Seeing the world and paying for it

Foreign countries formerly regarded as an easy tax dodge are tightening up their laws.

Expatriates do not generally attract much sympathy from their work colleagues. Though certain postings bring some personal risk, for the most part foreign assignments are seen as a desirable way of seeing the world at the company's expense.

However, this perception may be a little wide of the mark. For a start, few expatriate employees live in the style to which their predecessors of a few years ago were accustomed. This is largely because of sophisticated information available now to organisations and their relocation advisers.

No longer do Americans posted to London stand much chance of getting away with any request for a flat in Belgravia, since that is where "everybody lives"; the computer programmer will apply all the information provided about the employee's modest home on the outskirts of New York and come up with an equivalent in the London suburbs.

Second, and perhaps more serious, countries with past reputations for not worrying too much about taxing foreign nationals are cracking down. It is a move that has severe consequences for the individual and the organisation.

For example, in India until recently it was possible "through a nod and a wink" for multinationals to pay employees offshore, say international tax experts. Then, about 18 months ago, the government announced an amnesty for those who admitted past non-compliance - with the threat of dire consequences for those that did not own up.

According to Michael Kaltz, partner in expatriate services of accountants Ernst & Young, some "household name British companies" were among those forced to pay large fines.

But it is not just those who wilfully flout tax laws that can find themselves in trouble. As Stephanie Phizackerley, a partner with the international assignment services division of the accountants Price Waterhouse, points out: "Multinationals want to be compliant." The problem is that it can be difficult to keep within the law. This may be because a government is corrupt. Or it may be because - as in Russia - the law changes "regularly, retrospectively and without clarity", says Ms Phizackerley.

Even so-called "standard" countries can pose problems, says Mr Kaltz. Germany recently changed its policy on second homes. Previously, a British company could provide an employee who kept a home in Britain while posted in the country with accommodation free of tax for the duration of the assignment. Now that tax-free period is limited to 12 months. Belgium is reluctant to abide by the European treaty agreement on social security, which sets out clear rules for the taxation of European nationals working away from home.

As a result, Mr Kaltz and his team spend a lot of time seeking to co- ordinate the tax affairs of multinationals.

Similarly, the PW group claims to be able to offer help through a compliance review that analyses individual countries' requirements in income tax, corporation tax and social security. Moreover, it can call upon the expertise of its colleagues to keep track of changes.

"We have a better chance than most people of interpreting changes to legislation because we're in the business," Ms Phizackerley adds. Pointing to satisfied customers is tricky because of the risk of painting them as tax dodgers, but the firm claims "some take-up" for the service over recent months and anticipates a lot more business.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee