Articles & Whitepapers

NEI Service Partner Spotlight - Homebuyers Preferred

This month’s NEI Service Partner Spotlight is on HomeBuyer's Preferred and the ins and outs of radon in your home or rented space. Why is radon important to mitigate? What happens if you don't? Click HERE for the infographic.

NEI Spotlight on Corporate Living

Discover how extended-stays make temporary living easy and seamless for transferees from their full-service residential complexes offering apartment-style accommodations, real-time booking systems, fully-equipped kitchens, spacious layouts, and flexible rental agreements.

Download the infographic here.

‍

Canada's Relocation Property Rules Eased

On 1 January 2023, the Canadian Government imposed restrictions on non-Canadians from buying residences with the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which prohibited relocating employees from purchasing a home in Canada until certain restrictions were met . We’re happy to provide some recent updates that have amended the situation.

After much lobbying from the Canadian Employee Relocation Council (CERC) and Worldwide ERC, Ahmed Hussen, Canada’s Minister of Housing and Diversity and Inclusion, announced amendments to the law that will help alleviate stress for anyone who is considering moving to Canada.

Updated Amendments

• Non-Canadian employees with a valid work permit who work in Canada for at least 183 days may now purchase a single home.
• The requirements for a non-Canadian investor owning equity in a private Canadian business was increased from 3 percent to 10 percent. Once the equity threshold has been met, these investors will also be able to purchase a home.
• Non-Canadians may now purchase property for development purposes, such as vacant lots, zoned for residential or mixed use.

“These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities,” says Hussen.

Unfortunately, non-Canadian relocation management companies (RMCs) are still not able to acquire homes as part of a Guaranteed Buy Out or Buyer Value Option program.

NEI will continue to keep our clients updated with any further developments as they occur.

Passport Processing Woes Persist

The Pandemic may be officially over, but U.S. citizens in need of a passport are facing increased challenges with passport processing times.

‍

Millions in Backlog

During COVID, there was a government backlog of 1.7 million U.S. passport applications. Today, the U.S. State Department reports “unprecedented” delays in processing documents due to software and staffing issues with some three million applications now backlogged.

Though the Department issued a record 22 million passports in 2022, the weekly volume of applications so far this year is 30 to 40 percent higher than last year with an influx of about 500,000 new passport applications received each week now.

Before COVID, it took about four-to-six weeks to process a passport after receipt. Today, after receiving the application, new estimates for processing and issuing passports are more than three-to-four months. Mailing times can add additional weeks to a month and some people report receiving their passports five months after applying in the traditional manner and even four months after paying for an expedited service.

Further, many countries have "six-month passport rules," where they will not accept entry by travelers whose passports will expire less than six months after the beginning of their trip.

‍

Prepare Extra Early

In addition to the current backlog, 23 percent of U.S. adults say they plan on traveling internationally this summer – up from 20 percent in 2022. For U.S. citizens planning international travel this year, whether it is personal or business related, if you need a passport preparation should begin well in advance to avoid delay.

Just how far in advance? A minimum of four to six months when using expedited shipping is recommended. Consider the following:

• Applicants should make certain details and supporting documents (like pictures and driver’s license) are 100 percent correct to avoid delays.
• If travel is this October or later, applying the traditional way is likely safe, but your application should be submitted immediately with expedited shipping.  
• If travel is this August or September, one can potentially still get a passport in time, but will need to pay a fee to expedite processing as well as expedited shipping, but there is no guarantee.

‍

Checking on Passport Status

You can check the status of an in-process application by visiting the U.S. Passport Application Status page. If there is a proven life-or-death emergency or urgent international travel coming up within 14 days, one can try making an in-person appointment at one of 26 passport agencies throughout the U.S., but an appointment to visit an agency is mandatory and the only way to make an appointment is by calling 1-877-487-2778 between 8 a.m. and 10 p.m. ET, Monday through Friday. Spaces are limited and agencies do not accept walk-in services.

‍

Expediting Agencies

Expediting agencies are companies that assist with rushed passport applications and charge an additional fee on top of the standard passport application fee and expedited passport service fee. The fastest turnaround time is one week for $799 or a two-week option for $599, but even these can be limited in availability since expeditors rely on a subset of appointments being available.

In limited cases, expediting agencies may have extremely limited availability of next day or three day turnaround slots, but these are very few and often attract a much higher management fee from the agency according to EIG, one of NEI’s Visa and Immigration (V&I) service partners. There are various passport expediting agencies that offer these services, with each being allocated a certain number of faster appointments. So, if the agency first approached does not have any available appointments, it is worth checking with an alternative provider directly.

Newland Chase, another V&I service partner, suggested that companies may consider having their frequent business travelers obtain a secondary U.S. passport which would be valid for four years and could be quite helpful if an application is tied up in process and international travel is required.

NEI will continue to provide clients with updated information on this topic and manage relocating employees’ expectations accordingly. If you would like to discuss this passport situation further, please reach out to your NEI representative.

‍

Navigating Relocation Concerns

Relocating employees often face various challenges and concerns when considering a move. Understanding these common hesitations can help employers better support their employees during the relocation process. Based on data from 2022, we’ve identified the top five reasons why employees are hesitant to accept relocation assignments.

‍

#5: Undisclosed Personal Reasons

During a relocation, families may have sensitive personal reasons that they hesitate to disclose. As part of our commitment to supporting relocating employees, NEI's Account Executives are trained to observe and listen for subtle cues. By being attentive, we can address specific needs, such as accommodating a newborn with extraordinary medical requirements.

To help employees meet the needs of undisclosed concerns, many companies offer their employees more choice in selecting benefits that best fit their needs by using technology like NEI's iSelect tool or providing a “You” Allowance to access additional funds for needs unique to their situation. These types of actions bring peace of mind to relocating families and ensure smooth transitions.

‍

#4: Unfamiliarity with the Destination Location

Moving to a new area can be daunting, as families leave behind the comfort of their old home, family, and friends. Studies show that three out of four Americans express regrets after relocating, with acclimating to a new community being a significant stressor.

At NEI, we recognize the importance of personalization and strive to match relocating employees with real estate agents or service partners who understand their situation and can help minimize their concerns. Our city search tool allows your employees to explore their new location and connect with identified essential services, such as information about schools, shopping, parks, or community events.

‍

#3: Financial Considerations

Financial concerns are a common worry for relocating families. Rising housing costs and fluctuating interest rates pose challenges when purchasing a new home. If they are moving to a higher cost-of-living location, the concerns increase. NEI works closely with relocating families to help them thoroughly understand the available relocation benefits the company is providing to ease financial burdens.

We consult with our clients extensively in developing competitive benefits that lead to greater transferee satisfaction while minimizing corporate expense. Our Client Relations Managers partner with our clients for whatever they need, such as running cost-of-living analyses (COLA), advising them on various ways to support homeowners during challenging real estate markets, or offering significant insights on any topics of concern to aid acceptance rates.

‍

#2: Health and Safety

In an ever-changing world, health, safety, and security are paramount concerns for relocating families. One way that NEI helps to reassure them of the new location is to collaborate with local real estate agents or destination service partners for an area orientation. Advising them of the various neighborhood nuances and desired amenities is important prior to making any decisions. Obtaining this type of information helps relocating families feel confident they are making good decisions about relocating and where to settle. It prioritizes their sense of well-being so they can settle into their new environment with peace of mind.

‍

#1: Spousal/Partner Acceptance

The support and acceptance of a spouse or partner significantly influences an employee's decision to accept a relocation assignment. NEI recognizes the importance of spousal acclimation and recommends that companies provide this type of support because one of the top reasons for a failed relocation or assignment is an unhappy spouse or partner.

For example, if the relocating family needs to maintain a dual income household, helping that person acquire a new position can be essential to a successful relocation and a productive employee. Additionally, NEI continues check-ins with relocating families for extended periods, up to six months or longer, if needed, to ensure a smooth transition and address any concerns.

‍

Conclusion

At NEI, we understand that effectively relocating a family goes beyond finding them a new home. NEI founder, Chairman and former school psychologist, Kate Dodge emphasized, “The significance of supporting and grounding the family is critical during the relocation process. Our commitment to Service Exceeding Expectation means that we go above and beyond to ensure satisfaction from all parties involved.”

By placing proper focus on these top five concerns—undisclosed personal reasons, unfamiliarity with the destination location, financial considerations, health and safety, and spousal acceptance—companies can make each relocation a positive experience.

