Mapping Systems for Managing Global Travel

INTERNATIONAL EXECUTIVE SERVICES

Thinking
Beyond Borders
kpmg.com

© 2011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss
entity with which the independent member firms of the KPMG network are affiliated. 23943NSS

Contents
Mapping out systems for
managing employee travel 2

KPMG International Executive Services
Argentina 8 Mexico 116
Australia 12 Montenegro 121
Austria 15 Netherlands 124
Belgium 18 New Zealand 127
Bosnia and Herzegovina 21 Norway 130
Brazil 24 Panama 133
Bulgaria 29 Papua New Guinea 136
Canada 32 Peru 139
China 38 Philippines 142
Colombia 41 Poland 145
Costa Rica 46 Portugal 148
Croatia 51 Puerto Rico 151
Czech Republic 54 Romania 154
Denmark 57 Russia 157
Dominican Republic 60 Saudi Arabia 161
Egypt 63 Serbia 164
Fiji 66 Singapore 167
Finland 69 Slovakia 170
France 72 South Africa 173
Germany 75 South Korea 176
Greece 78 Spain 179
Hong Kong 82 Sri Lanka 182
Hungary 85 Sweden 185
India 88 Switzerland 188
Indonesia 92 Taiwan 191
Ireland 95 Thailand 194
Italy 98
Turkey 197
Jamaica 101 United Kingdom 200
Japan 104 United States of America 203
Luxembourg 107 Uruguay 209
Macau 110 Vietnam 212
Malaysia 113


Mapping out systems for
managing employee travel

2 / THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS

© 20112011 KPMG International Cooperative (“KPMG International”). KPMG International provides no client servicesis a Swiss
© KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and and is a Swiss
entity with with which the independent member firms of the KPMG network are affiliated. 23943NSS
entity which the independent member firms of the KPMG network are affiliated. 23943NSS

Most global organizations recognize the raft
of potential tax and other exposures that
their short-term international travelers can
unwittingly create. But few companies have
summoned the courage to turn over the rock
and deal with what they find there.

The past few years have seen rising awareness of business
travel-related non-compliance with tax and immigration
laws among companies and government authorities alike.
While governments see potential to boost tax revenues
by targeting short-term travelers, global companies can be
overwhelmed by the complexity and scope of the problem.

Few organizations have company-wide systems for
managing employee travel. Those that have such systems
typically set them up in the wake of a major audit or
dispute. By that time, the organization could have already
suffered severe fines, penalties, and administrative costs
— not to mention potential reputational damage in the eyes
of the tax and immigration authorities, shareholders, and
other stakeholders. A more proactive approach to employee
business travel can help a company gain control and plan
effectively to reduce related risks and costs.

Business travel — more employees, more trips
In many countries featured in this publication, the profile
of the typical business traveler continues to change in
ways that increase the employer’s related risk. Foreign
postings are less likely to involve moving executives, their
families, and their belongings to other countries for terms
of a year or longer. Short-term business travel is on the
rise as organizations globalize, work grows more project-
oriented, and two-income families become the norm.

By creating virtual project teams and moving talent around
the globe as needed, employers can respond to global
business opportunities more quickly. Many employees
are happier to work on global projects by commuting or
sojourning briefly in other countries without changing
residences or uprooting their families.

Having more employees travel more frequently for
shorter periods can be more productive and less costly
than traditional, longer-term relocations — but only to
the extent higher tax and other costs in the host locations
do not erode the gains and travel related expenses. The
risk of higher costs, described in the sidebar, rises
exponentially with the number of short-term trips taken.

THINKING BEYOND BORDERS: MANAGEMENT OF EXTENDED BUSINESS TRAVELERS / 3


Keeping employees safe
In addition to the trend toward commuting and shorter
A World of Exposure sojourns, events of the last year highlight the importance
Short-term international business travel is vital for of having a robust system in place for tracking and
exchanging ideas and getting employees to work planning employee travel. Political unrest and natural
together in global teams. But unmonitored and disasters such as volcanoes, earthquakes, and tidal
unplanned, such travel can create a host of income waves: emergencies like these can strike without
tax and other exposures. warning, creating a need to move employees out of the
danger zone for uncertain lengths of time or marooning
• Depending on how many days the employee spends them in a foreign country for longer than intended.
working in a foreign country—in aggregate and often
over more than one year—the travel could create Despite the underlying reasons, such moves can cause
income tax and social security obligations for the the same tax exposures as other employee travel. In
employee in that country. fact, these situations could entail even more risk, for
example, when the relocation of key decision-makers
• The extent of an employee’s travel in a country could
from one country to another constitutes a shift in
trigger income tax, social security, payroll tax and/
business functions with transfer pricing or permanent
or withholding obligations for the employer and the
establishment implications. When such events occur,
employee.
quick access to data about your employees’ whereabouts
• Employees entering a country on business without and options for relocating them safely and economically
the right immigration documents — or staying in the could be crucial.
country for longer than the documents allow — could
expose themselves and their employers to fines, Real-time monitoring and advance planning
penalties and future travel restrictions. Clearly, today’s global organizations need to be ready to do
more than respond after-the-fact to compliance obligations
• An employee’s activities in a foreign country, such as
created by a mobile workforce. Companies need to have
concluding contracts on the employer’s behalf, could
systems in place to monitor employee travel in real-time
be construed as creating a permanent establishment
and eliminate exposures before they occur.
there, opening the company to taxation as a resident
in that country. In developing a company-wide approach to managing
• The employee’s services in the foreign country could employee travel, the first step is to determine who
have indirect tax implications (e.g., by creating VAT should take ownership. Given the range of issues that
remittance or collection obligations or nexus for employee travel can produce, companies often have
purposes of business taxes imposed). difficulty knowing who is accountable. Responsibility for
• Cross-border charges between related companies for managing employee travel issues spreads across many
the services of business travelers should comply with parts of the business, with different aspects coming
transfer pricing policies in the relevant jurisdiction in under the purview of human resources, tax, finance,
order to avoid adverse tax assessments. information technology, and the travelers themselves.

