Companies are finding it increasingly difficult to deal with the tax implications of employees who work in different countries, according to a report by PwC.

The study finds that almost all companies plan to increase their mobile workforce in the next two years – with 60% having to change their approach in order to account for new international tax agreements, including the OECD’s Base Erosion and Project Shifting (BEPS).

It said BEPS has sharpened the focus on the risks posed by employee mobility as it aims to ensure profits are taxed in the territory where business activity is performed, but nearly a third (31%) of companies do not know the exact number of their employees working internationally. 

The report suggests that while more than half (58%) of companies surveyed are aware the BEPS recommendations have significant implications for mobility and their tax position, they are unsure how best to deal with the challenges.

It sees the “informally mobile population” – which includes business travellers, cross border commuters and international virtual workers – as posing a particular challenge and risk to employers.

The PwC research also shows 23% of businesses surveyed do not know who has responsibility for business travellers and only a third of companies feel their tax and mobility teams work closely together to monitor this.

Tax Partner with PwC Mary O'Hara said: “Global work is increasing sharply and, with the many international businesses in Ireland, as people move in more fluid and informal ways, it creates complex mobility challenges for their employers.

“Companies must develop an understanding of who their mobile people are, where they are going and what they are doing, to be best placed to identify the risks,” she added.