Should you like to discuss any of these topics further, please contact your NEI Representative.

NEI Service Partner Spotlight - PrimeLending

One of the best things you can do for yourself when you're getting ready to buy a new home is to know how much home you can afford. Read more for a glimpse of the type of trusted advice PrimeLending offers tranferees. Click here for details.

‍

NEI Global Relocation (NEI) is thrilled to introduce the latest in core-flex technology. Today’s relocating families want to be empowered to select benefits that fit their specific needs. That desire is nothing new, nor is the fact that companies have been using core-flex programs internally for some time now.

What is new is iSelect, our revolutionary design that improves the employee experience with choice and an online tool featuring opportunities to explore their options and various combinations of benefits before deciding what is best for them.

With iSelect, their onboarding experience begins with confirming and updating their information.  From there they are taken to a brief explanation of their core benefits, then quickly advanced to the selection process for their flex benefits. A points calculator is visible to show them how their budget is impacted with each selection.  Once initial selections are complete, your employee can easily coordinate a meeting with their NEI Account Executive through a collaborative calendar.

iSelect makes every relocation a personalized experience and NEI is here to help your relocating families think through their moves, manage the delivery of benefits and answer questions, enabling your employees to stay productive.

The entire process is streamlined, flexible and personalized!

It’s the latest in core-flex technology and we can’t wait to show it to you. Current clients should contact Cindy Beitel, CRP, NEI SVP, Global Client Relations to learn more. If you are not an NEI client, but would like additional information, please reach out to Pam Jacknick, CRP, GMS, NEI SVP Global Client Development.

New Travel Authorization Systems Postponed Again in U.S. and Europe

Enforcement of two new travel authorization systems have been postponed again in the U.S. and Europe:

1. ETIAS (European Travel Information and Authorization System) – until 2024; and
2. REAL ID – until May 2025

‍

ETIAS Postponement

Europe receives over 37 million visitors each year, so the introduction of ETIAS – similar to the U.S. ESTA program (Electronic System for Travel Authorization registration system) – is expected to have a significant impact on travelers from around the world, including the global mobile workforce.

The roll-out for ETIAS has been planned for years, but the start date has been repeatedly pushed back from 2020, 2022 and 2023, to launch in 2024. There is speculation the new 2024 date could be pushed back further, perhaps after the Summer Olympics in Paris concludes on 10 August 2024.

Once implemented, all visitors who previously travelled visa-free to Europe’s Schengen Zone will be required to register in advance online. For European countries which will be using ETIAS starting 2024, please see click here. To register, individuals will need a passport valid for three months beyond the intended stay, an e-mail account, and a credit or debit card. Passengers will be required to complete an online application form that covers a range of biometric, travel and security related questions. Data will be checked against a variety of European and International databases including no fly lists, to identify potential terrorist and criminal threats who will then be refused entry via the ETIAS program.

When up and running, it is expected most ETIAS applications will take 20 minutes to complete, but time will vary based on additional fields one may need to fill out. Applications may be processed and delivered by e-mail within one hour if no further checks are required, but it could take upwards of 96 hours if additional information’s needed. An application fee will be €7, though travelers under the age of 18 or over the age of 70 will not need to pay a fee.

‍

REAL ID Postponement

To help improve airline security, Congress passed the REAL ID Act in 2005 and the U.S. Transportation Security Administration and other federal agencies announced they would require REAL ID compliant licenses for people 18 years old and older to fly anywhere within the U.S. starting in May 2023.

However, the Department of Homeland Security announced the deadline would be extended until May 7, 2025 since state motor vehicle departments need more time to process the backlog of applications created by COVID-19 and only about 50 percent of the U.S. population has REAL ID compliant documentation.

Secure REAL ID will “set standards for the issuance of sources of identification, such as driver’s licenses” and will have a star at the top of the license. When enforced in 2025, it will be required for every air traveler 18 or older at airport security checkpoints for domestic travel. Those under 18 must be travelling with an individual who has acceptable documentation.

To get a REAL ID license, a person typically will need to show proof of their full legal name, date of birth, Social Security number, two proofs of residence and lawful status. Lawful status means that the person will need to provide valid documentary evidence that they are lawfully in the United States per Section 202.(c)(2)(B).  

Still, despite REAL ID requirements, other documents may be substituted or used instead when enforcement starts in 2025. These may include U.S. passports, Department of Homeland Security-trusted traveler cards, U.S permanent residence cards, federally recognized tribal-issued photo IDs, and USCIS Employment Authorization Cards.

Costs will be tied to local fees associated with obtaining driver licenses or identification cards. Employers should encourage their employees to determine if their current identification includes the star. If not, it would be good to advise them to obtain the REAL ID designation to avoid unnecessary delays obtaining the necessary documentation for traveling by air by the 7 May 2025 start date.

API Integrations and Relocation - What You Should Know

API integrations for relocation are the future of working faster and more efficiently. As global mobility professionals face growing responsibilities and increasingly complex processes, workflow efficiencies become more important to meet your talent objectives.

That’s where API integrations demonstrate true value. APIs, or Application Programming Interfaces, create communication protocols between business systems, automate workflows and streamline processes within and outside your organization.

Automation drives efficiencies for HR Mobility teams, all who touch your mobility processes, and improves the overall experience of your relocating employees. Automated workflows allow your team members to focus on what is important – securing critical talent and getting them where they are needed as quickly as possible.

It also helps your business scale for future growth by leveraging technology.

UNITE Integration Platform

NEI's UNITE Integration Platform simplifies the integration process to easily connect client and supply chain partners within a highly efficient mobile workforce management system to:

• Seamlessly integrate systems and synchronize data between the client and NEI
• Automate entire business processes, including authorizations, relocation activities, invoicing, compensation, and tax gross-up
• Drive efficiencies and improve the overall experience of your relocating employees through the timely delivery of quality services

While technical staff are needed for API integrations, NEI’s UNITE Integration Platform minimizes the one-time investment to create efficiencies throughout your relocation lifecycle. This investment pays long-term dividends, freeing up time and energy for what matters most - getting the right people in place to unlock new business capabilities for your company.

In Summary

As a full-service global mobility company offering related global compensation and consulting services, NEI Global Relocation (NEI) uses UNITE to unify the entire relocation experience.

Innovation through API integration is a strong focus toward our collaborative approach to provide trustworthy, consultative mobility solutions that make the relocation process work better, so you can achieve your talent agility objectives.

For more information on how UNITE can improve your workflows, please contact  NEI Global Relocation.

‍

NEI Global Relocation once again makes the HRO Today Baker’s Dozen for Relocation! NEI is one of only two companies to be recognized in the survey for at least 11 of the past 13 years, indicating strong consistency in satisfaction for the services provided to our clients and their relocating employees.

“We are very appreciative of our clients taking the time to participate in this survey,” said Randy Wilson, SCRP, President | CEO, NEI Global Relocation. “Time is precious, especially for today’s global mobility professionals. Our employees work very hard to ensure each relocating family has a positive experience and this type of recognition is important to see given the challenges we have all faced over the past two years.”

The Baker’s Dozen for Relocation is one of two annual industry surveys measuring client satisfaction among global mobility providers, the other one being the Trippel Relocation Managers’ Survey, which provides more overall detail. NEI is also a high performer in that survey, achieving more #1 rankings than any other relocation management company in each of the last three surveys.

A Welcome Price Drop

The ocean is a giant “highway” of vessels moving containers of goods across the globe. During the pandemic and until recently there were significant price increases for overseas shipping, but global shipping costs are back down to pre-pandemic levels.

• Shipping a 40-foot container from China to a U.S. west coast port was down 93 percent from its high of $20,600 in September 2021.¹  That’s roughly equal to February 2020. Shipping costs from China to U.S. east coast ports and to Europe have also decreased.

• Other global shipping routes have seen costs fall also: freight charges on Europe-to-U.S. routes dropped from highs of $16,000 to around $3,000.

This is welcome news, but will the trend last for corporate relocation?

NEI Global Relocation has advised clients since the start of the pandemic that companies' global mobility programs should remain prepared and flexible for the unexpected in such uncertain times. Today is no different.

