Personal Tax Liability

The extent of the personal tax obligation for each employee is dependent upon whether a tax treaty exists between the United States and the host country. If a tax treaty exists, an employee can generally spend up 183 days in the country without tax implications.

Exception: If the employer is deemed to have a permanent establishment in the country

Institutional Tax Liability

If the employee’s presence in the host country rises to the level of a taxable presence for the employer entity, the company would be subject to corporate income tax on the profit attributable to this permanent establishment.

What to do?

• Check for the existence of a tax treaty between your country of residence and the host country – if one does not exist, the 183 day limit may not apply. Your limit may be much shorter.
• If there is a treaty, do not plan to stay in the host country for longer than 183 days
• In both cases, consult with both the Assistant Vice President for Tax Compliance, and the Director of Global HR