Key Takeaways from the Global Tax Chat: What You Need to Know About Global Mobility and Taxation

The U.S. remains one of the few countries—alongside Eritrea—that tax individuals based on citizenship rather than residency. This means U.S. citizens are taxed on their worldwide income, regardless of where they live or work. While foreign tax credits and exclusions help mitigate double taxation, compliance remains a challenge, even for “Accidental Americans”—U.S. citizens who owe taxes but have never lived in the country.

A potential game-changer is the proposed Residence-Based Taxation for Americans Abroad Act. This legislation would allow eligible Americans living overseas to opt for non-resident tax treatment if they meet criteria like they establishing foreign tax residency and maintaining compliance on U.S.-sourced income. While this could significantly ease tax burdens for long-term expatriates, short-term assignees and those who frequently travel back to the U.S. might see limited benefits. The bill's chances of passing remain uncertain, but it is expected to be part of broader U.S. tax reforms anticipated in 2025. Global mobility professionals should stay updated on developments. Read more here.

Global Tax Rates Map

AIRINC’s Global Tax Rate Map provides a comprehensive analysis of income tax and social security rates worldwide, equipping companies with data-driven insights to inform talent deployment strategies. These maps assume a middle-income employee with a family of four. The rate shown is the effective tax rate (total tax divided by gross income) and may not represent the highest marginal tax rate.

For those dreaming of beaches and tax relief, destinations like the Cayman Islands stand out. However, mobility professionals know that effective tax planning extends beyond lifestyle preferences.

Several factors influence tax rates, including:

• Location: Income tax rules vary across jurisdictions—not just at the country level but also by state, city, province, or canton.
• Income Level: Many tax systems are progressive, meaning higher earnings result in higher tax rates.
• Marital Status & Family Size: Some tax systems offer benefits to married taxpayers or those with dependent children, potentially lowering tax liability.
• Deductions & Tax Credits: Many systems provide tax relief for expenses such as mortgage interest on a primary residence or charitable donations.

Poll Results

During the show, we asked the audience:

Do you consider foreign tax rates when making mobility decisions?

• Yes, to find cost savings - 15%
• No, but we are looking into this - 17%
• No, we have other methods of achieving cost savings - 5%
• Tax rates are one of many considerations - 46%
• I don’t know / N/A - 17%

Host-Based Assignment Tax Implications

As companies seek cost-effective mobility strategies, host-based assignments are gaining popularity. Unlike traditional home-based tax-equalized approaches, host-based assignments align compensation with the host location’s salary structure and tax obligations. These assignments work best where home and host countries have ‘affinity’, sharing similar costs of living and tax regimes, making intra-EU mobility particularly popular.

For more insights into how companies are using host-based assignment strategies, download the AIRINC Policy and Practice Benchmark. 73% of participants cited cost savings as the primary reason for adopting this approach. Download the survey highlights here.

The EU’s Posted Worker Directive

Although not strictly a tax issue, mobility professionals must ensure compliance with the EU’s Posted Worker Directive (PWD). This directive requires employers to align assignee benefits and working conditions with those of local employees.

Employers must:

• Provide advance notice of employee transfers to local authorities
• Maintain detailed employment records in the host country