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Global Mobility and COVID-19

The spread of the novel coronavirus has significantly impacted economies and daily lives all over the globe. It has also impacted global mobility programs.

While most employers have implemented working from home rules where possible and governments are urging people to stay at home and limit travel, global mobility programs face additional issues.

Some employees have taken matters in their own hands and have left countries upon the threat of COVID-19 and potential restricted travel and border closings. Short term assignments may turn into long term assignments and vice versa.

With employees moving to countries other than their home country or overstaying their initial assignment period there are some issues global mobility professionals have to discuss with their tax consultants:


Many business travelers are trying to avoid becoming a resident in a country other than the home country. The U.S. bases residency rules on days spent in the U.S. either exceeding 183 days in the current years or under the substantial presence test (all days of 2020, 1/3 of days in 2019 and 1/6 of days in 2018). The code provides for a medical exception from the substantial presence test. This only applies though if the individual cannot leave the U.S. due to a medical condition. This exception applies only if “the individual intends to leave and is unable to leave the United States because of a medical condition that arose while the individual was present in the United States.” It does not apply if the “condition or problem existed prior to the individual’s arrival in the United States [and] the individual was aware of the condition or problem, regardless of whether the individual required treatment for the condition or problem when the individual entered the United States.” There has been no statement from the IRS whether or not there will be an exception due to COVID-19 restricted travel.

There are ways to establish the tax residence in the home country based on either the treaty (Form 8833) or a closer connection statement (Form 8840).

Permanent Establishment

For employers, it will be important to avoid a permanent establishment in the country where employees work remotely and the company does not have an entity set up in the country. This will especially become problematic in countries where there is no income tax treaty.

Individual Tax

Employees moving to another country or having to stay longer than intended in the host country will most likely trigger income tax liabilities. For countries where an income tax treaty is in place, this may be less of an issue if the 183 days (within a calendar year or a 12-month period) are not exceeded. Nevertheless, there may be withholding implications.

Payroll withholding

Corresponding with the individual tax implications and residency rules there may also be payroll withholding obligations by the employers. In the U.S. there is a withholding requirement if the employee is in the U.S. for more than 90 days in the calendar year or the compensation allocated to workdays in the U.S. exceeds $3,000. There has not been any guidance so far on if the COVID-19 implications will have an impact on the 90 days rule.

Most countries have extended their filing and/or payment deadlines but employers should make sure their employees comply with their tax compliance obligations.

Restricted travel because of COVID-19 may also have severe implications on immigration topics. We recommend consulting with an immigration attorney if any employees may have to overstay their visas.

Written by Kristin Popp, Tax Supervisor with Frazier & Deeter

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