‍

What 2023 Could Bring

Issues that could threaten lower international shipping costs and fewer delays may include:

• Geo-Political Disruptions: The world has become more economically linked, and any military conflict can force the system to adapt in unpredictable ways including areas declared off-limits to shipping. Russia’s invasion of Ukraine could further disrupt global transport.
• China’s COVID Surge: This threatens to upset 2023 global supply chains again and could increase supply chain volatility. Three major ports across China have already experienced new supply chain delivery problems because of COVID and at the Port of Shanghai, the world’s number one container port, cancellations have increased.²
• Container Shipping Reliability: This will remain volatile in 2023 as a recent report found that global vessel schedule reliability had a 56.6 percent on time record in December – a huge improvement from 30 percent recorded earlier in 2022 – but the average on time was 74 percent in 2018 and 2019.³
• Rising Oil Costs: The shipping industry keeps a close eye on oil prices as fuel costs can correspond to 50 or 60 percent of a ship’s total operating costs, depending on vessel size. When oil prices/demand are on the rise and as China reopens after ending its Zero COVID policy, the shipping industry may pass those higher costs on to customers.
• Labor Shortage / Labor Strikes: Beyond finding moving crews / drivers, the global transportation infrastructure is under regular threat from labor strikes. 2022 saw many strikes at both air and seaports. The chances of new strikes disrupting supply chains in 2023 are high and there is pressure on employers to increase salaries with global inflation.
• West Coast Ports Avoidance: Cargo owners are seeking new supply-chain options and diversifying their port entry locations. Shippers continue to reroute to gulf and east coast ports, away from California, due to higher cost of transporting freight over land, labor disputes with dockworkers, and rail workers' unions causing uncertainty.

Despite these risks, some feel freight volatility and international freight shipping costs may continue to decrease. Dubai-based global logistics company DP World expects global freight rates to drop by a further 15 to 20 percent in 2023.

‍

Relocation Assistance Risk Considerations

Given the potential risk factors detailed above, what does this mean for client companies and global relocation assistance?  

Foremost, one should remember that:

• Potential rate increases could re-bound in 2023 if the recent, positive circumstances change; and
• Shipments could get delayed or re-routed to other ports, increasing time for one’s expected goods.

Companies need to continue to weigh the impact of potential, quickly changing rate increases and associated incremental costs of delayed shipments (e.g., temporary housing) on their budgets against the increased delays for relocating employees who could have to wait longer than expected for their goods should global supply chain disruptions arise.

If NEI is not managing your international shipments, we recommend:

• Remaining flexible on fluctuating rates due to swiftly changing economic conditions and budgeting for changing international container rates in your cost estimates.
• Working with the best partners to develop processes that include verification of all options, freight costs and that any increases or above average costs are genuine.

To be prepared for shipping costs to be fluid in the year ahead, set expectations with relocating employees and consider alternative policy considerations for shipping household goods internationally, if applicable.

‍

NEI Guidance and Diligence

NEI continues to be diligent about client costs for every single move. Our Client Relations Managers will work with each client to discuss the most cost-effective international household goods shipping options available and considerations for providing a relocating employee a small allowance towards being without those goods due to a longer transit.

To proactively discuss various options with our clients that may assist them in reducing or avoiding costs, NEI constantly monitors market and economic conditions so talent goals can be met.

For more information on this situation going forward, please reach out to your NEI representative.

Sources: 1) Freightos; 2) SCNBC; 3) Sea-Intelligence’s “Global Liner Performance” Report.

‍

NEI Service Partner Spotlight - IOR Global Services

Cultural training is a critical component of preparing for an assignment in a foreign country. Customs and communication styles can vary significantly and raising awareness of those differences can help relocating employees navigate the nuances of a new location.

In the linked infographic, you can see a glimpse of the type of information that is shared when working with one of our service partners, IOR Global Services. Click here for details.

‍

Crucial Insights into Business Travel Tracking

From crossing state lines to crossing international borders, a company’s Duty of Care obligation is a compelling reason alone to keep close track of employees on business travel.

Need another great reason? Tax compliance!

‍

A Critical Commonality

Business travelers can span the full range of an organization’s company ladder, from C-suite executives, recruiters and salespeople to in-the-field technicians, drivers and interns visiting different facilities. Methods of employee travel will also consist of various forms of transport getting to a destination.

Once they arrive, however, all share a critical commonality: they and their employers are subject to the tax laws, rules, and regulations of the local jurisdictions where they work.

Companies typically differentiate “business travel” from “short-term assignments” based on the number of days an employee is expected to travel and be on the ground in a specific location. Yet, internal company policies or travel definitions might not fully or consistently address all destination tax obligations and/or reporting requirements.

As more nations and states seek to collect income tax on the earnings of visiting business travelers to increase tax revenue opportunities, tracking and reporting employee movement has become significant.

‍

Recognizing Risks & Reducing Surprises

Employees and employers must carefully adhere to various requirements to allocate and report income and withhold and remit taxes on business travelers’ earnings, but the ability to provide consistent, comprehensive travel reports for analysis is an obstacle many companies still face internally.

An NEI global tax partner, Deloitte, points out that surprises can be reduced by 1) recognizing the risks emanating from a mobile workforce; and 2) working collaboratively to answer the following questions for further action:

• Who are the organization’s business travelers?
• In which jurisdictions are they working?
• What compliance obligations are generated?

Reporting on the whereabouts and business activities surrounding company business travelers is either frequently inconsistent or not addressed within most companies due, usually, to no specific group or stakeholder having the knowledge and capability to comply with the countless unique regulations by location.

Taking the lead to get one’s company in compliance – or in a better shape to comply – may seem a daunting task. The next question becomes who is best to lead the quest to answer the above three questions and proactively address the consequences of regulatory enforcement?

The answer will vary by company, but a senior executive sponsor is key for momentum, oversight and decision making, as is forming a cross-functional, collaborative team with members from Human Resources and Talent Management, Mobility, Payroll, Finance, Tax and Corporate Travel departments – those who understand the issues and can work together to mitigate risks.

‍

Data In = Data Out

This collaborative team will be responsible to review the business analytics around travel data for improved compliance efforts, but what if available data is sparse or inconsistent?

Some companies may find it seriously challenging to generate required travel data and reports for analysis. In addition to understanding how travel details for each individual employee can be consistently obtained, the Global Tax Network, an NEI global tax partner, suggests that meaningful reports for analysis would need to show whether:

• Business travel actually was taken on all days indicated on the report.
• The employee used part of the time at the destination location for personal reasons.
• The employee booked a business trip outside of the company’s travel department.
• The employee listed on the report was the one who traveled or did another employee(s) travel in their place.

With technology advancements and departments sharing more information – such as travel and workday calendars, smartphone tracking apps, relocation travel reports, and more – the capability to track business travelers has come a long way compared to two-to-five years ago. This can prove helpful to track business travelers and analyze the data for risks.

‍

Compliance Ready

Awareness of an employee’s work location and enforcement of business traveler compliance has become a more prominent issue since work-from-anywhere became popular and travel has increased again following a sharp COVID-related decline.

Despite increased administration costs and some initial hurdles, business travel compliance is much less stressful and costly than any noncompliance and expensive tax surprise consequences to either the employee or employer. Addressing business travel in such a manner also supports Duty of Care issues and knowing where all employees are should a crisis occur.

NEI understands there are many questions companies have and challenges faced when it comes to reporting for compliance regarding business trips, whether for tax, immigration, insurance, or countless other topics. If you would like to discuss business travel or other compliance trends, please contact your NEI representative.

The above article is provided for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors before making any decisions or transactions.

U.S. Renters' Housing Shortage

Renters make up a significant share of annual moves each year in the U.S. as they continue to be attracted to better weather, lower costs of living, stronger job prospects and/or wanting to be closer to family. Here is how it affects relocating employees.

‍

Areas Most Impacted

There is a clear migration trend for renters:¹

• More want to move out of the Northeast and West; and
• The South and Midwest remain popular destinations.

But key factors impact both those simply wanting to move and those relocating at the request of an employer: availability, competition, and affordability.

What reasons are behind this and what assistance is available for renters?

‍

Availability

In most markets, the biggest challenge for renters moving is a serious shortage in available housing and an underbuilding gap of 5.5 million to 6.8 million units.²

Jeffery Hayward, Executive VP and Chief Administrative Officer at Fannie Mae, points out most housing-cost-burdened households are not just in coastal or metros, but also in less expensive metros – like Fresno, Charlotte, and Las Vegas. Even smaller metro areas lack housing that’s affordable.

