Demystifying Mobility Taxation: Key Insights from AIRINC’s Summer School Webinar

AIRINC’s 2025 Tax Summer School opened with an engaging and insightful session: Mobility Taxation 101. This foundational webinar kicked off a three-part series aimed at helping global mobility professionals strengthen their understanding of the tax implications that arise when employees cross borders for work. The session explored essential topics, including mobility scenarios, tax services, sourcing rules, gross-ups, and compliance best practices. Watch the session again here.

What Is Mobility Tax?

“Mobility tax” is a term widely used in the global mobility industry to describe the intersection of individual income tax, corporate payroll tax, and employee mobility. While not a formal tax category in any jurisdiction, it represents the unique challenges that arise when employees work in a country different from their home location or the location of their employer.

Defining Mobility Scenarios

Global mobility scenarios typically fall into three main categories:

• Assignments, where the employee remains on home-country payroll while working in another jurisdiction.
• Transfers, in which the employee is moved to host-country employment and payroll.
• Other arrangements, including remote work, business travel, commuters, and hybrid work models.

These distinctions carry important implications for both tax compliance and mobility program structure.

Poll Insight:

When participants were asked “How many global mobility policies does your company have?”, the responses varied:

• 36% reported having five or more policies
• 32% had three to four policies
• 12% had one to two
• 13% were unsure
• 7% had none

This diversity illustrates the wide range of program maturity among organizations.

Tax Services Across the Mobility Lifecycle

Mobility-related tax services can be grouped into two broad categories—employee-facing and employer-focused.

For employees, common services include:

• Pre-departure tax consultations
• Tax return preparation for home and host locations
• Tax equalization to ensure tax neutrality
• Hypothetical tax withholding
• Certificates of coverage for social security exemptions

For employers, services often include:

• Strategic tax planning to reduce assignment costs
• Reporting of relocation benefits and trailing liabilities
• Shadow payroll administration for host-country compliance
• Gross-up calculations and tax accrual management

These services are essential in mitigating risk and delivering a smooth employee experience.

Tax Residency, Treaties, and Income Sourcing

One of the foundational principles of mobility taxation is that income is usually taxed where services are performed, not where an employee is paid. When multiple countries assert taxing rights, double taxation can occur—a situation often resolved through income tax treaties, foreign tax credits, or exclusions.

Poll Insight:

Participants were asked “Which of the following statements is true?” The majority, 88%, correctly identified:

“Payroll is a large area of corporate risk exposure.”

This strong result reflects heightened awareness of the risks tied to real-time reporting and global payroll compliance.

Social Security and Totalization Agreements

While income tax often garners the most attention, social security taxation introduces its own set of challenges. In some cases, totalization agreements allow employees to remain in their home country’s system and avoid dual contributions. These agreements are country-specific and often require formal documentation, such as A1 certificates.

Notably, remote work arrangements are not always covered by totalization provisions, although some regional efforts (such as those in the EU) aim to address this gap.

Taxability of Mobility-Related Benefits

Tax treatment of allowances and reimbursements varies by jurisdiction. Generally, if an employer pays it, it’s considered taxable—unless exceptions apply.

Examples of non-taxable or partially taxable benefits include:

• UK: Moving expenses up to £8,000
• Netherlands: The 30% (soon 27%) ruling for salary exclusions
• Hong Kong: Partial exclusion for employer-provided housing
• Japan: Qualified home leave
• U.S.: Per diems may be excluded if short-term; otherwise, most relocation expenses are taxable post-2017

Poll Insight:

On the question “How does your company determine the taxability of relocation benefits outside the U.S.?”, responses revealed:

• 71% rely on tax provider guidance
• 32% manage this internally within global mobility teams
• 28% defer to local payroll teams
• 23% work with relocation management companies
• 10% were unsure

This underscores the critical role of technical expertise and internal coordination.

Gross-Ups: Calculating the True Cost

Gross-up calculations ensure that employees receive net benefits, free of tax liabilities. The webinar compared two common methods:

1. Flat-rate gross-up, using a simple algebraic formula based on estimated tax rates.
2. With-and-without method, a more precise approach that models the tax impact before and after adding the benefit to income—often saving employers money while maintaining accuracy.

For example:

• A flat gross-up on a $20,000 net allowance at a 39% tax rate resulted in a 63.9% gross-up.
• Using the with-and-without method, the gross-up was reduced to 58.8%.

Poll Insight:

When asked “How do you determine a gross-up tax rate?”:

• 41% use the estimated marginal tax rate
• 38% perform detailed calculations
• 34% use statutory payroll rates
• 24% apply the top marginal rate
• 15% were unsure

This spread indicates a range of strategies depending on policy design and administrative capabilities.

Final Takeaways

Mobility taxation is a complex but critical area of global workforce management. Whether structuring a long-term assignment or supporting a virtual assignment model, understanding the principles of income sourcing, tax equalization, gross-up strategy, and social security compliance is essential.

With more flexible work arrangements, rising reporting standards, and evolving local regulations, companies must ensure they have the right tax strategies, policies, and partners in place to remain compliant and cost-effective.

Up Next: 

This webinar is part of a three-part series with AIRINC and GTN. If you are an HR, Global Mobility, or Global Tax Professional, then these sessions are for you! Register for the others in the series:

Mobility Tax 201 - Managing Risk and Cost in Global Mobility July 10 | 10:00 AM Boston / 4:00 PM Brussels REGISTER

Mobility Tax 301 - Advanced Taxation of Mobile Compensation August 7 | 10:00 AM Boston / 4:00 PM Brussels REGISTER

What You’ll Learn:

Each session qualifies for 1 CRP/GMS credit and 1 CPE credit. If the timing doesn’t work for your schedule or time zone, no worries—just register to receive the recording. To earn CPE credit, be sure to join us live and take part in the interactive polls.
You’ll hear from expert presenters and hosts from AIRINC and GTN, who bring a wealth of hands-on experience in managing global mobility tax strategy and compliance.

Meet Your Hosts and Presenters

• Pat Jurgens - AIRINC’s Director of Global Tax Research and Consulting, known for his 35 years of experience making international tax policy clear and practical for mobility professionals.
• Jeremy Piccoli - AIRINC’s Director of Global Tax Solutions, known for his deep technical expertise and leadership of AIRINC’s tax tools, with a background in international assignment tax consulting.
• Christopher Ward - GTN’s Director of Business Development, known for his strategic insight and friendly approach to building strong mobility industry partnerships.
• Tracy Novotny - GTN Managing Director with 18+ years of experience, known for delivering clear, actionable tax guidance and building trusted client relationships.
• Raj Azad - GTN Managing Director with a global perspective, drawing on 25+ years of tax expertise and personal expatriate experience to guide clients with care.
• Jack DeMarco - GTN Supervising Senior and equity compensation specialist, known for his proactive mindset and commitment to enhancing the client experience.