Total Mobility Law: January 2013

Total Mobility Law: January 2013

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  1 Total Mobility mobility news A compilation of Total Mobility Law’s recent news January 2013 Global law for global business 8 mistakes companies make when hiring abroad As many companies hire abroad, most will allocate sufficient resources to stay on the right side of the law in multiple countries. When considering a new or existing Inside hire abroad, companies should avoid several common mistakes: Message from Total Mistake #1: Not planning beforehand Mobility Law We ring in the New Year with a Known risks are superior to unknown risks, because welcome message from TML’s known risks help your business understand the true costs lead attorney. and benefits of a foreign hire. So make a plan, figure out 2 the issues, and build your global workforce with your eyes wide open. Permanent establishment Mistake #2: Not fixing existing problems When a risk can actually become Okay, so you already made Mistake #1 and now you've a foreign tax advantage got unknown risks in a foreign country. Don't bury 3 Follow me to Page 4
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  2 1 Total Mobility Law January 2013 Welcome to Mobility From: Todd M. Heine, J.D., LL.M., M.Ed. Even a journey of a million miles… … begins with one small step. Total Mobility Law launched its website businesses across the world, I established this month, as we intensify our efforts Total Mobility Law to expand my practice towards our professional goal: providing by advising more global companies on the top-notch international legal advice, issues they are facing abroad. I am excellent service, and maximizing profits dedicated to helping clients of all sizes for our clients. reach their global potential. We couldn’t be happier with where we are With that in mind, I am reaching out to all at as a budding international law firm. We global companies that want global growth, are super focused towards bringing a good help, and a trusted advisor. The successful year of growth for our demand is everywhere, and we are transnational clients. expanding. Total Mobility Law is a an outward You’ll find some helpful information on expression of my personal obsession: the various topics in this newsletter. We legal framework surrounding the global encourage you to do some research on your economy. An international lawyer by own—the more you know, the better client training, I am a focused member of the you become. huge and growing global mobility When you are ready to reach out, we are industry. here to help your business achieve its 2 After recognizing the needs of countless global potential.
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  Total Mobility Law January 2013 Business + Permanent Establishment = Fear Fear not. Do something about it! In some situations, a permanent establishment abroad is What is a a nightmare. The nightmare scenario is: Your company (a) has one employee abroad, who (b) acts as an in- permanent country agent, who (c) is discovered by the local tax establishment? authority, who (d) deems that the employee creates a permanent establishment. In this situation, your A permanent establishment is company may need to: register, file for taxes, follow local often a fixed place of business, accounting rules for business activities, make remittances which includes any physical to the local authority, and pay fines or penalties. Ouch. place or legally registered presence in a country. This In other situations, a permanent establishment offers tax definition does not include short- advantages. The dream scenario is: (a) the employee is term construction sites; storing, acting in a low-tax jurisdiction, where (b) your company displaying, delivering, stocking, expects ongoing profits and expansion, and (c) your processing, purchasing, or sampling most goods or company does not need immediate access to those profits. merchandise; or most pre-selling In this scenario, your company can likely defer taxes at activities. home by offshoring these profits and reinvesting the However—and this is the tricky- foreign profits at a significant discount in the target ish issue—if a foreign company country. This situation will actually help your company's has an agent in a local country bottom line, making the costs of compliance abroad worth that can and does enter into the investment opportunity and tax benefits. contracts on behalf of the company for any reasons other In any situation, your company should carefully analyze than those listed above, then the specific situation and make an informed decision this agent's activity will likely regarding your permanent establishment risks or create a permanent establishment. benefits. 3
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  2 Total Mobility Law January 2013 Continued from page 1 your head in the sand: figure out the issues and do something about. Chances are that you should fix the problem right now. Mistake #3: Assuming your foreign employee is an Limit costs independent contractor How can your business You probably know the independent contractor issues in reduce the cost of legal your home country. Do not assume that the rules are the advice for global issues? same in other countries. When you think you have an Businesses that are operating in independent contractor abroad, chances are that the rules- multiple jurisdictions know the cost of compliance abroad. -and risks--are different! As operating budgets remain tight for many companies, a few simple steps can help cut Mistake #4: Thinking you know the foreign compliance costs in foreign employment/labor laws jurisdictions. We suggest three things you can do. Don't assume that you can figure out foreign employment law by poking around on a website. In any country, labor law is a complex intersection of law, regulation, 1 Internalize functions jurisprudence, culture, and practice. You need local help. when appropriate. Some jobs are better done in house. A lawyer should do what a lawyer does best, Mistake #5: Thinking your local tax advisors know while employees do the rest. the foreign tax issues Your local tax advisor is likely an expert on local taxes; 2 Make sure you have cross-border employment requires attention to tax issues the right services. in multiple countries. You need knowledge and perspective For some tasks, non-legal from multiple experts if you want to maximize your tax service providers can advantages. provide better value. Mistake #6: Not registering a local corporate entity 3 Communicate your needs. In many countries, it is not legal to do business without a Don’t hesitate to tell you local registered entity. In most countries, a strategic lawyer your budget limits. corporate structure will reduce taxes and liability. With Law is a business too. limited planning and cost, your business can benefit by 4
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  4 3 Total Mobility Law January 2013 (Continued) following local corporate rules. These issues become more pronounced when working across borders and professional cultures. Mistake #7: Dodging immigration With all that in mind, you should have a laws plan that you implement each time that Immigration can be a headache--especially you need to manage outside counsel. for businesses that do not follow local procedure! In most places, visas and work permits are available at a fraction of the Mistake #10: Assuming that you cost of the fines, penalties, and reputation cannot afford international legal damage of noncompliance. advice Yes, legal advice is expensive. However, it is expensive for a reason, which is return Mistake #8: Doing it all on your own on investment. Most managers groan Saving costs by doing everything in house about the high costs of legal advice. often adds the long-term cost of Managers should instead be glowing about noncompliance and lost opportunities. what a great investment legal fees offer. While we encourage businesses to Good legal advice can open all kinds of internalize the information and services opportunities for added profits in the that we provide, most businesses need global economy, including: help getting started. When hiring employees abroad, spend the dime and get ü Tax advantages available in a some help. transfer pricing strategy ü Access to top talent in talent communities abroad Mistake #9: Not effectively managing outside legal counsel ü Reduced liability in multiple countries You pay a lot for outside legal counsel, so they should self-manage, right? Probably ü Access to massive consumer not. markets in expanding economies After all, you know your situation better ü Lower costs of materials, labor, than an outside lawyer. You need to know transportation, and utilities the process the lawyer is following so that ü Employee development in you can internalize functions that are interesting new locations better left to in-house employees. You should also know whether your lawyer is With all the benefits that good legal advice reinventing the wheel on your dime. can unlock, you can’t afford to not get good global advice. 5
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  Get in touch Welove talking to businesses that are involved in the global economy. Because the practice of international law is an ever changing and rapidly evolving subject area, every transnational business offers the opportunity for problem solving, which is what we at Total Mobility Law love to do. With that problem solving approach in mind, we offer two hours of complimentary consultations for all clients. This translates into several discussions where businesses get to know our collaborative approach, communication style, and deep knowledge of international legal issues. So reach out and let us know when you are ready to get some advice on your international legal issues. We are grateful to receive your questions and get you answers—whether or not you retain our services. Email: [email protected] January 2013 Total Mobility Law Email: [email protected] Twitter: @Total_Mobility Website: totalmobilitylaw.com 3220 Fuhrman Ave E Seattle, WA 98102 Phone: +1 425 351 9455 Skype: todd.m.heine totalmobilitylaw.com