Consider the following “availability” factors:

• Restrictive zoning increases the challenges nationally. Robert Dietz, Chief Economist at the National Association of Home Builders. "In certain neighborhoods you simply cannot build townhouses. You have to build single family units on lots that are bigger than the market wants." ³
• Institutional investors continue to purchase and rent out properties, owning about 700,000 of the 20 million single-family rentals in the U.S. today.⁴
• Renters also face the “Airbnb Effect” where landlords convert long-term rentals for local residents to short-term vacation housing, thus decreasing housing supply. A study found short-term rentals have caused a larger reduction in affordable housing than any other income level of rental housing.⁵

‍

Competition and Affordability

An average of 14 apartment seekers competed for a single rental across the U.S., but it’s even more challenging around ultra-competitive areas. San Diego – the 13th most competitive apartment market in the nation – has an average of 22 apartment seekers competing for each of the few available apartments.⁶

Since COVID, renters also face higher monthly leases with an overall increase in rents of 6.2 percent in 2022, marking the second-highest annual rent growth in this century, according to Yardi Matrix’s multifamily report. That growth rate is behind only 2021’s nearly 15 percent rise.⁷

However, that growth rate is well behind the rent growths in popular markets. From November 2021 to November 2022:

• Chicago was among the most robust in the Midwest region with average rents rising by 8.6 percent - $1,773 to $1,925. ⁸
• Phoenix rents surged 26 percent.
• Las Vegas rents jumped 23 percent.
• Charlotte residents saw rents climb 13 percent.⁹
• Florida metro areas of Naples, Sarasota, and Tampa jumped between 29 percent and 39 percent the past two years.¹⁰

‍

Renter Expectations, Experts and Effective Efforts

For companies that need to relocate employees to challenging rental markets, setting expectations in advance and pairing your people with the right local experts will result in the most effective efforts to compete for the best rental opportunities.

Expectations

• Relocating employees often must look farther out from a job site and accept longer commute times than years’ past – and may still have difficulties locating adequate housing.
• Managing renters’ expectations earlier is important: they need to know finding an apartment has become increasingly difficult and the type of housing they are accustomed to may now be beyond their budget.

Experts

• In the past, renters may have been offered only a lump sum and expected to make appropriate relocation decisions on their own. Such an approach rarely ends up working out well in the current environment given the competitive market and low housing availability.
• It is critical to work with local, on-the-ground experts who really know the rental market in each location. NEI is independent, so we can work with the most reputable and qualified rental agents, Destination Service Partners, and real estate brokers to preview potential apartments and rental homes before showing them.

Effective Efforts

Following a needs analysis, NEI’s Account Executives arrange for customized area orientation tours (if authorized) and provide access to our city search tool to acquaint themselves with the area before the home finding trip. Various service plans are available based on one’s program needs:

• NEI’s Home/Rental Finding Assistance minimizes time required for relocating employees to find suitable housing – whether as buyers or renters. We refer the families to reputable, qualified real estate brokers or rental agents to help in searching for their new home based upon specifics given through the initial needs analysis. NEI’s Rental Guide provides pertinent information to consider when leasing a property.
• Under NEI’s Extended Rental Assistance Program, we provide each agency with verbal and written instructions to anticipate the needs of employees, as well as clear expectations, required timelines and reporting requirements for the rental search. Our Account Executive follows up with the rental finding agent and calls the transferring employee after the initial contact, during, and just after the rental finding trips to ensure satisfaction. They remain in contact with the employee until a lease is finalized.

The Extended program may also include an area orientation tour to acquaint the employee with the new area and a guided tour of available rentals to quickly identify the most likely areas to meet the employee’s housing needs. Various service levels can be selected based on your program needs. This program is highly recommended for those moving to large, high cost of living areas.

‍

Relief in Sight?

There could be good news for renters across the country in the months ahead:

• Rents for both single-family homes and apartments are rising at a slower pace as of December 2022, but relief rates vary by market.¹¹
• Experts forecast an increase in the number of new homes, condos, and apartments coming to market. Apartment deliveries are projected to spike with more than 917,000 units under construction across the U.S. – the second largest volume increase the country has ever seen.¹²
• Home prices may decline in 2023 giving renters a potential window to purchase a home. Economists’ predictions for U.S home-sale prices run the spectrum for 2023: some feel it could remain stable and even re-bound again later this year, others expect a drop of 10 percent or more if there’s a sharp recession.

"This spike in prices in the short term should be followed by moving toward a new equilibrium, which does mean a bit of a cooldown in housing costs," senior economist at Zillow, Jeff Tucker.¹³

For more information on how NEI can help your company and your relocating renters in today’s volatile market, please reach out to your NEI representative.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

¹ Rent.com; ² National Association of Realtors; ³ National Public Radio; ⁴ Roofstock.com; ⁵ 2021 Carnegie Mellon University; ⁶ RentCafe.com; ⁷ Yardi Matrix; ⁸ Zillow; ⁹ Douglas Elliman and Miller Samuel; ¹⁰ CoStar Group; ¹¹ CNBC/CoreLogic; ¹² RealPage Market Analytics; ¹³ USA Today.

‍

Returning to normal causes an increase workload for the IRS

The Internal Revenue Service’s (IRS) workload has been increasing for years as its headcount has been contracting. Like other employers facing labor shortages, the IRS is having its own difficulties finding qualified job applicants, but there’s been signs of progress:

• Congress provided the IRS with $80 billion in additional funding over the next 10 years to increase hiring. More than 5,000 new customer service representatives were hired in October 2022 with training expected to be completed by February 20, 2023.
• The 4.7 million original individual returns backlog (Forms 1040) in January 2022 was reduced to about 400,000 by December, but is still anticipated to impact customer service.

‍

Difficulty Reaching IRS Customer Service

Of the 173 million calls the IRS received during FY 2022, only 22 million or 13 percent got through to an IRS employee after an average wait time of 29 minutes. As a result, most callers could not get answers to their tax-law questions, receive help with their account problems, or speak with an employee about compliance notices.

Telephone service for tax professionals hit an all-time low of 16 percent to a Practitioner Priority Service (PPS) hotline after an average 25-minute wait time for those who got through.

What to Do

If you need to call them, some say they have better results reaching the IRS in the morning, starting as early as 7 a.m. Eastern time, and Wednesday through Friday seem to be the best days to reach a representative. However, one should still expect long waits.

The IRS admits phone service wait times are often longer on Mondays and Tuesdays, on weekends and the closer it gets to April’s filing deadline. It is important to:

• be patient,
• be polite, and
• keep good records of contacts, attempted contacts, and one’s discussions.

The IRS has encouraged people to establish an online account at www.IRS.gov to help access information quickly. The IRS has invested in online capacities to provide taxpayers with a quick and easy way to access information so the calls for more complicated issues can be answered in a timelier manner.

If a call is necessary, the IRS encourages people to have all the information they need before filing a complete and accurate return. Organize and gather 2022 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and this year's Identity Protection Personal Identification Numbers valid for calendar year 2023.

Relocation Families

For relocating families, it is important to understand how relocation expenses are reported on various countries’ tax forms from the company. In most cases, NEI provides information about relocation-related expenses directly on the relocating employee’s NEI website and have access to any summary reports of tax related expenses in this one place.

NEI helps answer questions related to relocation expenses as reportable income. Employers can help manage employee expectations by reminding employees who are “surprised” about the tax implications from their relocation that:

• The policy they were provided indicated the tax implications.
• The details of their expenses are available on their NEI website.
• If they still have questions, they can reach out to their NEI Account Executive for more information.

For those moving cross-border, where two countries might be involved, tax expertise is always recommended, but here is some general information:

• One-way moves: Most companies offer a tax briefing to help the employee understand the nuances of the tax regime to which they are moving. Some companies might help with the first year of professional tax preparation fees.
• Assignments: It would be typical for companies to provide the tax preparation services for home and host countries.

In most cases, NEI coordinates with the company’s payroll or international tax provider to ensure they have all mobility expense information from the assignment to appropriately include in the home and host country payrolls.

Tips for Filing Taxes

“This filing season is the first to benefit the IRS and our nation’s tax system from multi-year funding in the Inflation Reduction Act,” said Acting IRS Commissioner Doug O’Donnell. “With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year.”

The IRS encourages everyone to have all the information they need in hand for a complete and accurate return.

As with any tax year, filing for your taxes with accurate information is the best way to eliminate potential frustrations down the road, whether you are reporting child tax credits received or relocation expenses. NEI can’t help with the former, but we certainly can assist with the latter. Help for questions is just a call away…and NEI answers our calls!

The above article is provided for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors before making any decisions or transactions.