Proper planning that takes into account domestic Once a chain of accountability is established for
laws, administrative policies, and potential tax treaty overseeing the various elements, companies can institute
relief can help a company manage and mitigate such a global process for tracking and managing employee
exposures before the employee heads out. travel. The next step is to put in place centralized,
automated procedures and mechanisms, as described
the sidebar, to help ensure the process is followed.



Short-term travel under sharper scrutiny
Companies are well advised to gain control over their
business travel management without delay. As noted, Getting the World by the Tail
short-term business travel and the potential for non-
In the ideal case, all employees of a global
compliance have caught the eye of governments seeking
organization would have a central mechanism for
to increase tax revenues. Around the world, enforcement
assessing future business trips and helping mitigate
activities in the area are growing more intense.
tax compliance and other risks before any travel can
Tax and other authorities are not only applying the be booked. Such a system would:
rules more strictly, they are also improving their
• quantify how much time the employee has already
methods for detecting non-compliance. National
spent in a foreign jurisdiction in the past and how
initiatives to heighten border security over the last
much more time he or she can spend there without
decade have taught agencies within governments
becoming a tax resident
the benefits of collaboration. Now government
departments are sharing information more frequently, • break down tax residence guidance at both national
for example, as customs, immigration and tax and subnational (e.g., state or local) levels
authorities work together more closely to fulfill their • enumerate any social security, payroll tax, and/or
mandates. Travel-related tax assessments, fines and withholding tax implications that could arise from
penalties are increasing as a result. extended business travel in the proposed host country
• advise whether the employee’s planned activities (e.g.,
Global travel policies and central systems are key
meeting suppliers, attending conferences, negotiating
sales) could have permanent establishment or other
In this publication, we provide a high-level overview consequences in the foreign jurisdiction
of the taxes and other considerations in countries • specify what visas or other immigration documents
around the world. To plan for and manage short-term are required by business travelers in the foreign
travel effectively, however, companies need a means to country
integrate this information with the particulars of their
• list any other requirements or obligations that should
employees’ business trips.
be taken into account by people traveling to the
Instituting global travel policies and a central system to particular country.
manage them can do more than help an organization Such systems should also track employees on
avoid running afoul of the rules summarized in the international assignments in the event that natural
following pages. Sound policies supported by a robust disasters or political developments make it necessary
system can demonstrate good governance and foster to find and relocate them quickly.
goodwill with tax and other authorities, help prepare
for emergencies by providing an economical means to
find and move employees to safety, and provide data to
help the organization analyze the costs and benefits of
employee travel programs.



KPMG’s International Executive Services

Argentina Mexico
Australia Montenegro
Austria Netherlands
Belgium New Zealand
Bosnia and Herzegovina Norway
Brazil Panama
Bulgaria Papua New Guinea
Canada Peru
China Philippines
Colombia Poland
Costa Rica Portugal
Croatia Puerto Rico
Czech Republic Romania
Denmark Russia
Dominican Republic Saudi Arabia
Egypt Serbia
Fiji Singapore
Finland Slovakia
France South Africa
Germany South Korea
Greece Spain
Hong Kong Sri Lanka
Hungary Sweden
India Switzerland
Indonesia Taiwan
Ireland Thailand
Italy Turkey
Jamaica United Kingdom
Japan United States
Luxembourg Uruguay
Macau Vietnam
Malaysia



Argentina

Introduction Contact
Rodolfo P Canese Mendez
. Adriana Laurino
A person’s liability to Argentinean tax is KPMG in Argentina KPMG in Argentina
determined by residence status for taxation Partner Partner
purposes and the source of income derived by T: +54 11 4316 5869 T: +54 11 4316 5784
E: rcanese@kpmg.com.ar E: alaurino@kpmg.com.ar
that individual. Income tax is levied at progressive
rates on an individual’s taxable income for the
year, which is calculated by subtracting allowable
deductions from the total assessable income,
with the exception of foreigners who are in the
country for less than six months; foreigners who
are in the country for less than six months are
assessed tax at a flat rate.

Key messages
Extended business travelers are likely to be taxed
on employment income relating to their Argentinean
workdays.



Income tax Tax rates
For 2010, net taxable income is taxed at graduated rates
Liability for income tax
ranging from 9 percent to 35 percent for both residents and
A person’s liability to Argentinean tax is determined by
nonresidents. The maximum tax rate is currently 35 percent
residence status. A person can be a resident, a nonresident
on income earned over 120,000 Argentine pesos (ARS).
on a ”permanent” basis, or a nonresident for Argentinean
Foreign beneficiaries may be subject to a flat rate if income
tax purposes (foreign beneficiary).
tax is withheld at the source (see the section on employee
Individuals are considered to be resident in Argentina when: compliance obligations and employer reporting
and withholding requirements).
• They are of Argentinean nationality, whether by birth or
naturalization, except for those individuals who have lost
their residence status. Social security
Liability for social security
• They are foreign individuals who have become permanent Argentinean nationals and expatriates living in Argentina
residents of Argentina (and have a permanent visa) or are subject to social security contributions. Social security
who are not residents but have spent sufficient time in contribution exemption is granted on request for foreigners
Argentina during a 12-month period. on short-term assignment (less than two years).
Generally, individuals who have been resident in Argentina Currently, social security taxes represent 17 percent of
will lose their residence status when they acquire gross wages. Since March 2011, a monthly cap amount
permanent residence in another country or remain in of ARS13,879.25 has been applicable to the employees’
another country for 12 months or more. contributions; employers’ contributions are not capped.
The 1998 law also established a new category of individuals In accordance with the laws currently in force, the cap is
who are considered to be nonresidents present in Argentina updated every March and September.
on a permanent basis. For example, foreign individuals whose Summary of the applicable rates and taxable bases for
presence in Argentina is based on the grounds of employment salaried persons
that is duly accredited and requires their permanency in
Employer (I) Employer (II) Employee
Argentina for a period not exceeding five years are considered
(Percent) (Percent) (Percent)
to be nonresidents. The same treatment applies to family
members who accompany them. Pension fund 10.17* 12.71* 11.00***

