Vistra Insights

What business travellers and their employers need to consider in light of the pandemic

The coronavirus pandemic has affected countries around the globe. To control transmission, most have imposed various travel restrictions. These have affected short- and long-term business travel and will continue to create new challenges for travellers and their employers for the foreseeable future.
Expect continual travel policy changes

While many countries have been easing border restrictions, variable vaccination rates, new coronavirus variants and case spikes continue to result in lockdowns. As recent events have made clear, changes can happen overnight, with little to no warning.

The result is many new travel requirements and associated documentation. Many countries have implemented some type of traffic-light (e.g. red, amber, green) stratification programme for incoming travellers, based on their country of origin.

Belgium, for example, allows travellers from the US — which it currently regards as a red zone country — for essential travel. Travellers must have a negative Covid-19 test less than 72 hours before departure to Belgium, and also have an essential travel certificate from their local consulate or embassy, as well as some additional documents. All documents must be presented on arrival in Belgium or the traveller might be turned away. Quarantine is required, and only travel to the location of essential work is permitted. When defining “essential,” Belgium authorities consider among other things commercial and economic factors. Other countries consider a more limited range of factors.

It should be emphasised that this Belgium example — like so many others — will likely soon be out of date, an illustration of the fluid nature of travel restrictions. The European Council recently updated its restricted-country list. As of 18 June, the Council recommends, EU member states “should gradually lift the travel restrictions at the external borders for residents” of 13 countries, including the US. (China is a fourteenth country on the list, subject to reciprocity.) Keep in mind that these are EU guidelines, and member states such as Belgium may have variations on their own restrictions or not adopt the guidelines at all. Significantly, the United Kingdom, a recent EU defector, is not on the Council’s 18 June list, meaning that travellers — including the US travellers in our example — from that country may not be able to enter the EU.

The UK itself provides another example of geography-based restrictions. In England, the US is at the time of this writing an amber zone country, along with Canada and most of Europe. Visitors from an amber zone country need a recent negative Covid-19 test. They must quarantine for 10 days, with additional tests on day 2 and day 8. Non-UK nationals are not permitted to enter from red zone countries.

Countries can move from one colour category to another depending on changes in the rate of coronavirus in that country. Portugal went from green to amber in the first week of June 2021, as its cases rose. As a result, many UK tourists in Portugal had to quarantine when they returned home.

Employers and travellers should keep in mind that in this example, the requirements apply to England specifically. Other parts of the UK (Wales, Scotland, Northern Ireland) have rules that vary slightly. In some cases, then, travel from, say, England to Wales may be more restricted than travel to England from outside the UK.

For its part, Singapore switched from a 14- to a 21-day quarantine in early May. Many travellers planning a trip had to incorporate another week of hotel quarantine into planning and budgeting, or decide the trip wasn’t worth it and cancel. It should be mentioned that Singapore maintains a list of low-risk countries that trigger less strict or no quarantine requirements. Unfortunately, the US is not on this list at the time of writing.

Changing requirements can affect even what many regard as the equivalent of “local” travel. The Australia and New Zealand trans-Tasman transit bubble allows free travel between those countries, but outbreaks in the Australian states of Victoria and New South Wales led New Zealand to restrict travel from these states in early May, and again just last week.

Plan to manage change

Changes to travel requirements, then, can happen at any time, including in an employer’s or traveller’s home country. Employers should check both originating and destination government websites regularly. Not all websites have English translations, and even when they do, quickly implemented rules can be ambiguous. As the above UK example shows, employers must also be cognizant of any regulations specific to a state or other jurisdiction that is part of a larger whole.

In short, travel arrangements are more subject to sudden changes than previously, and that’s unlikely to end soon. Employers should ensure that all travel arrangements are cancellable in case a country chooses to shut down on short notice. And they should consider expenses, taxes and insurance, as well as updating employee handbooks and other relevant policies, in light of possible unanticipated extended stays.

One significant risk is that of an employee getting stuck en route to their destination or being forced to leave because of a policy change, but finding themselves unable to return home. While most countries that have changed restrictions have allowed in-country visitors to complete their stay and then depart, this is not guaranteed.

The most common cause of an employee being unable to return is when the home country changes its rules during a trip. When the Delta Covid-19 variant surged in India, for example, Australia stopped all flights originating in India and arrivals of anyone who had been in that country for more than two weeks, with no exceptions for Australian nationals. Those travellers like others had to remain in place until the restriction was lifted.

Make contingency plans for unexpected lengthy stays

Employers should develop policies and contingency plans for employees who are delayed or unable to return home. These should answer the following:

  • Who is responsible for additional unbudgeted costs, such as flight changes or cancellation fees?
  • When is the employee required to secure lower-cost long-term accommodation?
  • Who will pay for clothing, toiletries and other incidentals that had not been needed for the anticipated short-term visit?
  • Who will arrange for visas and work permits in the event they’re necessary?

In extreme cases the unexpected stay might extend past 183 days, which may trigger personal tax liability in the host country. In such cases, the traveller’s employer may find employer of record services useful in order to lower risks related to local labour, income tax and social security obligations. The traveller’s activities should also be reviewed in light of local laws to ensure the activities do not trigger a permanent establishment and result in corporate tax liabilities.

The company should not provide serviced office or hot desk facilities for a “stranded” employee in-country either. In most jurisdictions, leasing such premises in the company’s name will immediately trigger a permanent establishment.

Anticipate changes from remote connectivity

The virtual workplace proved essential during coronavirus lockdowns. What effect these technologies will have on how both short- and long-term assignments are handled will depend on the value in-person work has in each industry.

For example, manufacturing companies that subcontract various parts of their supply chain have found that remote inspections do not provide satisfactory results. In-person visits by skilled personnel remain essential. If restrictions do not permit this, companies may need to reconfigure supply chains and perhaps reshore some functions.

Online connectivity combined with the normalisation of remote work will probably reduce the frequency of short-term business travel. During the pandemic, businesses learned that not all meetings need to be in person, and remote training also increased. Short-term trips will still be necessary, but they can be combined with virtual visits to solve specific problems and to quickly respond to emergency business issues. As a result, many businesses may find themselves reducing their travel budgets.

Reduced business travel will in turn affect businesses involved in transportation, logistics and hospitality. These industries will need to adapt to a world with a higher proportion of virtual meetings and negotiations.

Pay attention to the communication needs of employees

Turning the focus to short- and long-term expat assignments as opposed to business visits, it’s worth considering that expat employees who go on longer assignments tend to be executives with rare skillsets that employers greatly value and want to retain. Expat assignments are challenging even in normal times, and they’ve become more difficult with changing travel restrictions and other uncertainties.

These uncertainties may make it more likely that expats, their families and their employees are more reluctant to engage in assignments involving family members staying in the host country. If this shift does occur, employers will need to revise their budget considerations. For example, employers may no longer need to budget for an expat’s children’s host-country school fees, though additional home-leave trips for the expat may be necessary.

Employers must recognise these new realities and plan to effectively and regularly communicate with their remote employees about any new or revised travel rules, corporate policies and other relevant information. This will increase employee retention and help ensure the company has high-achieving employees in countries where it needs a presence.

Dafydd Williams, Senior Director, Tax Advisory, contributed to this article.

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