‍

The Art of Housing Supply and Demand

Low home inventories, high housing prices and interest rates have slowed younger, first-time buyers from both becoming homeowners and the potential wealth-building aspect of owning a home. Consider that:

• About 65 percent of American households own their own home.
• Between 2010 and 2020, the total value of owner-occupied homes in the U.S. rose from $8.2 trillion to a staggering $24.1 trillion, according to the National Association of Realtors.
• Unlike rent, a homeowner with a fixed-rate mortgage provides more stability in knowing the principal and interest payment will not change, regardless of inflation.
• First-time homeowners may qualify for tax credits.

Historically, first-time home buyers made up about 40 percent of sales; but that percentage has dropped this year.

‍

An Up Hill Climb and a Moving Target

Increasing mortgage interest rates and escalating home prices have become a high hurdle for home buyers, especially for first-time buyers. Now, they are forced to stretch farther. Consider that:

• The average rate on the 30-year fixed mortgage -- the most popular product today –started this year around 3 percent and is now approaching 7 percent.
• According to Realtor.com, in 2021, Millennials in the 23 to 31 age range paid a median price of $250,000 – today it is $280,000;  and those 32 to 41 paid a $315,000 median purchase price in 2021 vs. today’s median of $350,000.
• Per Redfin, the typical homebuyer’s monthly mortgage payment has climbed $337 (15 percent) over the past six weeks to a new high of $2,547.

As qualifying for loans have become more stringent to secure, there’s been a significant uptick in adjustable-rate mortgages (ARMs) which have lower monthly payments. At the start of 2022, ARMs made up just 3.1 percent of loan applications. More than 12 percent of borrowers applied for ARMs in June and July – the highest percentage of ARM applications since 2007 -- according to Zillow.  9.1 percent of September’s loan applications were also ARMs, according to the Mortgage Bankers Association.

Taking out an ARM may be seen as a “gamble” on what rates will do in the future. Though rates could decrease during the adjustable-rate period of the loan, monthly payments would be higher should they increase.

‍

Cash is King

Economists expect home prices will start slowing, and even dropping, in some of the most overheated markets in the country over the next couple of years.

Though sellers may lower asking prices, their homes may be listed on the market longer. This could benefit buyers who can afford to wait, but bidding wars put first-time homebuyers at a disadvantage since they usually have limited savings compared to investor buyers who are offering cash or other buyers who benefited from strong markets.

In fact, according to Redfin, homebuyers who offered all cash were more than four times as likely to secure a deal as those who did not, making it the most effective approach.

Though bidding wars may have slowed in competitive U.S. markets, they leave first-timers at a disadvantage. To secure a property, some buyers opt out of typical inspections or protection clauses. “A buyer’s odds of winning a bidding war,” according to Redfin, “increase significantly by waiving the financing contingency or conducting a pre-inspection”.

Buyers who used those strategies “were 31 and 25 percent more likely to win than those who didn’t, respectively.”

However, waiving inspections can have consequences. If an employee moves on their own or relocates with their employer again later, they may be required to complete those repairs out of pocket. NEI provides counsel to help avoid future property eligibility concerns such as excessive acreage, environmental issues or building / material defects to help mitigate future risk.

‍

Helping Relocating First-Time Buyers

Given how volatile markets have been lately and because nobody’s housing market predictions are sure things, NEI counsels relocating employees about the emotional ups and downs when buying / selling a home and the necessary negotiations today. We help clients prepare for possible exceptions due to market circumstances out of relocating employees’ control and to brainstorm unique solutions that fit each company’s culture, budget and drivers.

Companies can also help relocating employees who are renters who want to fulfill their dream of homeownership. NEI increasingly sees more companies offering relocating renters destination home closing costs reimbursement and direct-billed mortgage partner assistance.

Another method companies can use is contributing to home purchases for first-time homebuyers by offering funds towards new home down payments or closing cost assistance or other incentives in the form of forgivable loans that don’t have to be paid back unless the employee leaves the company within a certain period, perhaps two or three years.

‍

More of the Same

New residential construction slipped again in June as challenging financial conditions discouraged potential buyers. With home construction constrained by labor and supply chain issues, the housing problem isn’t going away soon.

“While we do expect home price growth rates to decline, we don’t expect prices to fall much at the national level. For home buyers trying to determine the best timing this year, the main benefit of waiting is that there may be less competition as supply starts to build up,” says Chen Zhao, Redfin’s economics research lead.

If you would like to discuss this topic further, please reach out to your NEI representative at any time.

‍

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

NEI Global Relocation is pleased to announce that our Service Organization Control (SOC 1 and SOC 2) audits achieved ZERO findings for the second year in a row and in five of the past six years.

SOC 1 – Compliance with Financial Laws and Regulations to Combat Fraud

A SOC 1 audit is for service organizations and assesses the internal controls and procedures which are in place to protect client data and ensure controls around processes are operating as designed – more specifically related to financial reporting. A SOC 1 report validates the organization's commitment to delivering high quality, secure services to clients.

This report provides customers with an independent opinion so they can be confident that financial laws and regulations comply with corporate responsibilities to combat corporate and accounting fraud.

“This is an amazing accomplishment! We are so proud of our employees who always stay focused on the details and following our established processes,” said Michelle Moore, NEI Chief Global Mobility officer. “As a service organization, there is no higher compliment than to go through an extensive SOC 1 audit with ZERO findings. Thank you to all our employees for recognizing the importance of being consistent with processes and accurate with data.”

The AICPA clarifies that this type of SOC report for service organizations provides a level of assurance to the organizations’ clients that financial reporting is practiced in accordance with the Statement on Standards for Attestation Engagements SSAE No. 18.

SOC 2 – Availability, Security, and Confidentiality

The SOC 2 report addresses a service organization’s controls that relate to services, operations, and compliance. NEI’s SOC 2 reports on the criteria of availability, security, and confidentiality – that which is often categorized under data security.

“We are very excited to receive this kind of recognition with our SOC 2 audit,” said Greg Keith, NEI Chief Information Officer. “The fact that we have achieved “zero findings” so often means NEI employees are performing extremely well with our data security processes and controls. Privacy and liability concerns have increased the demand for assurances of confidentiality and privacy with customer data. These results clearly demonstrate our commitment to protecting confidential information.”

The SOC 2 report is connected to the SSAE 18 standard and was created in part because of the rise of cloud computing and business outsourcing of functions to service organizations.

In addition to our excellent SOC 1 & 2 Type 2 ZERO findings results over the years, NEI was recognized with more #1 rankings than any other relocation management company in the 2020, 2021 and 2022 Trippel Relocation Managers’ Surveys.

Should you want more information about our SOC 1 and 2 Audit results, please reach out to Michelle Moore, NEI Chief Global Mobility Officer or Greg Keith, NEI Chief Information Officer. We are always here to help.

‍

Making Relocations More Affordable for Employees

A recent report shows 78 percent of those surveyed associate home ownership with the American dream¹, yet one in two Americans see housing affordability as a serious problem.² What does this mean for companies who need to relocate their employees?

It’s an indicator that employees may be reluctant to relocate for several reasons:

1. They want stability for their family, given the challenges of the last few years.
2. Anxiety over rapidly rising inflation, higher housing costs and increased mortgage rates.
3. Fear of moving to a higher cost of living area with many unknowns.

These are all real concerns. According to Fannie Mae, only 16 percent of U.S. consumers believe that now is a good time to buy a home. Another alarming statistic: mortgage applications in November 2022 fell by 25.2 percent compared to the previous year.³

‍

Interest Rate Impact

Last year, U.S. 30-year fixed mortgage rates had the biggest year-to-date rate increases in over 50 years. In January of 2022, the average rate was 3.33 percent – in January 2023 it was 6.58 percent!⁴ Negative buyer sentiment is often linked to mortgage rate increases.  

While today’s rates are historically low compared to the October 1981 peak of 18.45 percent, the escalation in home prices during the pandemic from mid-2021 to mid-2022 per the provided chart have greatly impacted employees’ concerns about relocating.

You can see why when you look at how a monthly mortgage for principal and interest has risen in one year. On a $360,000 30-year fixed mortgage (P&I), payments at the beginning of 2022 would have been $1,583 per month. By January of 2023, that same payment increased by $711 to $2,294!