The general rule is that people who are residents of Argentina Pensioner’s 1.50* 1.62* 3.00***
are assessable on their worldwide income. Nonresidents are Healthcare Fund
generally assessable on income derived directly or indirectly Family Allowance 4.44* 5.56*
from sources in Argentina. Extended business travelers are Fund
likely to be considered nonresidents of Argentina for tax Unemployment 0.89* 1.11*
purposes or foreign beneficiaries. Fund
Definition of source Medical Care 6.00** 6.00** 3.00***
Employment income is generally treated as being
Total 23.00 27.00 17.00
Argentinean-sourced compensation where the individual
Source: KPMG in Argentina, June 2010
performs the services while physically located in Argentina.
Notes:
Tax trigger points
(I) mployers for manufacturing, commercial, and service activities,
E
Technically, there is no threshold/minimum number of days invoicing less than ARS48 million a year.
that exempts the employee from the requirements to file and (II) ommercial and service activities invoicing more than ARS48 million
C
pay tax in Argentina. To the extent that the individual qualifies a year.
for relief in terms of the dependent personal services article Additional information:
of the applicable double tax treaty, there will be no tax liability. *These percentages apply to the total remuneration without any limit.
The treaty exemption will not apply if the Argentinean entity
**These percentages apply, without any limit, to the total remuneration
is the individual’s economic employer. since November 2008.

Types of taxable income ***These percentages apply to the total remuneration or to the
monthly limit of ARS13,879.25 (taxable salary, called ”MOPRE”)
For extended business travelers, the type of income that is since March 2011.
generally taxed is employment income.



Argentina has entered into formal social security totalization There are two kinds of visas: temporary resident and
agreements to prevent double taxation and allow cooperation permanent resident.
between Argentina and overseas tax authorities in enforcing
Temporary resident
their respective tax laws:
A temporary visa (Residencia Temporaria) provides
– Bilateral treaties: Spain, Portugal, Italy, Chile, Greece permission for an individual to stay in the country on a
– Multilateral treaties: Uruguay, Paraguay, Brazil nonpermanent basis to develop certain activities. This visa is
granted for one year and can be renewed every year. Once they
– Ibero-American treaty: Argentina, Bolivia, Brazil, Colombia, have arrived in Argentina, individuals and their employers can
Costa Rica, Chile, Ecuador, El Salvador, Spain, Paraguay, proceed in making arrangements to obtain their DNI (personal
Peru, Portugal, Uruguay, Venezuela. The Convention will ID card in Argentina).
come into force and effect on the first day of the month
following the date when the deposit of the seventh Permanent resident
instrument of ratification, acceptance, approval, or joining A permanent visa provides permission for an individual to
was made. However, this action will affect the relationship stay in the country indefinitely.
between said states once the Implementation Agreement Once they have arrived in Argentina, individuals and their
is signed by said states. The deposit of the seventh employers can proceed in making arrangements to obtain
instrument of ratification to the SEGIB made by Bolivia in their DNI (personal ID card in Argentina), Argentine driver’s
February 2011 implies that its coming into force will be license, and tax registration.
in May 2011.
The visas for residency and work are not differentiated in
Compliance obligations Argentina. Therefore, if the individual’s spouse or dependants
Employee compliance obligations receive visas, they will also be able to work in the country.
The deadline for filing individual income tax returns and paying Double taxation treaties
any annual tax due depends on the final digit of the taxpayer’s In addition to Argentina’s domestic arrangements that
tax board registration number and usually ranges from April 15 provide relief from international double taxation, Argentina
to April 20 following the tax year-end, which is December 31. has entered into double taxation treaties with approximately
Individuals whose only source of income is employment 18 countries to prevent double taxation and allow cooperation
income, which may often be the case with extended between Argentina and overseas tax authorities in enforcing
business travelers, do not need to file tax returns if the their respective tax laws.
income was subject to withholding at the source unless their Permanent establishment implications
annual gross income exceeds a minimum that is set by the There is the potential that a permanent establishment could
Argentine tax authorities (currently set at ARS144,000), be created as a result of extended business travel, but this
in which case it becomes mandatory. would depend on the type of services performed and the
For many types of income, including any income other than level of authority the employee has.
employment income paid to a nonresident, the payer must Indirect taxes
withhold tax at the source and remit taxes withheld to the The standard rate of VAT is 21 percent. VAT or IVA (impuesto
tax authorities. al valor agregado in Spanish) is a general tax on
Employer reporting and withholding requirements consumption within the Argentine territory. It is levied on the
Withholdings from employment income are covered delivery of goods or the rendering of services by any person
under the Pay-As-You-Go (PAYG) system. If an individual is or legal entity conducting an economic activity and on the
taxable with respect to employment income, the employer importation of goods and services.
has a PAYG withholding requirement. Foreigners who are VAT is levied on:
present in Argentina for less than six months are subject to a
withholding rate of 24.5 percent on their gross compensation. • The sale by VAT taxpayers of movable property located in
Argentina
Other • Work, leasing, and services specified in the law, provided
Work permit/visa requirements they are performed in Argentina
Foreign nationals generally must obtain visas at Argentine • The final importation of movable property
consulates in order to enter Argentina. A waiver of the visa
• The use or exploitation in Argentina of services that are
requirement is available to nationals of most developed
supplied by nonresidents (i.e., import of services)
countries if a trip is brief and for tourism or nonemployment
business purposes. Executives coming to Argentina for
the purpose of engaging in employment must obtain a visa
(prior to departure) with the Argentine migratory authorities
through the Argentine company that will act as their employer
during the assignment.



