The biggest relocation challenges for 2018

Controlling relocation and assignment costs

The number one challenge on the list of global relocation challenges for businesses and relocation managers is, unsurprisingly, the costs of employing an expat. One of the issues that raise the costs of the relocation project is the employees' demands, which can be much more ambitious than the expectations employees have when working in their home country. Another reality that companies have to deal with and allocate money towards is the type of move that they will offer to relocate employees — will it involve shipment of the belongings or long-term storage of goods? To effectively manage relocation costs, companies are educating the staff involved in the relocation process about the costs and saving methods, as well as encouraging less long-term expatriation projects for employees.

Immigration  

Many companies take the immigration policies of different countries lightly, and send employees to new places, without realising the complexity of the specific entry requirements. The challenge of immigration includes formalities such as visas and work permits, as well as knowledge about the social, economic, and political conditions of a country. It is critical for the company to be able to answer well in advance questions such as: “How long does it take for a work permit to be issued?” and “How does Brexit, for example, affect the stay of a European Union employee in England?” A good idea to lessen the adverse effects of this challenge is for companies to ensure better communication between the managers and employees, which will allow for a higher flow of information from one end to another.

Tax compliance

Forty-nine percent of the surveyed companies by Cartus consider tax compliance to be one of the biggest global relocation challenges, bringing it to the third place. This is mainly because of lack of advanced planning and knowledge about the tax requirements of the host country. Often, the managers are surprised by the unexpected cost that tax adds to the relocation assignment. The top three countries in which tax compliance challenges are most frequently found are China, the United States, and Japan. For example, in Japan, the taxes that apply to corporations are the corporate income tax (approximately 30%), consumption tax, registration tax, and stamp duties — all of which are levied by the central government and the prefectural and municipal authorities.

Compensation approach

Compensation and relocation allowances seem to be less of a concern for the relocation managers and their business. However, it is still at the fourth place of the top relocation challenges. Companies are trying to achieve successful expatriation projects with the lowest costs. However, this is not a sustainable measure, as it doesn't take into account the implications it has on the employee and possibly their trailing family. Thus, packages such as education for the employee's children, travel and accommodation allowances must be structured and stated before the hiring process has begun. This approach may even help the recruitment of new talent, who has been initially attracted by an enticing expatriation project.

Housing

Housing is the fifth biggest relocation challenge with 23% of the participants bringing their housing concerns up. There are many things to consider when booking a house abroad for an expat, and unfortunately, even when you think everything is under control, things may take an unexpected turn. Relocation managers often have to deal with requests from employees for exceptions (e.g. enquiry for a fully furnished place when the agreement had been for an unfurnished home). Also, employees who go to a country for the first time may get disappointed by the quality of housing, targeting their anger to the company for not ensuring a higher-standard accommodation. Last but not least, relocation managers shouldn't underestimate the importance of local lease practices and inventories, as any misunderstanding may cost a lot of money to the company at the end of the relocation contract. According to Cartus, housing challenges are mainly seen in the United States, the United Kingdom, and Brazil. The priority for companies when it comes to housing is to be able to provide a secure and pleasant place to their employees — which is not always easy or possible to achieve.