‍

Mortgage Rate Options to Consider

NEI helps client companies prepare for situations caused by market circumstances which are out of relocating employees’ control. Each company’s unique culture, budget, and drivers are taken into consideration when making suggestions to help retain talent while making your company attractive to new talent. Options to consider include:

Mortgage Interest Differential Allowance (MIDA)

MIDA programs were developed as a solution to assist employees when purchasing a home in the new location at a significantly higher interest rate. Popular options in the 1980s and 1990s, such MIDA policy benefits are getting dusted off again for consideration by some companies. As this benefit was rarely used over the last twenty years, any industry information or statistics are obsolete.

In this program, if a specific interest rate threshold is passed (e.g., 8 percent with at least 2 percent differential on the employee’s existing mortgage), the company would temporarily pay the difference in interest between the relocating employee’s former mortgage rate and their new one for a determined amount of time. The allowance is sent directly to the lender by the company and reflected on the employee’s payment.

Some companies require employees to invest their full equity from the sale of the old home into the purchase of the new home to be eligible. In addition, caps are sometimes placed on the total differential.

MIDAs can be difficult for companies from a budgeting perspective, however if the employee moves to a different home while the benefit is in effect, the coverage ceases and the company is no longer assisting.

3-2-1 Interest-Based Mortgage Subsidy

An appealing option for companies to consider is a subsidy program that supports mortgage payments over a set period of time to help the employee ease into the higher mortgage payment. Many companies use a three year period with the subsidized rate decreasing each year until the company would no longer be subsidizing interest. For budgeting purposes, some companies prefer to define a maximum subsidy dollar amount spent per year for the benefit.

Prepaid Interest

Companies can pay for loan discount points to assist relocating employees facing higher rates on a home purchase. Using a sliding scale, one point could equal one percent of a borrower’s mortgage and is interest that is paid upfront at closing. This lowers the rate for the life of the loan.

Some corporate mobility policies have a sliding scale for points coverage tied to the current market rate. If one uses a sliding scale, it may make sense to lower thresholds. Companies might offer to pay for one point when interest rates reach seven percent, two points at eight percent, and so forth. Thresholds help keep pace with changing mortgage environments and help make moving more agreeable.

Because this benefit impacts the life of the loan, this may not the best option for an employee who could be relocated again within a few years.

‍

Unpredictable Markets and Economic Conditions

Prospective home buyers today face expensive ownership costs and prospective sellers contend with lower price expectations as well as unfavorable mortgage rates if buying again.

NEI constantly monitors market and economic conditions to proactively discuss various options with our clients that may assist them in adapting to meet volatile market challenges so recruitment and retention goals can be met.

For more information on the above programs or other needs, please reach out to your NEI representative. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

‍

Sources: 1) Mynd Consumer Insights Report; 2) Pew Research Center; 3) Fannie Mae; 4) Mortgage Bankers Association; 5) CNBC.

‍

Upcoming Changes from the US IRS for 2023

With the new year comes new caps, tax tables and allowances from the U.S. Internal Revenue Service (IRS). Listed below are the areas related to relocation for 2023.

‍

Standard Mileage Rate

The U.S. Internal Revenue Service (IRS) announced an increase of the optional standard mileage rates in mid-2022 to 62.5 cents per mile for the second half of 2022. On 1 January 2023, the rate increased again to 65.5 cents per mile driven.

Most companies follow the IRS guidelines to calculate the mileage reimbursements for final move expenses when driving to the new location.

This rate increase will affect mobility programs:

• If you are an NEI client who has elected to follow IRS guidelines for your expense administration, nothing is needed at this time.  NEI will incorporate the mileage change into your expense reimbursement policy, as agreed.
• If you are an NEI client who has not elected to follow the government established mileage rates in the past, NEI will continue to follow your prescribed rates unless you advise us that your company is changing the rate. Please contact your NEI Client Relations Manager directly, if you would like to confirm or update your current rate.

‍

Supplemental Rates

As some companies gross-up non-salary relocation benefits at supplemental rates for federal and state levels, most companies also withhold at supplemental tax rates for non-grossed items. Keeping on-top of supplemental rates and explaining the potential tax implications to your relocating employees can aid them in knowing what to expect when taxes are due.

Federal supplemental rates remain unchanged, holding steady at 22 percent withholding for supplemental wages under $1 Million and 37 percent withholding for non-salary wages over $1 Million.

For easy reference, we are providing the current state supplemental rates in the table below:

‍

Federal Income Tax

While federal income tax rates remain unchanged from the 2022 tax year, 2023 income tax brackets have shifted dramatically to accommodate an over 40-year high inflation rate. Additionally, the 2023 standard deduction amounts have increased.

Due to these adjustments, most relocating employees can expect a modest reduction in their tax-liability. New grads stand to benefit the most from the changes, as the majority of graduates earned less than a full year’s wages when starting in the summer or fall.

See below for 2023 adjusted tax brackets which reflect an approximate nine percent increase from the prior year ranges:

Standard deduction amounts have also increased:

‍

Social Security Wage Limit

The Federal Insurance Contributions Act (FICA) requires companies to withhold three separate taxes from the wages paid to employees.  The largest tax of these three is the Social Security, also known as the Old Age, Survivors and Disability Insurance Program which is set by statue at 6.2 percent for both employees and employers to pay on the first $160,200 of wages in 2023.   This is up from $147,000 in 2022.

The second element referred to as the Medicare Tax, is also split evenly between employees and employers, is not subject to a wage limit and remains at 1.45% for both parties.    There are no changes to the remaining element called Additional Medicare tax.   This rate is 0.9% for the employee with wages over $200,000 for single filers and $250,000 for married filing jointly.   The employer does not get charged for this additional tax.

In Summary

As your relocation partner, NEI is here to explain year-end tax questions for your relocating employees. If you have any question about these changes, please contact your NEI Client Relations Manager at 800.533.7353.

‍

‍This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.

The government of Canada passed the Ban on the Purchase of Canadian Residential Property by Non-Canadians Act that went into force on 1 January 2023 and is stated to be in effect for two years. The Canadian Employee Relocation Council (CERC) submitted a proposal to CMHC outlining their concerns and requested exceptions related to the relocation industry, but all exception requests were denied.

Notable Impacts on Global Mobility Programs

1. Relocation Management Companies (RMC) incorporated outside of Canada will not be able to offer any RMC home sale programs such as Guaranteed Buy Outs or Buyer Value Options in Canada:

• NEI will work with our clients to update their home sale program offerings in Canada.

1. A modification of home sale programs to a Direct Reimbursement program will allow clients to continue offering some type of home sale assistance:

• This type of program is non-taxable in Canada. However, if the move is cross-border, there may be tax consequences for the reimbursement.

1. Employees currently working in Canada can only purchase a home if they:

• Have a valid work permit.
• Worked in Canada for three straight years out of the last four, and
• Filed a Canadian tax return three out of the four years.

Should anything change, NEI will continue to provide our clients with updates and further policy recommendations.

‍

From Paws to Passports:

At NEI, we believe pets are family too! Here are five tips to consider before relocating internationally with one’s pets:

‍

A Pet Owner's Guide to International Relocation

#1 Meet with your veterinarian

Ask your vet to check on destination requirements for your pet’s vaccinations and quarantine rules. Ask your vet for advice on long flights with pets, microchipping your pet, and obtaining a supply of prescribed medications. It is not recommended for old, anxious, or sick pets to ride in an aircraft’s cargo hold.

#2 Understand travel rules before purchasing tickets

Travelers should call the airline(s) before booking a ticket to confirm carrier/crate limits, weight limits and space for their pet as they may limit the number allowed on a specific flight or not permit any pets on board. It is important to find flights with the fewest stops as layovers can be stressful for a pet.

#3 Prepare and organize all pet documents

Different airline rules and destination country Customs and Imports laws may require pet documentation for vaccinations and a vet’s letter clearing them for travel. Take a copy of your pet’s complete medical records while traveling.

#4 Consider using a professional pet transportation provider

At each client’s preference, NEI can direct employees to pet transportation experts. Fees vary by provider and situation. Most offer comprehensive services to manage the entire process!

#5 Always ask questions

Information received from airlines, veterinarians and pet transport firms can be overwhelming, so ask for clarifications well ahead of travel. NEI has helped many travelers proactively solve their pet challenges.

Examples of When to Make Other Arrangements

Advanced planning is the key to moving with pets internationally. When moving with an exotic or uncommon pet — snakes, birds, fish, turtles, insects, etc. — ensure you check for specific requirements about these creatures. Every country differs on what types of animals may enter. Missing a detail around their transport and laws would be an unwelcome surprise.

