Mobility via Podcast


Episode 7: Global Mobility considerations of COVID-19

Martha Klasing, who leads the Global Mobility Services team in KPMG's Washington National Tax, sits down with Bob Rothery and Glen Collins, to discuss the potential implications of COVID-19 on organizations and their assignees.

Martha Klasing

Martha Klasing

Partner, Washington National Tax, Global Mobility Services, KPMG US

+1 202-533-4206

Robert Rothery

Robert Rothery

Director, Washington National Tax, Global Mobility Services, KPMG US

+1 858-750-7329

Glen Collins

Glen Collins

Senior Manager, Global Mobility Services, KPMG US

+1 202-533-6238

Podcast transcript


Hello and welcome to  this edition of Mobility via Podcast. I'm Martha Klasing, a partner from KPMG's Washington National Tax practice and I'm joined today with two colleagues: Glen Collins, a senior manager with our Global Mobility Consulting Services group. He's based here in Washington D.C.  And, Bob Rothery, a Director in our Washington National Tax practice and he's based in San Diego.

Today's topic, as you might guess, is centered around the COVID-19 crisis.  What we have seen unfold in the last several weeks is nothing short of astonishing. And we're still very early on in the crisis. The impact  is being felt all over the globe and, at least, from what I can tell, there is few if any countries that have been spared. Governments around the world - they are shutting their borders and ordering their citizens to remain at home to help stop the spread of the virus. They are passing legislative measures designed to provide relief to tax payers via extended due dates for tax filings, as well as tax payments.  They are looking at ways to shore up economies that have taken a severe hit.  And, if we think about the global mobility space, HR professionals are still scrambling to sort out where their employees  currently are.  Are they safe? Are they stuck? Are travel restrictions impending their ability to get home? Not to mention trying to understand what the outlook is if we have a protracted environment.  What does that mean in terms of the programs,  the policies and the cost?

As I said, we are still very early on in the crisis.  Many of us are still in a very reactive mode.  Four weeks ago, six weeks ago, we could not have foreseen that we would be hunkered down today trying to remain productive in a completely changed environment. There is no business as usual at the moment. Everyone's trying to adapt while trying to stay safe.  So, this is what we are going to talk about today's conversation.  We're going to address some of these issues while understanding the current state is very fluid and we really don't know how long this environment will last. We don't know how deep of an impact this will have on our societies, businesses and economies around the globe. Let's talk about where we are.

Glen, you've been speaking with a good number of global mobility professionals that are grappling with this COVID-19 crisis.  What is top of mind and what are some of the urgent considerations that our HR professionals are dealing with?


Thanks, Martha.  Yes, I think the good news is that there’s so many challenges, as you’ve perfectly laid out, from a global-mobility program perspective.  What we’re seeing from our clients is that they are really putting significant emphasis on putting their people first.  So regardless of the potential tax or immigration outcomes, potential corporate tax risks to their organizations from, say, like a permanent establishment perspective, those issues are top of mind, but they’re really going to be dealt with later. 

So, the big push at the moment is to really ensure the safety and security of their employees and arming them and giving them with enough information that they can make, ideally, an informed decision about whether to remain in country or to return to their country of origin.  We just finished up our initial first spot survey in the market, it was entitled Implications on Global Mobile Employees, and we had about 200 participating cross-industry global organizations, which is great.  So, we’re able to already glean some insight about what’s happening. 

I was a bit surprised, but actually, considering the fact that so many global organizations have numerous employees in many countries globally, 61 percent of the participating organizations stated, in our survey, that they had no plans at the moment to repatriate their international assignees at this time, and essentially assignees are being directed to follow the local country mandates, including, very similarly to what we’re having occurring in the United States, stay at home and self-quarantining as needed.  And a third of the participants, though, said they’re still handling decision making on a case-by-case basis.  So maybe where there was an international assignment that was due to come up and end, say, within the next three to six months, there perhaps was more attention on just repatriating the assignee and accompanying family members back to the country of origin.  Certainly, with short-term international assignments, most of those individuals have been returned to home and have concluded their short-term assignments. 

Just to give you some examples, though, as far as the case-by-case scenario, in looking at whether or not to keep assignees in country or ask them to come home or respect their desire to come home, et cetera, one of our participating organizations said that they had actually identified about seven host countries where the medical-care situation was not very good so that they outright offered the assignee and their accompanying dependents in those locations to return to the home country, just to give you an example, one pointed area. 

So, at the moment, the situation is still quite fluid.  For those assignments that were (Inaudible) for 2020, as well as permanent transfers, for example, or international transfers, many of those have also been put on hold temporarily and it’s kind of a wait-and-see scenario.  Some organizations have said that they’ve outright cancelled, but the numbers are not as high as those that are still … about half of the participating organizations said that they’re just going to wait it out again and see, but the intention is that those that were planned for 2020 are still on the horizon, but it’s just the uncertainty as to when the timing will be, obviously, for those assignments or transfers to occur. 

