EUROPEANCHAPTER

HMRC’s latest statistics for tax years ending 2022 to 2024 show that employees received £790 million in Income Tax relief and £500 million in National Insurance relief from tax-advantaged Employee Share Schemes in 2024—a combined 18% increase from the previous year. Save As You Earn (SAYE) became the largest contributor to tax relief and had the highest total value of options granted and gains, driven by increased participation post-Covid and asset price growth. The number of companies operating ESS rose to 20,370, while the Company Share Option Plan (CSOP) saw significant growth following the doubling of its option limit.

Recent global employment and tax updates include increased superannuation in Australia, new tax-free bonuses in Austria, and expanded employee share plan benefits in Italy and Japan, with similar startup-focused initiatives proposed in Luxembourg and New Zealand. Countries like Bosnia & Herzegovina and Slovenia are adjusting social security rates, while Japan simplifies securities laws to broaden employee equity access. Additionally, key compliance deadlines for employee share scheme reporting are approaching in the UK, Saudi Arabia, Australia, Vietnam, China, and other jurisdictions.

The UK government's new PISCES trading platform introduces regulated, periodic opportunities for shareholders in private companies to sell shares, addressing long-standing liquidity challenges for employees and early investors. Legislative changes ensure that participation in PISCES will not jeopardize the tax-advantaged status of EMI and CSOP options, removing a key barrier to broader employee share ownership. While the platform holds promise, its success will depend on forthcoming FCA rules and how companies balance legal, tax, and practical implications before opting in.

UK businesses that grant shares or other securities to employees, directors, or officer holders must submit an Employment Related Securities (ERS) annual return to HMRC by July 6, covering all equity-related activity from April 6, 2024, to April 5, 2025—even if no activity occurred. One-off awards still count as a “scheme” and must be registered online, with companies required to self-certify tax-favoured plans and retain screenshots of the entire reporting process for their records. Penalties apply for late filings or inaccurate information, and awards to Employer of Record employees must typically be reported by the Employer of Record.

As the modern workforce becomes increasingly mobile, companies face a new frontier of complexity: payroll tax compliance for employees who cross borders, whether temporarily or permanently. Organizations that proactively address these challenges are better equipped to reduce risk, maintain compliance, and support their global talent effectively. 

Drawing on deep expertise in global mobility and equity compensation, Marlene Zobayan (Rutlen Associates), Andrea Kagan (NVIDIA), and Marianne Friebel (Dolby) shared actionable insights and strategies for navigating the evolving landscape of payroll tax for mobile employees. 

The global mobility ecosystem 
Effective management of payroll tax for mobile employees requires collaboration across a network of internal and external stakeholders: 

• HR and mobility teams: Track employee movements, manage assignments, and coordinate with payroll. 
• Payroll providers: Calculate and remit taxes in multiple jurisdictions, ensuring timely and accurate payments. 
• Tax advisors: Interpret complex, ever-changing tax laws and provide guidance on compliance. 
• Legal and compliance teams: Monitor regulatory changes and mitigate risk. 
• Technology providers: Offer tracking, reporting, and automation tools for mobile workforce data. 
• Employees: Must be educated on their responsibilities and the impact of mobility on their compensation. 

The challenge is threefold: first, accurately tracking employee movements and assignments; second, managing the tax obligations; third, ensuring seamless data flow and communication among all parties. As Marianne Friebel emphasized, ‘Visibility and real-time data are critical for staying ahead of compliance risks.’ 

Key challenges for employers 
Managing payroll tax for a mobile workforce presents unique hurdles: 

1. Complex, fragmented tax regulations: Each jurisdiction has its own rules, thresholds, and reporting requirements. 
2. Tracking employee location and days worked: Even short business trips can trigger tax obligations. 
3. Data accuracy and integration: Disparate systems and manual processes increase the risk of errors. 
4. Employee communication and education: Employees may be unaware of the tax implications of their mobility. 
5. Cost management: Unexpected tax liabilities can impact both the company and the employee. 

Practical steps to payroll tax compliance 
The panelists agreed: success requires a blend of clear processes, and cross-functional collaboration. Here’s how leading companies are tackling the challenge: 

• Centralize data collection: Use technology to track employee movements and assignments in real time. 
• Establish clear policies: Define mobility, tax, and reporting policies that are communicated to all stakeholders. 
• Engage experienced partners: Tax advisors and technology providers can help interpret regulations, share best practices from their client base, leverage existing systems  and if appropriate, automate compliance. 
• Conduct regular training: Equip HR, payroll, and employees with up-to-date knowledge on mobility tax issues. 
• Monitor and audit: Implement regular reviews to identify gaps and ensure ongoing compliance. 

Andrea Kagan highlighted the importance of ‘building strong bridges between HR, payroll, and tax teams, so everyone is working from the same playbook’. 

Embracing mobility for competitive advantage 
Global mobility is no longer a niche concern—it’s a strategic imperative for companies seeking to attract, retain, and deploy top talent worldwide. By investing in integrated solutions, expert partnerships, and clear communication, organizations can turn mobility compliance from a risk into a competitive advantage. 

As the workforce becomes more mobile, proactive management of payroll tax is essential—not just for avoiding penalties, but for supporting business growth and employee satisfaction. 

For more information or to arrange a consultation, contact Marlene, Andrea, or Marianne directly. 

Watch a recording of the webcast on GEOlearn: WATCH THE WEBCAST