Consider these two examples when NEI Account Executives provided advanced pet problem solving for employees contemplating assignments with their pets:

Example 1 – Gerbils: from Canada to the UK

NEI managed the move for an employee going on assignment from Canada to the UK who was concerned about his two gerbils he wanted to take. NEI checked with a vetted pet transport service partner, inquiring about the latest quarantine period in London for gerbils.

When the employee was informed of the regulations, he decided to trust the gerbils' care to a family member while on assignment.

Example 2 – Five Chihuahuas from Japan to the US

A Mexican national and his spouse accepted an international assignment from Tokyo to San Jose, CA.  During a pre-move needs assessment, the NEI Account Executive learned the couple planned to bring their five dogs from Tokyo believing that, due to their small size, it should not be a problem.

Their NEI Account Executive advised them proactively that relocating five dogs could be a potential issue:  not only are more U.S. municipalities enacting regulations on the number and type of animals a person can keep on a property, but California had even stricter laws that varied county-to-county.  

Research conducted by NEI found the California counties the relocating couple was interested in only allowed two dogs at any given time and more than two dogs required a kennel license.

After NEI and the DSP discussed options with the couple, they decided to take two dogs with them from Tokyo and relocate the remaining three to Mexico to live with the assignee’s parents until the couple’s eventual home country repatriation.

Had NEI not counseled the couple at the beginning, the result could have been much different and they greatly appreciated NEI’s guidance.

For more weekly information about hot topics and mobility trends, follow NEI Global Relocation on LinkedIn!

‍

Eager Competitors

Experienced employees repatriating from company-sponsored international assignments are highly pursued today by recruiters. The risk of losing these valuable assets – and negatively impacting the company’s Return on Investment (ROI) – is simply too great not to prioritize proactive, meaningful actions.

To protect the company’s investment in international assignees from eager competitors, organizations are encouraged to assess their program objectives and foster a successful employee retention culture with greater post-assignment recognition and career opportunities.

‍

Achieving Meaningful Results

NEI suggests organizations ask the following questions to achieve meaningful results:

1. How are assignment success goals defined and measured, and who reviews the results to gain meaningful insights into the company’s Return on Investment (ROI)?
2. How do our employees perceive the value of international assignments? What do they feel are the positive and negative aspects of the experience?
3. How do companies demonstrate the value it places in employees who accept assignments and are those rewards visible to others to reinforce the benefits of going on assignment?

Before a candidate accepts an international assignment, companies are encouraged to discuss the potential long-term benefits such an experience could have on their future with the company. While not all companies guarantee a position after an assignment’s completion, conveying how it has helped others in their careers can be an excellent recruitment tool.  

‍

Unexpected ROI Challenges

Repatriation for relocating families can have unexpected psychological challenges. Helping to establish repatriation expectations and highlight the potential reverse culture shocks upon returning are best discussed during the recruitment process, allowing the candidate to go into the experience with eyes wide open.

“Reverse culture shock is experienced when returning to a place that one expects to be home, but actually is not home any longer. It is far more subtle, and therefore, more difficult to manage than outbound shock precisely because it is unexpected and unanticipated,” says Dean Foster, founder and president of DFA Intercultural Global Solutions.

NEI can help clients support assignment repatriation retention strategies and company ROI. We recommend that companies:

• Initiate employee career discussions at both the onset of the assignment and within 6 to 12 months of the end of the assignment.
• Arrange for repatriation training three to six months prior to employees / families returning from assignment to ensure a smoother re-entry to the home country and a position in the company that could use their new skills.
• Survey repatriated employees for top-of-mind feedback on repatriation benefits, support and challenges, and track the career progress of these employees. It is common for employees to leave the organization within two years of being repatriated and these actions will provide a better understanding of why they left so strategies to retain those employees can be developed.

As your global mobility partner, NEI can support and address repatriation issues, along with assistance in achieving your assignee retention and strategic goals. We often provide clients with recommendations and support assignment analysis by:

• Conducting focus groups and / or surveys of employees who have recently returned from assignments.
• Interviewing company leaders and human resources to identify potential underlying issues and help future assignment candidate preparedness.
• Reviewing exit interviews of repatriated employees who left the company within two years to analyze causes that may be undiscovered by global mobility or business units within the company.
• Comparing tenure and turnover of repatriating employees to their peers who have not gone on assignment to determine if causes might be more related to business factors – like company business conditions, compensation increases, promotions, or skills development opportunities rather than a repatriated employee’s lack of ability to apply new skills gained from an assignment.
• Comparing retention and turnover rates of employees to and from specific global office locations.
• Understanding how many employees took advantage of recommended repatriation assimilation training and career discussions at both the onset of the assignment and within six to 12 months of the end of the assignment.
• Determining the impact on a spouse / partner who did not work while on assignment, but upon repatriation was unable to return to the workforce with suitable employment – especially if a dual-income household is needed upon return. Did the spouse / partner take advantage of company-sponsored career programs prior to repatriation?
• Analyzing the impact that a mentor may have had on the assignee, if he or she had one at any point during the assignment.
• Considering the pros and cons of offering a retention bonus for repatriated employees who remain with the company longer than two years upon returning and are also willing to act as mentors for company employees currently on assignment.
• ‍

Leveraging Technology for ROI Analysis

NEI can review the client’s established priorities and targets relative to specific retention challenges, assignment locations, culture, and costs. We can help client stakeholders analyze the effectiveness and costs for offered and used repatriation benefits, which can be useful in making decisions or adjustments on future benefits. Our flexible technology and reporting tools also allow clients to see the program status and expenses in progress as they accrue, as well as total cost reports and more.

If a company’s international assignment ROI is based upon how repatriated employees re-integrate and benefit the organization through new skills and expertise gained on assignment. Such investigations are best done through one’s internal Organization or Talent Development teams working together with each repatriate’s receiving manager over a period of time.

Based on information received, we can help recommend solutions to meet global needs, integrate these changes into your program and assist with your ROI measurements and goals. As one employee indicated:

"Now that I'm back, I just wanted you to know how much I appreciate everything that you have done for me and my family. You helped out more than you'll ever know.  Thank you very much." ~ NEI Client Assignee

‍

If you have questions or would like further information, please reach out to your NEI representative.

A Comprehensive Examination

Offering partial lump sums in lieu of reimbursement for certain policy benefits is well-proven in U.S. Domestic mobility policies and the strategy has become popular for its flexibility and ease of administration. Providing a partial lump sum for specific policy benefits can also allow relocating employees to spend how they feel best in their situation.

But do partial lump sums have a place in international mobility policies?

Let’s investigate!

‍

What’s Your Comfort Level?

It may sound tempting to the employee and company to use partial lump sums in an international policy, however, it varies on each company’s comfort level surrounding how a partial lump sum would be used, particularly for:

• Specific benefits (e.g., temporary living, meal per diems, to/from airfares and baggage fees, spouse/partner counseling), and
• Specific employee levels (entry level, management, executives)

After all, since companies relocating employees “intra-country” – such as from Los Angeles to Las Vegas – use partial lump sums for certain benefits, why couldn’t employees relocating on assignment from Los Angeles to London, for example, do the same where appropriate?

The answer is…it depends.

It is no secret international moves have unique “grey” areas and nuances to address that are different from domestic policies. Successful, trouble-free international moves take considerable coordination involving timelines, logistics, and attention to detail for Global Mobility or Talent Management administrators. To help bring more clarity to potential concerns, consider the following:

‍

Upsides for Using Partial Lump Sums for Certain Benefits

Companies operate with an eye towards overall efficiency and employee self-service where possible.

Those in favor of partial lump sums often cite the following:

• From a generational standpoint, Millennials taking international assignments may embrace using a partial lump sum compared to Gen-X or Baby- Boomer generations.
• Employees may feel more empowered to make relocation/assignment choices that work for their preferences and are incented to spend as little as possible to keep what remains.
• Partial lump sums make corporate budgeting for certain benefits more predictable and streamline the management process.
• Companies find issuing partial lump sums for certain relocation benefits more efficient than collecting receipts from the employee then reviewing and auditing expense reports so employees can be reimbursed.
• Anticipated savings may reach up to ten percent when using a partial lump sum allowance for certain benefits compared to a direct reimbursement approach.

‍

Potential Downsides of Using Partial Lump Sums

Most companies prefer managed control of an international relocating employee’s approved benefits, logistics, and costs. Using a partial lump sum for certain benefits, while attractive on paper, can have its risks if the wrong benefits are included.