Employment income is not subject to VAT. Transfer pricing
For VAT purposes, the concept of taxable “sale” includes: Argentina has a transfer pricing regime that applies to
transactions made with foreign affiliates and other entities.
• Sales and other transfers for consideration of movable More details can be found in Argentine Tax Office Law 20.628
property located in Argentina (payment in kind, allocation and relevant amendments, as well as in Decree 1344/98 and
of property on the liquidation of a company, contribution to General Resolution No. 1122/01.
a company)
A transfer pricing implication could arise to the extent that
• The incorporation of movable goods produced by the the employee is being paid by an entity in one jurisdiction but
taxpayer in the case of leasing and rendering of exempt performing services for the benefit of the entity in another
services or those excluded from taxation jurisdiction, in other words, when a cross-border benefit is
• Transfers of movable goods that are attached to the soil being provided. This would also be dependent on the nature
at the time of the transfer, provided they have their own and complexity of the services performed. Forms F742 and
individuality and represent goods in trade for the taxpayer F743 require disclosure of related-party transactions with
foreign entities. Management fees can be deductible but must
• The removal of movable property by the owner for personal meet an arm’s-length standard and be directly related to the
use or consumption income being generated, and the relevant documentation
• Transactions carried out by commission agents, must be kept.
consignees, and others who sell or buy personal property Local data privacy requirements
in their own name but on behalf of third parties Argentina has data privacy laws, including the Law for the
Under the VAT system, tax is levied at each stage of the Protection of Personal Data enacted in 2000 and the related
manufacturing and distribution process on a noncumulative regulations enacted in 2001. The laws are enforced by the
basis. The accumulation of tax is avoided through the National Data Protection Commissioner. The European
deduction of VAT invoiced to an entity. The entity pays VAT on Union (EU) has determined that Argentina’s laws meet the
the total amount invoiced by it in each monthly tax period, EU’s”adequacy” standard for data flows outside Argentina.
but is entitled to recover the input VAT that was invoiced to Exchange control
the entity during the same period. Exchange houses and banks trade foreign currencies freely.
If, in any tax period, the credit for input VAT is higher than A visitor would be well advised, however, to travel with U.S.
the amount of VAT due on output, the entity is not entitled dollars in Argentina, as these are exchangeable and are often
to a refund (unless the refund is related to exports). In cases accepted directly as payment.
where there is an excess, it is credited against future VAT Nondeductible costs for assignees
liabilities. Nondeductible costs for assignees include contributions by
If a business manufactures taxable supplies in Argentina, an employer to non-Argentinean pension funds and medical
it will be required to register and account for Argentine VAT. insurance premiums.
Note that under Argentine VAT legislation, it is not possible
for a non-Argentine entity to register voluntarily in Argentina
and act as an”Argentine established entity. VAT must be filed
”
on a monthly basis.



Australia

Andy Hutt
Residents are taxed on worldwide income whereas nonresidents KPMG in Australia
and temporary residents are generally taxed on Australian- Tax Partner
sourced income only. T: +61 2 9335 8655
E: ahutt@kpmg.com.au
A person’s liability to Australian tax is determined by residence
status for taxation purposes and the source of income derived
by that individual. Income tax is levied at progressive rates on an
individual’s taxable income for the year, which is calculated by
subtracting allowable deductions from the total assessable income.

Key messages
Extended business travelers are likely to be taxed on employment income relating to their Australian workdays.



