Are you considering a corporate relocation (move)? If so, you’ll want to take advantage of the available tax benefits. In this blog post, we will discuss the different tax benefits that are available and how to claim them. Read on to know more:
WHAT IS CORPORATE MOVING?
Corporate moving is a process where an employee relocates or a firm or a branch of the firm moves from one location to another.
As said, moving involves either only an employee or the firm itself moves to a different location. This brings us to the two types of corporate moving: 1. Moving an employee to another branch and 2. Moving the firm to a different location.
1. Moving an employee to another branch
Globalization and digitization have opened up new opportunities for businesses to expand into various locations. The reach of connectivity can now allow employees to work from anywhere in the world as long as they maintain their connection with the company through multiple offices across different regions or countries.
In order to optimize the workplace, some businesses have been moving their employees by either transferring them within or between departments. This practice can be because of new projects/assignments or better opportunities that are available in another location. The concept of moving works very well for those who want more challenging positions with different responsibilities than what they had before working at this company.
2. Moving the firm to a different location
Moving a firm from one location to another is a tedious task. The distance or how far the new location of the office is from the current office and the reason for shifting the office several things must be considered before moving.
When you’re thinking about moving your company, it’s important to consider all these things. The smallest relocation can still cost millions, depending on size and assets. So making sure everything goes smoothly will save time in recouping those investments later.
It’s important that you do your research on where the company will be headquartered. You might sign a long-term lease or other agreements with local authorities and need an area in which they can provide economic benefits for years into the future. That means making sure this decision isn’t just one made on impulse.
WHAT ARE THE TAX BENEFITS APPLIED ALONG TO A CORPORATE MOVE?
When employees move, they have to account for the additional cost of living and commuting. The company will pay this directly or through salary increases so that you can avoid out-of-pocket expenses like rent/mortgage payments, electricity bills, etc.
When an employee is transferred, their employee can claim tax benefits from the cost of moving them. However, it’s important to know how much you’re being compensated for. If it’s more than what they actually paid in relocation money, then this additional amount will instead be taxable as income.
To claim a tax exemption for relocation, make sure you have all necessary documents that validate the payment of expenses towards transfer. Subsequently submit these papers (comprising receipts, etc.) to your employer and income tax department so that they can calculate any deductions from their salary package should there be an expense-related move coming up.
WHAT EXPENSES ARE COVERED UNDER TAX BENEFITS?
The expense coverage varies from company to company, but many employers offer employees the financial support they need when moving. Following are some basic expenses that are covered tax benefits:
- If the employee has spent money on any sort of storage service because of the moving, it will be included in the tax benefits.
- For moving, the employee may use a packing and unpacking service, so it is included.
- For a move, vehicles are required, so that cost is also included.
- If, because of the moving of the employee, his/her spouse/partner loses their job, then a consolation gets added to the tax benefits.
- As the moving is done for the company, fees paid for the passport and visa have to be included in tax benefits.
- The traveling expenses also come under tax benefits.
- If there is no fixed accommodation available, the cost of temporary accommodation for the employee is completely included in tax benefits.
- If the new location of the employee is at a place where he/she might face communication issues because of language and culture, then the cost of learning the new culture and language will be added to tax benefits.
- The legal fees that are associated with selling the old home and buying the new home are also included.
HOW DO YOU CLAIM TAX BENEFITS?
Your expense documents have to be retained for proof. So it’s best not just throw them away or lose track of what you’ve done with this information.
We hope this blog post answered all your questions about corporate moving and the associated tax benefits. For any further queries regarding the blog, you may contact us via mail or phone call.