So, while the focus has obviously been on the safety and security of international assignees and their accompanying family members, overall, though, as we know, the issues associated with outside of the HR (Inaudible) care areas, specifically around compliance, are still there.  So, organizations are going to have to start thinking about that and addressing that, and then it’s most likely going to be coming up in the not-too-near future. 

So, Bob, how are you seeing specifically maybe a few areas that organizations are … maybe should be considering or already consider?  I know we’ve had a number of legislative changes coming into play as well over the last couple of weeks.  So, I’ll turn it over to you and love to hear what your thoughts are on that.


Great.  Thanks, Glen.  Well, at this point, we still have more questions than answers.  There are, in fact, a lot of tax implications to a person remaining in place longer than anticipated or returning home sooner than anticipated.  So, some countries we’re beginning to hear reports from about ways that they will address these things, and on intra-EU moves, there’s been a lot of pronouncements already.  Certain other countries, Australia is making some pronouncements.  So far here in the United States we’re very early in receiving guidance.  There has been congressional action that we’ll talk about in a minute.  In terms of situations where days needed to be counted in order to not cross a certain threshold, so far, we don’t have any guidance there.  So just the things that clients are beginning to ask about and that we’re going to be closely tracking to identify when the IRS has some guidance for us. 

There’s, for example, the foreign earned-income exclusion, where there’s qualifying tests that require that a person remain in the foreign country for a certain period of time.  There are provisions in the Tax Code that allow the IRS to waive those time requirements.  The wording of the code is not well suited to a crisis like this.  So, we’ll have to see whether the IRS feels like it’s within their purview to make waivers of the time requirements in this case. 

Similarly, there are certain thresholds that will cause a person to be taxable or change their status.  So, residency in the U.S., as well as residency in various U.S. states may be dependent on how long you remain in the U.S. or in a given state.  So we’ll be waiting to see whether there is the potential of waivers, either from the U.S. or from states, to prevent a person from being regarded as a resident where otherwise they wouldn’t have been, had they not been forced to remain in place in the U.S., due to the travel restrictions that have been forced upon us by COVID-19. 

Similarly, there’s a provision that allows certain business travel expenses not to be included in income, and that’s dependent on a person not remaining in the host location for too long.  So, again, we’ll look to see whether there’s any guidance from the Internal Revenue Service on whether that might be a way for a person who’s forced to remain in place in the host location for longer than would normally be allowed.  All of these are things that are driven by the U.S. Internal Revenue Code.  So, we would be seeing similar kinds of rules, but with different standards, in other countries.  So, it would be looking at them to see whether they’ll be relaxing their standards as well. 

Finally, there is one thing that’s driven by treaties, where if a person is in a host location for less than 183 days, they may be able to not be taxed in the host location with respect to their compensation for services provided in the host location.  We are having early reports that the OECD is beginning to look at these issues.  And a similar issue, Martha, is that of permanent establishment, which is also driven by treaties.  Do you have any thoughts on that?


Yes, certainly.  I mean, a lot of times this is coming up from the Tax Department, right?  But this age-old worry about individuals working in a certain location for a company that’s based in another country and the question of by reason of their activities, are they creating what is called a permanent establishment or PE.  And because of the global pandemic, there are going to be a lot of situations where employees are working in countries other than the country where they normally and regularly work. 

In some instances, they might be stuck in a country, can’t leave due to the travel restrictions or border closings.  In particular, in the EU, many individuals commuted cross borders daily to their jobs, but, now, they’re working from home in the country where they live, but, historically, they’ve not worked there.  And the concern raised by many is whether or not these individuals could potentially create a permanent establishment due to this unplanned and usual situation. 

So in response to this, and just recently, in fact, three days ago, the OECD you mentioned, Bob, they did issue guidance to specifically address this concern, and it’s a seven-page discussion paper, but, in a nutshell, to boil it down, the guidance is that it’s unlikely that the COVID-19 situation will create any changes to the regular PE determination that you would go through. 

Some countries, you mentioned Australia, they have made specific points about leniency when it comes to the issue of PE during this exceptional times of crisis.  Australia’s ATO stated that it, quote, will not apply compliance resources to determine if a company has a PE in the country if the business has employees there only because of travel restrictions related to the pandemic.  So, Australia was a very early country to come out and make a statement with respect to this. 

Ireland’s revenue also issued guidance to disregard the presence of an individual in Ireland, and, where relevant, in another jurisdiction for corporate income tax purposes for a company, if individual’s presence is a result of COVID-19 travel restrictions.  So, there’s a lot of countries that haven’t even gotten to addressing this yet, but my view is absolutely they recognize that there are these various tax issues that are driven off of someone’s physical presence.  Bob, you mentioned the individual’s tax residency as one, the ability to qualify for tax relief under a treaty, what we call the 183-day rule, but I think you’re going to see more and more countries, as they get further down the road with dealing with everything they’re trying to deal with, that they will come out with some sort of pronouncements in terms of, hopefully, leniency in applying some of these rules. 