Income tax In January 2011, the Australian government proposed the
Liability for income tax introduction of a one-year levy to help fund the rebuilding
A person’s liability to Australian tax is determined by as a result of the recent floods. If introduced, an additional
residence status. A person can be a resident, nonresident, 0.5 percent will be payable on taxable income between
or temporary resident for Australian tax purposes. AUD50,000 and AUD100,000, and 1 percent on taxable
income in excess of AUD100,000. Those affected by the
A resident of Australia generally refers to an individual who floods or those with taxable income of less than AUD50,000
enters Australia with the intention of remaining for more than will not be liable.
six months (or who actually spends more than six months in
Australia during an income year). A temporary resident is a Social security
resident of Australia who is in Australia on a specific temporary Liability for social security
visa and meets other prescribed conditions. A nonresident Superannuation is a mechanism requiring individuals to
of Australia is generally someone who spends less than save money for retirement. It prescribes that employers
six months in Australia. The general rule is that a person who is make a contribution of 9 percent of earnings (up to a
a resident of Australia is assessable on worldwide income. maximum contribution of AUD3,799.80 per quarter) into an
Nonresidents are assessed on income derived directly or Australian superannuation account. An exemption from the
indirectly from sources in Australia (subject to the interaction superannuation requirement can apply for certain senior
of a double tax agreement). Temporary residents are executives or where there is a totalization agreement
assessed on employment income from all sources derived between Australia and the home country.
after arrival in Australia and all Australian-sourced investment Medicare Levy is payable only by residents and temporary
income (subject to the interaction of a double tax agreement). residents from countries that have reciprocal health
Extended business travelers are likely to be considered agreements with Australia. The Medicare Levy rate is
nonresidents of Australia for tax purposes unless they enter 1.5 percent of taxable income. The Medicare Levy Surcharge
Australia with the intention to remain in Australia for more may also be payable depending on the employees’ level of
than six months. income and whether the employee has appropriate private
Definition of source health insurance. If applied, the Medicare Levy Surcharge
Employment income is generally treated as Australian- rate is 1 percent of the total of taxable income plus reportable
sourced compensation where the individual performs the fringe benefits.
services while physically located in Australia. Nonresidents are not liable for the Medicare Levy or
Tax trigger points Medicare Levy Surcharge.
Technically, there is no threshold/minimum number of days Foreigners may be exempt from superannuation. The Medicare
that exempts the employee from the requirements to file and Levy and Medicare Levy Surcharge may be payable.
pay tax in Australia. To the extent that the individual qualifies
for relief in terms of the dependent personal services article
of the applicable double tax treaty, there will be no tax liability.
Compliance obligations
Employee compliance obligations
The treaty exemption will not apply if the Australian entity is
Tax returns are due by October 31 following the tax year-
the individual’s economic employer.
end, which is June 30. Where a tax agent is used, there
Fringe benefits tax is levied on the employer. The maximum is an automatic extension. Tax returns must be filed by
tax rate is 45 percent. nonresidents who derive any Australian-sourced income
(other than Australian dividend income, interest income,
Types of taxable income
or royalties, which are subject to final withholding tax).
For extended business travelers, the types of income that
are generally taxed are employment income and Australian- For many types of income, including any income other than
sourced income and gains from taxable Australian assets employment income paid to a nonresident, the payer must
(such as real estate). Fringe benefits, which are broadly withhold tax at the source and remit taxes withheld to the tax
noncash employment income, are subject to fringe benefits authorities.
tax, which is levied on the employer.
Employer reporting and withholding requirements
Tax rates Withholdings from employment income are covered under
Net taxable income is taxed at graduated rates ranging from the Pay-As-You-Go (PAYG) system. If an individual is taxable
15 percent to 45 percent. Nonresidents are subject to tax with respect to employment income, the payer has a PAYG
at 29 percent on the first 37,000 Australian dollars (AUD) of withholding requirement. Where the payer is a nonresident,
income and graduated rates ranging from 30 percent to this may be varied to zero by application to the Australian Tax
45 percent for the remaining income. The maximum tax rate Office (with the liability arising on lodgment of the return).
is currently 45 percent on income earned over AUD180,000 in In addition, employers may be liable to payroll tax at a state
the case of both residents and nonresidents. level where the annual payroll exceeds certain threshold
levels and an exemption does not apply. Rates, thresholds,
and exemptions vary between states.



Other services for the benefit of the entity in another jurisdiction,
Work permit/visa requirements in other words, when a cross-border benefit is being
The appropriate visa must be applied for before the individual provided. This would also be dependent on the nature and
enters Australia. The type of visa required will depend on the complexity of the services performed.
purpose of the individual’s entry into Australia. Local data privacy requirements
Double taxation treaties Australia has data privacy laws.
Australia has an extensive tax treaty network. Exchange control
In addition to Australia’s domestic arrangements that provide Australia does not restrict the flow of Australian or foreign
relief from international double taxation, Australia has entered currency into or out of the country. However, certain
into double taxation treaties with more than 40 countries reporting obligations are imposed to control tax evasion
to prevent double taxation and allow cooperation between and money laundering. New legislation requires financial
Australia and overseas tax authorities in enforcing their institutions and other cash dealers to give notification
respective tax laws. of cash transactions over AUD10,000, suspicious cash
transactions, and certain international telegraphic or other
Permanent establishment implications electronic funds transfers (there is no minimum amount).
There is the potential that a permanent establishment could All currency transfers (in Australian or foreign currency)
be created as a result of extended business travel, but this made by any person into or out of Australia of AUD10,000
would be dependent on the type of services performed and or more in value must be reported.
the level of authority the employee has.
Nondeductible costs for assignees
Indirect taxes Nondeductible costs for assignees include contributions by
Goods and services tax (GST) is applicable at 10 percent on an employer to non-Australian pension funds.
taxable supplies. GST registration may be required in some
circumstances.
Transfer pricing
Australia has a transfer pricing regime. A transfer pricing
implication could arise to the extent that the employee is
being paid by an entity in one jurisdiction but performing



Austria

Hans Zoechling
A person’s liability to Austrian tax is determined by residence status KPMG in Austria
for taxation purposes and the source of income derived by that Partner
individual. Income tax is levied at progressive rates on an individual’s T: +43 1 31 332 259
E: hzoechling@kpmg.at
taxable income for the year, which is calculated by subtracting
allowable deductions from the total assessable income.

Key messages
Extended business travelers are likely to be taxed on employment income relating to their Austrian workdays.



