Month: December 2018

Categories
Global Relocation Global Relocation Challenges Global Relocation Tips Global Relocation Trends Visas and International Travel

China Residency Rules May Increase Taxes on Foreign National Employees

Attractive young man standing near the glass fence outdoors with cityscape in the background

China residency rules are changing with the implementation of a new law. The People’s Republic of China Individual Income Tax law has abolished the 5-year tax exemption period during which a foreign national employee does not have to pay income tax on their worldwide earnings. As a result, foreign national employees working in China may face higher taxes on their earnings.

What are the Current China Residency Rules?

Currently, foreign national employees have an exemption for five years before they must pay income tax on their worldwide earnings. Until the five year requirement is met, they only owe income tax on their earnings in China. Also, the current China residency rules require five full years before tax on worldwide earnings takes effect. Foreign national employees with absences are able to avoid the tax requirement if they break residency with one of the following scenarios:

  1. Have an absence of 30 or more days continuously on a single trip during the year.
  2. Have an absence of 90 or more days over multiple trips during the year.

What are the New China Residency Rules?

The new China residency rules eliminate the full year requirement for residency starting January 1, 2019. Instead, foreign national employees who are a resident in a People’s Republic of China-treaty country, and who work in China more than 183 days in a given year, will owe taxes on worldwide earnings. Foreign national employees receive an exemption for China income tax if they do not exceed 183 days residing in China.

Foreign national employees from a non-treaty country have a much shorter China tax exemption of only 90 days. After 90 days, these employees would owe tax to China on their worldwide earnings.

What Should Employers Expect?

Employers in China should expect that the new China residency rules may require employees to pay taxes on their worldwide earnings to China if they exceed 183 days residing in China during a year. Also, there is no mention of any five year period to determine residency, so employees may face immediate tax obligations.

What Should Employers do?

Employers should review their current employment situations in China to determine how the new China residency rules will impact their company and their employees residing in China. They should also provide information to their employees residing in China so the employees can prepare for possible tax obligations accordingly.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their country-specific employment, visa, and residency requirements. We can help your company understand how to respond effectively to new China residency rules.

Learn how your company can mitigate the impact of China residency rules and resulting tax impacts on employees from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary Visa Program Assessment

Categories
Buy a Home Global Relocation Global Relocation Challenges Home Purchase Relocation Challenges

Mortgage Loan for Foreign Nationals Relocating to the United States

Happy family is standing with keys from their new house in hand. Smiling and looking at camera.

Many of Global Mobility Solutions’ clients have transferees relocating to the United States from outside the country. Often, they will need a mortgage loan to buy a home. These transferees may not have established credit in the US. As a result, they will not have a credit profile that lenders can use to determine their creditworthiness.

GMS spoke with Michael Farner, an expert at Quicken Loans who agreed to share his advice and guidance on this topic.

How Can a Foreign National Obtain a Mortgage to Buy a Home in the US?

According to Michael Farner, if a foreign national has established credit in the US over a period of time long enough to have all three credit bureaus reporting, Quicken Loans would also be able to lend at that time.

Quicken Loans and other mortgage companies have a program to support foreign nationals who are relocating to the US and want to obtain a mortgage, but who have not established credit in the US. The program entails work on the part of Quicken Loans to create a credit profile for the foreign national.

Important Points to Note for Program Eligibility Include:

  1. There must be 0 credit established in the US to qualify for this program. In other words, the foreign national must not have obtained any other credit instrument. Examples may include a loan to buy a car or a credit card in the US.
  2. The foreign national must provide a social security number.

If the foreign national is eligible for the Quicken Loans program, the lender will then build a credit profile for the customer. To do this, the lender may examine the foreign national’s debt in their departure country. This examination will include:

  1. Information on payments for housing, including rent payments, showing 24 months of history for each credit reference.
  2. Information for three other “non-housing” debts that can establish payment histories. Examples may include insurance, utilities, or automobile loans. These debts must also show 24 months of history for each credit reference.

The foreign national may need to assist the lender in obtaining information. The lender may ask the foreign national to participate in a conference call with their departure country’s financial institution.

Once Quicken Loans gathers sufficient information, they will build a credit profile for the foreign national. The credit profile will determine how much they can borrow on a mortgage loan, and the terms of the mortgage.

What are the Features of a Mortgage for a Foreign National?

