tax.
• Shadow payroll.
• Economic Employment.

Mitigations
• Identify employees with personal tax exposure or potential liabilities to maintain your and their tax compliance.
• Review travel activity data in aggregate to determine if there is a risk of creating a permanent establishment.
• Understand your requirements in relation to how each country is implementing the BEPS actions.
• Learn how much impact the overseas travel on your payroll costs.
• Recent developments in the areas of remote working will only exacerbate reliance on the 183-day rule*. If your employees have been working remotely during the COVID-19 pandemic they may already have triggered economic employer liabilities - remember they are working not visiting.

SOCIAL SECURITY

Issues
The rationale for the EU Posted Worker Directive 2018/957/EU for instance, was primarily to protect employment rights within lower and higher-cost European territories. Although social security obligations can be one of the most significant contributions that employers will pay if they decide to send an employee overseas, social security may also be one of the most overlooked aspects of the compensation package. The major social security issues that concern both employer and the employee going abroad are whether contributions to social security plans will be required in the home country, host country, or both and whether the international travel will result in the employee losing any benefit entitlements.

Penalties and risks
• In Asia, directors who are listed on the organisation register can be banned from taking directorships in new companies.
• Under the EU Posted Worker Directive, fines up to €15,000 per employee per incident of non-compliance. These can be increased in size for repeated breaches.
• Companies viewed as repeat offenders can be excluded from posting workers and this is not limited to the country of breach.
• Removal from the country for failing to comply.

Mitigations
• If travelling into the EU, pre-travel checks to see if A1 form or posted worker registration needs to be done.
• Are suitable arrangements in place for overseas remote workers?
• Are there reciprocal arrangements/treaties in place between origin and destination country?

COVID-19

Issues
The COVID-19 pandemic that began at the end of 2019 was something that governments  around the world were unprepared for. The World Health Organisation declared a public health emergency of international concern regarding COVID-19 on 30 January 2020. Since that time governments have responded by closing borders or at least limiting entry, imposing quarantine regimes and more recently requiring test and vaccine certificates as a condition of entry.

Penalties and risks
• Requirement for test and vaccine certificates.
• Mandatory quarantine—cost of hotel accommodation (pre and post travel).
• Border closures (complete or partial), requirements for special travel permissions.
• Requirements changing daily.

Mitigations
• Review travel activity before it takes place to avoid costly quarantine periods and reduced productivity.
• Make sure your travellers are equipped with the necessary test and vaccine certificates if required.
• Check if your travellers require travel approval before they travel.

Compliance summary

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Other consequences of non-compliance that apply to all the above areas

• Brand reputation damaged.

• Duty of care failures.

• Embarrassment in front of clients if your staff are removed from their premises by the authorities.

• Reduced productivity of workforce owing to delays and quarantines.

• Delays caused to in-house and client projects or programmes.

• Damage to government relationships.

Cost control benefits of a dedicated business travel compliance solution
 

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Conclusion

Considering how unpredictable the nature of business travel can be, often spontaneous and based on need, organisations find it challenging to manage varying levels of exposures brought on by immigration, tax and social security compliance requirements. COVID-19 has added another layer of complexity to the challenge of mobilising your business travellers. While doing nothing may seem like the easiest path to take, it may no longer be acceptable, due to the association of immigration, social security, COVID-19 and tax risks that we have highlighted above. In fact, it will be far more cost effective to ensure a proper business travel compliance solution is put in place and at the same time allow organisations to provide a greater level of safety and security to their business travellers.

About Santa Fe Relocation:

Santa Fe Relocation supports companies in the management of their employees’ international assignments by offering tailored solutions and cost optimization programs. Santa Fe’s services are specially designed to assist employees and their families, in line with each company’s mobility policy. “In order to provide a full range of services, it has its own global mobility management departments in Relocation, Visa & Immigration and International Removals services.
“Quality and customer support will always be our main priorities.” This has made Santa Fe a key player in providing international mobility solutions. “Our global presence gives us the means to meet your needs in all countries. From any country in the world to any destination, Santa Fe Relocation chooses the most appropriate mobility solution for your needs.” www.santaferelo.com