Income tax For the assessment of an individual who is subject to limited
Liability for income tax tax liability in Austria, the amount of EUR9,000 is added
A person’s liability to Austrian tax is determined by residence automatically by the tax authorities to the taxable income in
status. A person has unlimited liability to taxation (is a “tax order to reduce the tax-free amount to EUR2,000.
resident”) if that person’s residence (that is, any home readily
available for the resident’s use) or habitual place of abode Social security
(which is automatically assigned once the stay exceeds Liability for social security
six months) is in Austria. The general rule is that such a person The Austrian social insurance scheme, which is a statutory
is assessable on worldwide income. If neither of these system, includes insurance for health, accident, unemployment,
conditions is fulfilled, the person has only limited liability and pension. In principle, employment in Austria is the criterion
to taxation (is a “nonresident”) in Austria, in other words, for being included. As a result, Austrian nationals and others
is generally assessable only on income derived directly working within the territory of Austria are treated equally.
or indirectly from sources in Austria. Extended business The contributions consist of an employee’s element and an
travelers are likely to be considered nonresidents of Austria employer’s element: The employee’s element amounts to
for tax purposes unless they enter Austria with the intention 18.07 percent. This rate applies for regular payments (those
to remain in Austria on a permanent basis. that recur every month, such as the monthly base salary).
Definition of source In addition, there is a maximum contribution basis of
Employment income is generally treated as Austrian-sourced EUR4,200 per month for regular payments. The rates for
compensation where the work is performed or used in Austria. special payments (those that do not occur on a monthly basis,
such as a bonus) amount to 17 percent; the maximum
.07
Tax trigger points contribution basis for special payments is EUR8,400 per year.
Technically, there is no threshold/minimum number of days
that exempts the employee from the requirements to file and The employer’s rates on regular payments amount to
pay tax in Austria. To the extent that the individual qualifies for 21.83 percent and on special payments, 21.33 percent.
relief in terms of the dependent personal services article of The same maximum contribution bases apply.
the applicable double tax treaty, there will be no tax liability. Due to the EU regulation 883/2004 (respectively, 1408/71
The treaty exemption will not apply if the Austrian entity is in some cases) and a number of social security totalization
the individual’s economic employer. agreements, extended business travelers are usually exempt
from Austrian social security.
Types of taxable income
For extended business travelers, the types of income that
are generally taxed are employment income, Austrian- Compliance obligations
sourced income, and gains from taxable Austrian assets Employee compliance obligations
(such as real estate). Tax returns are due by April 30 of the following year or by
June 30 if filed electronically. If the taxpayer is represented
Tax rates – 2011 by a tax advisor, the deadline is automatically extended until
Taxable income is subject to progressive tax rates of up to April 30 of the next following year.
50 percent, starting at an annual income of 11,000 euros (EUR):
Generally, a tax return must be filed only if the individual’s
taxable income exceeds EUR12,000 (in case of wage
Annual taxable
taxwithholding) and EUR11,000 (in all other cases).
income (euros) Tax rate on total income Income tax on employment income is withheld at the source
From To (wage tax). Nevertheless, a tax return is required if the
0 11,000 0% individual has additional annual income in excess of EUR730
not previously subject to employer withholding or more than
11,001 25,000 ((income – 11,000) * 5,110) / 14,000 one form of employment. A threshold of only EUR22 applies
25,000 25,000 20.44% for foreign income from investments.
25,001 60,000 ((income – 25,000) * 15,125) / 35,000 Employer reporting and withholding requirements
+ 5,110 If the remuneration is paid by an Austrian employer, the
60,000 60,000 28.73% employer is obliged to calculate wage tax on the employee’s
behalf and remit it by the 15th of the following month to the
60,001 no limit ((income – 60,000) * 0.5) + 20,235 tax authorities. The employer is responsible for the correct
remittance.
Source: Income Tax Act, 2011
Payroll-related employer taxes include municipal tax (3 percent
Austrian tax law distinguishes between regular payments, of gross compensation), contribution to the Family Equalization
which recur every month, and special (nonrecurring) Fund (4.5 percent of gross compensation), and surcharge for
payments. If total special payments are less than one-sixth Chamber of Commerce (approximately 0.4 percent of gross
of all regular payments earned within the same tax year, the compensation). Depending on the social security status in
special flat tax rate of 6 percent applies. If one-sixth of the Austria, exemptions are available.
regular payments is exceeded, the amount in excess is taxed
at the progressive income tax rate.



Other Transfer pricing
Austria has a transfer pricing regime. A transfer pricing
Work permit/visa requirements
implication could arise to the extent that an employee is
In general, there are no visa requirements for moves within
the EU (although there can be visa requirements for arrivals
services for the benefit of the entity in another jurisdiction,
from new member states). A visa must be applied for before
in other words, a cross-border benefit is being provided.
individuals from outside the EU enter Austria. The type of visa
This would also be dependent on the nature and complexity
required will depend on the purpose of the individual’s entry
of the services performed.
into Austria.
Local data privacy requirements
Double taxation treaties
There are data privacy laws in force in Austria.
In addition to Austria’s domestic arrangements that provide
relief from international double taxation, Austria has entered Exchange control
into double taxation treaties with about 90 countries to Foreign currencies can be exchanged at the daily exchange
prevent double taxation and allow cooperation between rates. Travelers’ checks can be cashed easily in Austria, and
Austria and foreign tax authorities in enforcing their credit cards are accepted almost everywhere. There are no
respective tax laws. restrictions on the import and export of either the euro or
other foreign currencies.
Permanent establishment implications
There is the potential that a permanent establishment could Nondeductible costs for assignees
be created as a result of extended business travel, but this Nondeductible costs for assignees include, for example,
would depend on the type of services performed and the payments by an employer that have already been treated
level of authority the employee has. tax-free on the Austrian payroll.
Indirect taxes
Value-added tax (VAT) is applicable at 20 or 10 percent on
taxable supplies. VAT registration may be required in some
circumstances.



Belgium

René Philips
A person’s liability to Belgian tax is determined by residence KPMG in Belgium
status for taxation purposes and the source of income derived Tax Partner
by the individual. Income tax is levied at progressive rates on T: +32 27083807
E: rphilips1@kpmg.com
an individual’s taxable income for the year. In certain cases,
separate flat tax income tax rates apply (e.g., for termination
payments and lump-sum pensions).

Key messages
Extended business travelers are likely to be taxed on employment income relating to their Belgian workdays.