Again, many, many unanswered questions, although it does seem like there’s developments each and every day.  Like every 24 hours passes and there’s another development.  So, the one thing that we can say is this is a very fluid environment and it probably will remain as such for the near future.  So just staying on top of the latest developments is pretty important.


Absolutely.  And with that in mind, I think it’s important to say that both Congress and the IRS are trying to react quickly to advance policies that will have the most immediate impact on the economy.  Now, for example, with that in mind, the IRS announced a couple of weeks ago that tax deadlines will be extended.  Any entity that has a tax return or a tax payment due on April 15th will have that delayed for three months.  So, April 15th tax returns will be due on July 15th, and April 15th payments of tax will be due on July 15th.  There are some wrinkles there.  There are some subtleties there. 

So if you have something due on April 15th, you should talk to your tax provider to be sure that it is extended, but the idea here is to give people some breathing room, some leeway with respect to administrative functions that are related to tax return filings that may be difficult to accomplish with the disruption in business that’s going on right now, and also to alleviate cash-flow concerns where an amount would be due on April 15th at a time when revenue streams for many businesses have really dried up.


And interesting, Bob, that you mentioned just the issue of liquidity and maintaining cash reserves.  You think about these payments that are due on April 15th from an individual perspective, but if we think about a lot of global mobility programs where tax equalization is a central theme, the fact that the companies may be able to defer those payments, in fact, can defer those payments for three months, that’s at least a short-term benefit in terms of maintaining their cash and keeping their liquidity higher during that period.


Absolutely.  And I think the July 15th date was chosen rather arbitrarily, and we’ll see what happens this summer with respect to developments with the pandemic, whether additional extensions are needed.  There’s no way to know at this point, of course, what future action may be taken or may be needed to be taken. 

There’s a lot of other provisions in the recent legislation that were aimed at relieving cash flow for taxpayers, including a postponement of the deadline for employer portion of FICA taxes and various tax credits to help employers retain their employees and help the cash flow of individuals and corporate taxpayers.  One of the provisions in the recent legislation that’s receiving the most attention is the recovery rebate checks that a lot of individuals will be receiving in the months to come.


So, yes, Bob, this recovery rebate is certainly getting a lot of attention and a lot of questions around exactly how is this going to work.  Initially, when the legislation was passed, there were very old comments, if you will, that they wanted to have the checks in the hands of the individuals within two weeks’ time.  And I think we’re getting close to that date, and there still is the discussion administratively how they identify the taxpayers who are eligible, how do they get the checks to them, and, largely, the eligibility in terms of an individual’s level of income.  The IRS will look to a prior tax return, either 2019 or 2018, if 2019 has not been filed.  But it’s a rebate.  It’s an advance rebate with respect to 2020 taxes.  So, it’ll be trued up the following year.  And that certainly has some implications from a tax policy or tax equalization approach that companies may have. 

So, Glen, I know earlier in our discussion you mentioned that right now companies are really focused on the safety of their employees, but then we did progress to some of the tax issues that will have to be addressed down the road.  And I think this advanced rebate, from a policy perspective, may have some implications.  Do you have any thoughts on that?


So, Martha, yes, thanks for that.  And I think I do have a few thoughts from a global mobility program perspective as far as some of the associated outcomes, now, of the CARES Act and specifically the implications on global mobility programs and tax equalization.  And from that perspective, some assignees may have their payments reduced or eliminated because of increased wage reporting due to assignment allowances, their assignment packages, right, or associated payments.  And then, conversely, since the determination of eligibility is based on adjusted gross income, as you mentioned, certain expatriates who qualify for the foreign earned-income exclusion may now have their AGI reduced, making them eligible for when they otherwise would not have been eligible. 

So I think, at this stage, global mobility managers should really start to think about these associated policy implications and spend the time now maybe thinking about how their program will approach these potential disparities and work out a communications plan to share with their employees on how the organization tends to address this from a policy, and perhaps even more importantly, from a process perspective.


So, Glen, when you’re talking about this, it makes me think that we went through a similar situation just in terms of a stimulus rebate back in 2008, when we had the financial crisis.  Certainly, weren’t dealing with a global pandemic at the time, but the IRS did have a similar type of rebate and it operated largely the same way.  So that could be a key that anyone who, from a policy perspective, addressed this at that time, they could go back and take a look at what the thought process was, where they ended up and what the resolution was, and perhaps that gives them a framework for addressing it this time around. 

So, we’ve covered quite a bit of ground during the last several minutes, talking about a lot of things COVID-19 related.  It’s certainly an unsettling period, and the situation remains very fluid, but every day, there are new developments as we try to address all the things going around the globe.  I do want to thank everyone for joining us for this episode of Mobility via Podcast.  You will find links to our COVID-19 Information Page in the online description of this recording, and there are a wealth of resources there.  So please check it out. 

In future episodes, we will continue to address the top-of-mind issues of interest to our listeners, and, in the meantime, we would love to hear from you.  If you have thoughts on today’s episode or ideas for what you’d like to hear in the future, please send us an email at  Bob, Glen, great to speak with you and to our audience, again, thanks for listening.