A mortgage for a transferee who will be relocating to the US is similar to a mortgage for any US-based customer who is seeking to buy a home.

For a foreign national, a mortgage will generally feature the following:

  1. Finances the purchase of an existing home.
  2. Length may be 15 or 30 years.
  3. Interest rate may be fixed or variable.
  4. Foreign national borrower makes principle and interest payments for the life of the mortgage.
  5. Mortgage is often sold to investors in the bond market.

Do Foreign National Transferees Need to Sell Their Current Home Before Applying for a New Mortgage?

Foreign national transferees who are relocating and who currently own a home in their departure country may want to keep their current home. Everyone’s situation is different, and what is possible depends on a number of factors:

  1. Is there a mortgage on the current home in the departure country?
  2. If yes, what is the amount of the current home mortgage?
  3. What are the amount and terms of the mortgage loan for the home in the US?
  4. Can the transferee obtain approval for the total debt load? This would include their current mortgage and the new mortgage loan in the US.

What does this mean?

Foreign national transferees who want to obtain a mortgage in the US to buy a home should review their current financial arrangements with a qualified lender. Transferees who have a mortgage on their current home in their departure country may be able to obtain mortgage for a home in the US. However, this depends on their financial circumstances. Importantly, transferees should understand that they must obtain approval for the total amount of current mortgage debt and the new mortgage loan in the US.

What should employers do?

Employers with foreign national transferees looking to buy a home in the US should direct them to speak with qualified lenders and financial advisors for guidance. Employers should also review their relocation policies to determine if enhancements can be made to allow for exceptions that may arise from foreign national transferees who want to obtain a mortgage in the US.

Conclusion

Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand how to communicate to foreign national transferees any issues related to obtaining mortgages to purchase a home in the US. Therefore, our team can help your company understand how best to proceed by providing guidance to foreign national transferees on obtaining information from qualified lenders and financial advisors.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand mortgage loans for foreign national relocations. However, GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.

Request your complimentary relocation policy review

Categories
Buy a Home Global Relocation Trends Relocation Challenges

Dublin Housing Market Remains Strong, Prices Begin to Stabilize

Walking through the beautiful streets of Dublin, Ireland

The Dublin housing market is beginning to stabilize after experiencing a period of rapidly rising prices. Residential property prices in Dublin rose in some places from 50% to 100% or more since the 2012 housing bust through 2015, but then moderated when changes were made to Central Bank rules. Over the past few years through 2018, Dublin housing market prices have been rising even higher. Through the second quarter of 2018, residential prices in Dublin rose year-on-year by 6.2%.

Overall, housing in Ireland continues to face strong demand and weak supply. New construction in Dublin generally focuses on new homes in the form of housing estates. Most demand is for apartments located in the city, indicating a mismatch between supply and demand. However, the new home construction in the Dublin housing market has helped prices stabilize.

According to Daft.ie’s Irish Price Report for Q3 2018:

Most Expensive Housing Markets in Ireland

  • South County Dublin
  • South Dublin City
  • North Dublin City
  • Wicklow (located south of Dublin on the east coast of Ireland)

Ireland’s Strong Economic Growth Drives Dublin Housing Market

As the Ireland economy continues expanding with growth forecasts in some cases doubled, the Dublin housing market will experience continually higher demand. New construction adding to the supply will help keep price increases from overheating too rapidly.

There are concerns that the Ireland economy is growing too fast. Growth estimates of over 9% in the first half of 2018 may be high due to multinational currency transfers. However, the underlying economic momentum appears to be two and a half times the European Union average.

What should employers expect?

Employers should expect that the Dublin housing market will continue to experience price increases. Both residential home prices and rents are expected to continue rising. Conversely, employers looking to relocate employees from the Dublin market may experience shorter timeframes for property sales.

What should employers do?

Employers should review their hiring plans and determine how to mitigate the impact of the Dublin housing market price increases. Employers should examine their relocation policies to determine if they would benefit from enhancements that assist transferees looking to relocate into Dublin.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their country-specific employment, visa, and residency requirements. We can help your company understand how to respond effectively to the Dublin housing market. Our experts can help your company understand the impact on transferees and their ability to accept relocations as housing prices continue to rise.