Income tax Resident taxpayers are entitled to personal exemptions,
including exemptions for dependents. Nonresident
Liability for income tax
taxpayers are not entitled to any personal exemptions
A person’s liability to Belgian tax is determined by residence
unless either (1) the taxpayer’s family is living in Belgium
status. A person can be a resident or a nonresident.
or (2) at least 75 percent of the individual’s earned income
A resident of Belgium generally refers to an individual who is subject to income tax in Belgium. Some taxpayers may
enters Belgium, as a single person or with family, with the be able to claim partial or full personal exemptions based
intention of remaining for more than 18 to 24 months on the tax treaty signed between Belgium and their home
(depending on circumstances and other factors). countries.
Under certain circumstances a person may qualify for
expatriate tax concessions. A taxpayer qualifying for the Social security
expatriate tax concessions is always deemed to be a Liability for social security
nonresident taxpayer. A nonresident of Belgium is generally Extended business travelers employed by an entity located
any individual who is not a resident or who is benefiting from in an EEA member state or Switzerland can, in most cases,
expatriate tax concessions. remain subject to their home country social security scheme.
They can obtain an exemption from paying social security in
The general rule is that a person who is a resident of Belgium Belgium, regardless of their citizenship. This exemption is
is assessable on worldwide income. Nonresidents are based on the EEA/Swiss rules with respect to posting and/or
generally assessable on income derived directly or indirectly simultaneous employment.
from sources in Belgium.
Other extended business travelers, in some cases,
Extended business travelers are likely to be considered may stay in their home country social security system and
nonresidents of Belgium for tax purposes unless they enter obtain an exemption from paying Belgian social security.
Belgium with the intention to remain in Belgium for more This arrangement is based on the provisions of a social
than 18 to 24 months (depending on circumstances and other security treaty signed between their home countries
factors). Many individuals who move their tax residence and Belgium.
to Belgium may qualify, however, for the expatriate tax
concessions. If no continued home country social security coverage
and no subsequent exemption from social security
Employment income is generally treated as Belgian-sourced contributions are available, an extended business traveler
compensation where the individual performs the services will be subject to Belgian employee social security.
while physically located in Belgium.
Tax trigger points Compliance obligations
Technically, there is no threshold/minimum number of days Employee compliance obligations
that exempts the employee from the requirements to file and Tax returns are due in the year following the tax year-
pay tax in Belgium. To the extent that the individual qualifies end, which is December 31. The actual filing due date is
for relief in terms of the dependent personal services article determined annually by the tax authorities but is typically
of the applicable double tax treaty, there will be no tax liability. the end of June for residents’ tax returns and the end of
The treaty exemption will not apply if the Belgian entity September for nonresidents’ tax returns.
is the individual’s economic employer or if the individual is Resident taxpayers always have to file a tax return.
working for a direct branch in Belgium of a foreign employer. For nonresidents who have received Belgian-sourced
Similar rules apply if the individual cannot rely on a tax treaty. employment income, there is also a tax return filing
Types of taxable income obligation in all instances. Belgium does not have a system
For extended business travelers, the type of income that is of final wage withholding taxes for employment income.
generally taxed is employment income, including noncash Employer reporting and withholding requirements
benefits in kind (such as housing, company car, etc.). Withholdings from employment income apply if the
Depending on the actual facts and circumstances, some employee is paid via a Belgian payroll or is working for a direct
payments/allowances may be tax exempt. branch in Belgium of a foreign employer. If wage withholding
tax is applicable or if the employer deducts the remuneration
Tax rates for Belgian corporate tax purposes, the employer has to
Net taxable income is taxed at graduated rates ranging from establish a wage tax reporting card (fiche 281.10).This fiche
25 percent to 50 percent. Tax rates are the same for both 281.10 must be filed with the tax authorities generally in the
resident and nonresident taxpayers. In addition, local tax month of March of the year following the year of payment.
is due. Local tax is calculated as a percentage of income
tax due. The actual percentage depends on the commune
where the taxpayer is living and may vary from 0 percent to
10 percent. For nonresident taxpayers, local tax is always
7 percent.



Other Transfer pricing
Belgium has a transfer pricing regime. A transfer pricing
Work permit/visa requirements
implication could arise to the extent that the employee is
A work permit and a visa must be applied for before the
individual enters Belgium. The type of work permit required will
services for the benefit of the entity in another jurisdiction,
depend on the purpose of the individual’s entry into Belgium.
in other words, a cross-border benefit is being provided.
EEA and Swiss nationals do not require work permits and/or This would also be dependent on the nature and complexity
visas, except for nationals of Bulgaria and Romania, who still of the services performed.
may require a work permit.
Local data privacy requirements
LIMOSA registration Belgium has data privacy laws.
Any employee who is working in Belgium and who is not
Exchange control
subject to Belgian social security has to be registered with
Belgium does not restrict the flow of euros or foreign currency
the LIMOSA system. This registration has to be made by
into or out of the country, although Belgium has money-
the employer sending the employee. In certain cases,
laundering legislation. This legislation provides for a series
an exemption may be available.
of preventive measures carrying administrative sanctions
Double taxation treaties and imposing a duty on certain specified institutions and
In addition to Belgium’s domestic arrangements that provide individuals to cooperate to detect suspicious transactions
relief from international double taxation, Belgium has entered and report them to the Financial Intelligence Processing
into double taxation treaties with more than 80 countries Unit, an authority created for this purpose. The provisions
to prevent double taxation and allow cooperation between of the law are applicable to a broad range of mostly financial
Belgium and overseas tax authorities in enforcing their institutions and professions (including lawyers, tax advisors,
respective tax laws. certified accountants, company auditors, notaries, bailiffs,
etc.). The law contains, among other things, specific
Permanent establishment implications
provisions concerning client identification and due diligence,
There is the potential that a permanent establishment in
transfer of funds, due diligence with regard to unusual
Belgium could be created as a result of extended business
transactions, restriction of cash payments for real estate
travel, but this would be dependent on the type of services
transactions and for transactions by a merchant (namely the
performed and the level of authority the employee has.
prohibition of cash payments over EUR15,000), and disclosure
Indirect taxes of suspicious transactions.
Value-added tax (VAT) is applicable to taxable supplies of goods
Nondeductible costs for assignees
and services. The standard VAT rate is 21 percent, but certain
Nondeductible costs for assignees include contributions
supplies are subject to reduced 6 percent or 12 percent
to nonqualifying company pension schemes. Most non-
rates or, in some cases, a zero rate. VAT registration, in some
Belgian company pension schemes are considered as
circumstances, is required. The EU reversed charge rules may
nonqualifying schemes.
be applicable.