For example, it is strongly recommended to avoid including visa and immigration benefits, as well as overall taxation support, in partial lumpsums.

Consider the following:

• A partial lump sum may not be appropriate for executive or senior-level assignments. If the sum is deemed too low, getting an exception approved to increase the benefit for their perceived need can become an annoyance that negatively affects satisfaction.
• Client administrators will need to invest time to determine partial lump sum amounts that are fair and effective by location, decide which benefits should be included, and apply them across multiple policies. And all this work must be repeated as market changes occur.
• Currency fluctuations or high inflation can leave employees feeling short-changed or requesting exceptions due to a “special situation.” This can add to administrator workloads which could impact savings and potentially create tension for companies and employees alike.
• Relocating employees may spend significant time researching how far their funds might realistically stretch in their international destination, which could impede their productivity and responsibilities at work.
• Relocating employees may opt for less expensive options to retain more cash, instead of, for example, selecting safe and reliable temporary living apartments in the host country. There is also a risk of jumping into something that looks like a great deal only to realize it is a scam.
• Relocating employees who have previously been on a company international assignment with eligible costs reimbursed may not see the overall value in a partial lump sum.
• With partial lump sums often taxed as ordinary income, companies may be able to avoid taxation outside of a partial lump sum in certain countries. It is important to check with your tax firm before implementing any changes.
• If the relocating employee is responsible for taxes with the partial lump sum, they may be unaware of home and/or host country regulations that could result in penalties and / or negative company compliance issues.

‍

Striking a Comfortable, Equitable Balance

Keeping the above considerations in mind, determining if using a partial lump sum in lieu of reimbursement for certain benefits boils down to what is the right fit for that company. To help assess the fit look at:

• Company culture and annual move volume,
• Employee “noise” levels about policy benefits,
• Employee demographics and job levels, and
• Company program flexibility and expense tracking goals. A partial lump sum allowance for international assignments may seem appealing but may also burden employees/ families with unexpected extra time for planning and research to effectively budget for their needs, all while needing to focus on the international transition, core job responsibilities, and / or family concerns.

“Beauty is in the eye of the beholder” and each company needs to strike a comfortable, equitable balance between employee workload, cost savings, risk, compliance, and flexibility.

If you would like to discuss international partial lump sum options or other topics, please contact your NEI representative at any time.

_{The above information is for general information only and is not presented as tax or legal advice. Please consult with your tax or legal advisors and internal stakeholders before making decisions and taking any action.}

‍

The Next Big Business Trend for Global Mobility

For decades, many Western manufacturers shifted production to Asia and China for countless items – including consumer products, textiles, cell phones, computers, microchips and much more. The intent was to lower labor costs and raise profits.

As global supply chains continue to feel great pressure, offshoring production to far off locations may be reversed.

How might this trend impact global mobility?

‍

Global Instability Impacts Globalization Efforts

Concerned with global stability and COVID-19 lockdowns, CEOs have started researching plans to relocate production closer to home – more than even during the first six months of the pandemic, according to Bloomberg.

U.S. Treasury Secretary Janet Yellen has called for more “friend-shoring” – also called “near-shoring”, “re-shoring” or “on-shoring” –in a push for U.S. companies to become less reliant on geopolitical rivals. Larry Fink, CEO of Blackrock, said the war in Ukraine has "put an end to globalization” and “companies and governments will also be looking more broadly at their dependencies on other nations."

A December study by Goldman Sachs found 75 percent of respondents plan to diversify their supply chains.

Such strategies are designed to:

• ‍Reduce risk: Numerous industries fell victim to offshored product availability that stalled their business.‍
• Avoid geo-political concerns: This can include trade wars and actual wars – as seen when hundreds of western companies exited Russia after its invasion of Ukraine. With China-Taiwan tensions escalating, U.S. companies in Taiwan are taking proactive measures to insulate themselves from potential business risks.‍
• Decrease supply chain delays: In-country or regionally produced products have a more streamlined distribution process and don’t usually require expensive overseas shipping.‍
• Greater quality control: Re-shoring closer to home provides greater control over the production process and quality standards to ensure consumers receive the highest quality of products in a timely manner.‍
• Reduce time zone differences: Re-shoring allows companies to proactively avoid issues before they disrupt their manufacturing process as collaboration between individuals in closer time zones reduces communication challenges.‍
• Sustainability Efforts: Re-shoring/near-shoring also adds sustainability and ESG (Environmental, Social, and Governance) benefits. Shorter, “greener” supply chains mean lower carbon emissions and reduced Scope 3 emissions (emissions generated indirectly by a company’s activities).

‍

Supply Chain Stability vs. Expense Savings

Some U.S. business sectors – automotive, aerospace, textiles, microchips, etc. – have started re-shoring faster than others, but re-shoring or near-shoring of manufacturing and supply chains is no small task. It is also not without risk and still influenced by the global locations where necessary manufacturing supplies and raw materials are sourced.

Consider the situation of an Italian maker of hydraulic equipment. They had re-shored their steel and wire supply chain from China to a European regionalized approach. One of the new regional suppliers where they sourced iron was located in Mariupol, Ukraine – a city that became completely devastated when Russia invaded. The company had to scramble to get this supply component all the way from India.

Despite much political pressure for companies to come back home, it is a huge investment and can often take years to accomplish. The biggest challenges may be in the U.S. and Europe:

• ‍First: energy and construction costs in the U.S. and Europe are higher than many offshored locations. If certain raw materials for production are sourced locally at much higher prices, companies may need to push that cost onto consumers who may not be willing to buy;‍
• Second: inflation in the U.S. and Europe have pushed employees to demand higher compensation and benefits, and construction and energy costs have grown even higher;‍
• Third: U.S. manufacturing employment is still below its pre-pandemic level and only two-thirds of what it was just two decades ago; and‍
• Fourth: not all employees of various countries are equally qualified. Depending on the product being manufactured, companies feel significant skills gaps exist in countries where companies can near-shore for precision, high-tech manufacturing skills and operations. Certain components of equipment also can’t be made in all locations and must be brought from countries with higher skilled employees.

Though nations like China have huge manufacturing advantages, more companies in western Europe have begun near-shoring factories to Eastern Europe and more U.S. companies are near-shoring manufacturing to Mexico and Central America due to lower capital and labor costs.

Consider that 172 of 260 company executives with manufacturing  plants  in China acknowledged their interest in near-shoring to Mexico to supply the U.S. market, as reported by Border Now magazine.

‍

What This All Means to Global Mobility

With all the talk of relocating manufacturing and supply chains, many experts believe companies will respond by both 1) diversifying suppliers and 2) relocating to near-shore, low-wage countries.

Global Mobility Managers would be wise to think about how best to plan and prepare for regional / global group moves and entries of new employees/families into previously untapped locations. For instance, regarding Taiwan, this may be a “slow drip” over time transition that might not be highly noticeable, unless there is a blockade or hostilities.

NEI encourages client global mobility stakeholders and management to collaborate and work closely before a decision to re-shore or near-shore is made so:

• key talent can be identified as potential relocation candidates,
• visa and immigration needs can be researched to establish necessary timelines, and
• realistic costs projections can be made.

As some countries fight “brain drain” – the loss of educated, skilled talent leaving for countries with more opportunity – they will take aggressive measures to keep that talent from leaving.

Yet the “brain drain” will continue.

In March 2022 alone, a Russian technology industry trade group estimated between 50,000 and 70,000 tech workers had left the country and an additional 70,000 to 100,000 would soon follow. In China, since the nation’s aggressive COVID lockdowns, middle-class and wealthy citizens’ inquiries to immigration consultants have surged.

History shows people will sacrifice and find a way to leave situations they do not see as sustainable. Western countries and companies may continue to benefit in the future and should be prepared.

‍

Pre-Planning is Everything

Consider the projection by the McKinsey Global Institute that re-shoring and near-shoring production will relocate between 16 and 26 percent of the value of world trade in the next five years – that’s up to one in four facilities!

Imagine having a crystal ball and being able to plan for the unimaginable disruptions like COVID-19 well in advance. This might be one’s chance to prepare for a potentially huge trend looming on our horizon.

If you would like to discuss how best to support your company’s initiatives with re-shoring, near-shoring or global group moves – as well as relocation, retention and immigration needs for key local national or international employees – please contact your NEI representative.

‍

_{In addition to normal global mobility services, NEI is also able to provide clients with worldwide assistance in identifying commercial locations in which to relocate.}

‍