Learn how housing markets impact relocations from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Relocation Expenses Incurred in 2017 and Reimbursed in 2018 are Not Taxable

Photo of a young couple going through financial problems

The Internal Revenue Service has ruled that relocation expenses incurred in 2017 and reimbursed in 2018 are not taxable. Prior to this ruling, employers had been treating such reimbursements as taxable income for transferees. As a result, employers had been withholding federal taxes on that income.

How did this tax issue arise?

The issue arose as a result of the 2017 Tax Cuts and Jobs Act. The Act suspended the exclusion from income for qualified moving expenses paid or reimbursed by an employer. However, many moves actually occurred in 2017 with final accounting and reimbursement occurring in 2018. As a result, several transferees do not have clarity regarding their 2018 tax obligations.

What does the IRS rule state?

Notice 2018-75 provides that amounts reimbursed for 2017 moves are not taxable even if they are paid or reimbursed in 2018. Employers that have included relocation expenses in individual’s wages or compensation may use the adjustment process under Section 6413 or the refund claim process under Section 6402. These processes allow the employer to correct the overpayment of federal employment taxes.

What does this mean?

Transferees with a qualified 2017 move will not owe taxes on any amounts paid for or reimbursed by their employer in 2018. Qualified moves include those that are work-related, and for which relocation expenses would have been deductible if the employee had paid them in 2017. Also, the employee must not have already claimed these expenses as deductions in 2017.

What should employers do?

Employers who have been withholding federal taxes on such amounts should process adjustments for these overpayments. Employers should not include reimbursements and amounts paid for qualified 2017 moves and relocation expenses as income for the affected employees.

Conclusion

GMS’ team of corporate relocation experts has helped thousands of our clients understand how to respond to the impact of changing tax and other regulations. Our team can help your company understand how best to proceed with this new IRS ruling. We can help your company understand how it relates to employee income, federal tax withholding, and moving expense reimbursements.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand the law regarding relocation expenses. However, GMS is not a CPA firm and is not giving tax advice. Everyone’s tax situation is different; individuals and employers should consult their tax advisors prior to making any decisions.

Request your complimentary relocation policy review

Categories
Labor Force Talent Management Talent Mobility

China’s Labor Force Declines While Economy Transforms

Portrait of happy engineer. East Asian ; Japanese, Chinese, Korean engineer looking at camera, smile. Engineering people concept.

China’s labor force is in decline. After fifty years of continued expansion, the labor force in China declined last year. Although China still has over 20% of the world’s labor, the decline is indicative of how China’s economy is transforming.

Several other countries with major economies have declining labor forces similar to China’s labor force decline. Countries with declining labor forces include:

  • Italy
  • Japan
  • Russia
  • Spain

Since 2013, many other countries and regions with major economies, as well as several developing countries, have seen their labor forces expand. Countries and regions with expanding labor forces include:

  • European Union
  • India
  • Mexico
  • Turkey
  • United States

Additionally, China is increasingly expanding its level of capital stock. Whereas in 2000 the U.S. capital stock per person was 12 times the level in China, by 2014 the ratio had fallen to 3 times. Recent investment by China has probably pushed the ratio even lower. China is quickly moving on par with the U.S. level of stock per person, even as China’s labor force declines.

What does this mean?

The government in China continues to promote the nation as one that mainly exports lower-value consumer goods and finished products. However, this does not reflect the reality of China’s investment in capital stock. The decline in China’s labor force will further erode the country’s ability to use labor to support its growth as a trading partner of lower-value consumer goods and finished products. The U.S. is currently a trading partner that exports higher-value capital goods and intermediary goods to China. The future for China’s economy will be in this same higher-value market of goods.

What should employers expect?

Employers in China should expect to find it increasingly difficult to recruit and hire as China’s labor force continues to decline. Those with plans to expand into new markets should take this into account as they develop their hiring plans and corporate objectives. Employers should also expect the economy in China to increasingly expand into higher-value capital goods and intermediary goods. There may be significant opportunity in China for companies looking to expand in this market of goods.

What should employers do?

Employers finding difficulties in hiring and recruiting for positions in China should consider highlighting their relocation program’s benefits in their recruiting materials to counteract the effect of China’s labor force decline. The healthcare industry has been facing critical talent shortages for several years. Healthcare employers have responded in several ways, including:

  1. Providing Exceptional Candidate Experiences
  2. Using Data to Enhance Recruiting
  3. Recruiting for Cultural Fit
  4. Creating a Superior Employer Brand
  5. Speeding the Process to Keep Candidates Engaged

Relocation Management Companies (RMCs) are ideal sources for information on global candidate recruitment and relocation. Pre-Decision Services are critical for employers as they provide valuable information about a candidate’s ability to accept a position and be successful. Assessment data can be paired with structured interview questions to better understand the candidate’s interests, goals, and motivations.

