As the pace of business accelerates, more companies are relying on internationally mobile employees, commonly referred to as “extended business travelers,” or EBTs. These are the corporate equivalent of Digital Nomads, people who live and work around the world.
While Digital Nomads are generally self-employed and part of the gig economy, EBTs are hired by one particular company. And so the company has more responsibility over their work conditions. There can be a lot of pluses and minuses for people who want to explore new regions and experience somewhat of an expat life.
Who are Extended Business Travelers?
EBTs are usually deployed by larger companies to complete a wide range of projects, from expanding into new markets to training global staff. While these companies feel EBTs allow them more nimble deployment of talent than “traditional” relocations and assignments, a recent survey by Weichert Workforce Mobility reveals that many fail to grasp their serious risks and implications.
In its survey, Weichert asked corporate relocation professionals at 79 companies about the ways they use and manage EBTs, defined as employees who travel from one country to another to work for anywhere from a few days to several weeks or months in a calendar year.
Although EBTs carry similar tax and immigration risks as employees on short or long-term assignments, they are often more difficult to manage or simply not regarded with as much scrutiny because “they’re just business travelers.”
Here are Some of the Potential Issues
The survey showed that while 48 percent of companies have tools to track their EBTs’ locations, these tools are often simple travel department tools that reflect planned itineraries rather than actual geographic locations. Only 12 percent of companies surveyed utilize GPS-based apps or tools that identify employees’ physical locations and actual days in country triggering immigration and tax obligations. Additionally, only 31 percent have formal mobility policies or guidelines in place for their EBTs.
Despite this, almost all of the companies surveyed—92 percent—said they were concerned with the level of risk associated with EBT non-compliance, while 86 percent admitted that remaining compliant with global tax rules was the biggest challenge associated with EBTs.
Their concern is warranted, according to Jennifer Connell, Practice Leader in Weichert’s Advisory Services group and architect of the survey.
“Tax authorities have become much more aggressive in recent years, to the point that they are now demanding documentation of the number of visits, total compensation paid and the type of work performed by EBTs, which makes the administrative task of remaining compliant more daunting,” Connell explained. “Meanwhile, punishments for non-compliance have escalated from simple fines to million dollar penalties and, in some cases, jail time.” That’s a high price to pay for a job that will let you live and work around the world.
Making the management of EBTs more challenging is confusion over who holds ultimate responsibility for them. Nearly one-third of respondents said they don’t provide any sort of guidance to their EBTs as to what functions they can perform, and although 70 percent of respondents said HR/mobility has responsibility for identifying and managing EBTs, closer examination shows otherwise.
“Less than half of the companies have a formal approach to EBTs, so mobility departments are likely only identifying these employees through travel reports or when business units contact them for assistance,” said Connell. “Most companies agree that the successful management of EBTs requires careful collaboration between a number of departments, including tax, payroll, and the requesting business unit, but they haven’t found a way to make it work.”
Here are the Key Findings
– 89 percent of companies said the top reason for sending employees on extended business travel was in response to the needs of business units.
– 97 percent of respondents expect their EBT volume to increase or stay the same in the coming year.
– Only 35 percent of companies have thresholds in place for how often travelers can visit a country before tax or immigration support is provided.
None if this is presented to deter you from becoming an EBT or Digital Nomad. There are great benefits of having a job which allows you to love and work around the world, but as tis surgery points out, a little planning and organization will go along way to making your life easier and the journey more rewarding.