Bosnia and Herzegovina

Paul Suchar
Bosnia and Herzegovina (BiH) consists of two territorial and KPMG in Bosnia and Herzegovina
administrative entities (the Federation of BiH (the FBiH)) and the Tax Partner
Republic of Srpska (the RS) and one district, the Brcko District T: +385 1 53 90 032
E: psuchar@kpmg.com
(BD). Due to the insignificant size of the BD, this document will
address only the legislation of BiH’s entities. Each entity has its
own income tax legislation. Generally, in both entities, a person’s
personal income tax (PIT) status is determined by residence
status for PIT purposes and the source of the income derived
by the individual. The PIT base is determined by subtracting
allowable deductions from the total income.

Key messages
Extended business travelers staying less than 183 days in a year in the territory of the FBiH or the RS are taxed on the
income earned in the FBiH or the RS, respectively.



Income tax Social security
Liability for income tax Liability for social security
Unless otherwise specifically stated, the information Social Security Contributions (SSC) in BiH are regulated at the
provided below applies to both the FBiH and the RS. level of the entities.
A person’s PIT liability in the FBiH/RS is determined by Total SSC rates applicable in the FBiH amount to 41.50 percent,
residence status. The FBiH/RS PIT Law defines a resident applicable to gross salary. Out of that, 31 percent is withheld
taxpayer as an individual who: from salary and 10.5 percent is paid in addition to salary.
• Has residence in the FBiH/the RS Total SSC rates applicable in the RS as of February 1, 2011
amount to 33 percent, all of which is withheld from salary.
• Has residence in the FBiH and spends a cumulative period
of at least 183 days in the FBiH/the RS during a calendar year The existence of a totalization agreement between BiH and
the home country of an expatriate may have a bearing on
• Has residence in the FBiH and earns income by carrying
SSC liabilities.
out a dependent activity outside the FBiH that is paid from
the budget of the FBiH and/or BiH (only the FBiH).
Compliance obligations
A nonresident is considered to be an individual spending less Employee compliance obligations
than 183 days in the FBiH/the RS during any calendar year. An individual is required to submit an annual return no later
than March 31 of the current year for the previous year in
The general rule is that residents are taxed on their worldwide
both entities if in that calendar year the individual had income
income and nonresidents on income earned in the territory
from more than one source (e.g., two employment contracts,
of the FBiH/RS. Extended business travelers are likely to
rental income, and similar).
be considered nonresident of the FBiH/RS for tax purposes
unless they stay in the FBiH/RS for more than 183 days over Employer reporting and withholding requirements
one calendar year. Employers performing business activities in both entities are
obliged to withhold and pay PIT and SSC for their employees
Tax trigger points
in each entity, respectively.
In the FBiH and the RS, the PIT trigger point arises
simultaneously with the payment of income.
Other
Types of taxable income Work permit/visa requirements
The following types of income are subject to PIT: income A visa is not required for most foreigners entering BiH (such
realized through dependent activity (i.e., employment), as EU and U.S. residents), that is, they can enter BiH under
independent activity, property and property rights, the visa-free regime. However, foreign nationals must obtain
capital investment, etc. For extended business travelers, a work permit in order to work in BiH.
the types of income that are generally taxed are employment
income and all related benefits in kind. Double taxation treaties
IBiH has entered into double taxation treaties (DTTs) with
Tax rates several countries to prevent double taxation. Further, BiH has
The PIT rate in both the FBiH and the RS is 10 percent (as of incorporated into its legal system, through succession,
February 1, 2011 in the RS). a number of DTTs from the former Socialist Federative
Republic of Yugoslavia.



Permanent establishment implications Local data privacy requirements
A permanent establishment could theoretically be created BiH has data privacy legislation.
as a result of extended business travel, but this would be
Exchange control
dependent on the type of services performed and the level of
Generally, there are restrictions on transfer of foreign
the employee’s authority.
currencies for residents. Certain reporting obligations are
Indirect taxes imposed to control tax evasion and money laundering.
Value-added tax (VAT) is applicable at 17 percent for taxable In addition legislation requires financial institutions and
supplies. The registration threshold is taxable supplies of other cash dealers to give notification of cash transactions
50,000 Bosnian marks (BAM) (approximately EUR25,000) over BAM30,000 (approximately EUR15,000) or suspicious
or more in the previous year. cash transactions.
Transfer pricing Nondeductible costs for assignees
Both the FBiH and the RS have a transfer pricing regime, Generally, costs paid to assignees not employed by the
and if a business travelers’ costs and taxes are recharged to company are considered as a nondeductible expense or an
an entity in the FBiH or the RS or if a service fee is charged on entertainment expense, unless the company can prove the
the duties performed by the business traveler, such charges business purpose of the travel.
may be subject to scrutiny under the transfer pricing rules.



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