Conclusion

GMS’ team of corporate relocation experts has helped thousands of our clients develop relocation programs that attract and retain qualified employees. Our team can help your company by using industry best practices to design your relocation program for the greatest appeal to positions in China. This will increase your company’s ability to attract and retain new employees as China’s labor force declines and its economy transforms.

GMS was the first relocation company to register as a .com. It also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Categories
Relocation Policy Review Relocation Programs Relocation Technology

Top 5 Reasons Why You Should Benchmark Your Relocation Policy

Young businesswoman giving presentation on future plans to her colleagues at office

Industry best practice shows employers should benchmark their relocation policy every 12 to 18 months to ensure your company remains competitive with your industry peers. A thorough benchmark will also help you learn about how the relocation industry is changing to reflect higher employee expectations for relocations.

As an employer, are you confident that every internal stakeholder in your company understands the importance of your relocation policy? Do you think they understand how it relates to their functional discipline? Most employers understand their relocation policy impacts several departments. As the competitive landscape changes in their industry as well as in the relocation industry, the importance of why employers should benchmark their relocation policy becomes increasingly clear.

Top 5 Reasons You Should Benchmark Your Relocation Policy:

1. You Should Benchmark to Identify Enhancements and Cost Savings

Reviewing industry best practices can show areas where your company can save costs or enhance your relocation policy to reduce costly exceptions. Learning about new and changing regulations can help your company avoid costs that may arise from immigration, legal, or tax issues. A thorough benchmark will identify technological enhancements that may be useful for communications, processes, or cost savings.

2. Align Corporate Mobility Objectives on a Global Basis

Many companies have operations spread around the world. This may lead to significant differences in relocation policies and implementations. Employers should benchmark their relocation policy to identify such differences. They should also work to align all areas to a consistent policy that fully supports corporate objectives regardless of location.

3. Understand Your Industry’s Competitive Relocation Landscape

Most of your industry peers also have relocation policies they use to attract and retain new hires and transferees. Employers should benchmark their relocation policy to identify how their industry competitors are designing their relocation policies. With this information, employers can then design a relocation policy that ensures they remain competitive and will be able to attract highly skilled talent.

4. Learn About Relocation Innovations

Technology is useful for informing and engaging employees throughout their relocation process. It also increases the speed of communications and provides valuable information and assistance. Technology can help transferees receive reimbursements in a timely manner. Employers should benchmark their relocation policy to help them learn about new ideas and innovative solutions to employee relocation issues.

5. Increase Internal Stakeholder Knowledge on Why You Should Benchmark

At most companies, several departments interact with the relocation process. Internal stakeholders from finance, procurement, and legal can learn how transferees interact with each department, what their needs are, and what the best practices are related to their discipline. Employers should benchmark their relocation policy and include internal stakeholders in the process. This will ensure their understanding of relocation policy guidelines. Also, it will help provide transferees with a smooth and easy relocation process as they interact with diverse internal stakeholders.

What Should Employers Do?

Employers should benchmark their relocation policy with a knowledgeable Relocation Management Company (RMC). The policy benchmark should include a full assessment of the company’s current policy as well as corporate objectives. This allows the RMC to benchmark the relocation policy to industry best practices. As a result, the RMC will be able to present a full complement of recommendations to ensure the employer can implement relocation policy best practices. This will also help them maintain a competitive edge in their industry.

Conclusion

Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand why they should benchmark their relocation policy. We can help your company understand how to create a relocation policy that reflects industry best practices. As a result, this will ensure the policy attracts highly skilled new hires and transferees.

Learn best practices from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

What's happening in your industry? Request a Courtesy Benchmark report

At GMS, we make it a priority to know how talent mobility is changing in each major industry. What are the best practices? How are other companies changing their programs to retain a competitive edge? Your Mobility Pro will be in touch within 1 business day to help answer your questions and benchmark your industry.

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

About

About Us

Careers

GMS Client Login

Privacy Policy

 

Contact

Contact Us

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904 

Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

Accessibility by WAH

Looking for something?