COVID-19 International Tax and Global Mobility
International Tax Risk
As a leading international university, the University of Strathclyde requires to manage tax exposure in all countries in which it and its staff operate. However, with the arrival of COVID-19, international tax risk has been increased by changes in two key areas: 1. Staff location and 2. Remote service delivery. The Finance and Human Resources Directorates, with support from professional advisors, have sought to manage this risk with a fiscally responsible approach which supports staff, students and the University’s own position.
The location of staff is often a main contributor to the creation of tax liabilities. The University’s policy is to recruit the best staff to support its teaching and research activities and is able to attract talented individuals from all over the world. However, the University of Strathclyde is a Scottish university, and unless particular circumstances require the permanent overseas location of staff to fulfil their contract, it is assumed that they will also be normally located in Scotland or elsewhere in the UK. All exceptions to this must be approved in advance by the hiring Head of Department, School or Directorate, the Director of Human Resources and the Director of Finance.
For existing staff who may wish to relocate another country for personal reasons, it must be understood that this will require a change of contract, which may be agreed only after consultation with, and approval from Human Resources and Finance Directorates. Location of staff overseas can create income tax charges for the University, VAT or indirect tax charges, obligations to establish an overseas payroll and possibly double taxation charges. There may also be tax implications for the staff member personally. Where a relocation is requested by a member of staff and not required by the University then the costs of obtaining professional advice regarding their personal circumstances may be chargeable to the staff member personally, or with prior approval of their Head of Department, School or Directorate, to their budget.
There are many issues which need to be considered in respect of staff location if this is not in the UK and they are case specific, so please make contact as early as possible to discuss. No commitment should be given to a staff member to work overseas for the University without being approved by the relevant Head of Department / School, the Director of Human Resources and the Director of Finance.
Payment Mechanism to Pay Overseas Assignees
There have been several challenges in determining a viable approach to paying overseas assignees (e.g. external examiners, guaranteed hours roles). It has now been confirmed that all such assignees residing overseas (only) will need to be paid through the Financial Management System (FMS).
The mechanism to process these payments will be as follows:
- Assignee submits an invoice to the department where the work was undertaken. You can use the Invoice Template for Overseas Assignees as an example.
- Department complete a Request for Payment Form
- under ‘Reason for Payment’ please detail ‘Overseas Assignee Covid 19’
- in the ‘Employment Status Details of Supplier’ please cross the third option ‘ESS Outcome not applicable to this Supplier’
- Assignee’s invoice and completed RFP form should be scanned as one pdf to firstname.lastname@example.org
If further guidance is required with regards paying overseas assignees, please contact the Finance Helpdesk email@example.com
The supplementary payments route must therefore only be used for those assignees who are based in the UK.
Remote Service Delivery
With international travel reduced for Staff and Students the University has quickly adjusted to a changed approach to teaching and managing research activities, often through online communications. The location of the delivery of a service, which may be determined by the location of the recipient of that service, will often be a key factor in creating an obligation to pay tax to an overseas tax authority and can create ongoing reporting obligations.
International tax is a growing and highly complex area of compliance and it is essential that the risks are appropriately managed. If you need support or have any questions about Staff Location or Remote Service Delivery, please contact Deputy Director of Finance, Clare Urquhart or the relevant HR Manager for your area.
Line Manager Role
It is vitally important that we have full transparency of our staff base and it is the responsibility of all staff to update their home location information on Pegasus in the event that this changes. We would ask that managers advise their HR Manager if they know of any staff who are based overseas currently – even if this is a temporary arrangement.