9 in 10 expat professionals ‘unaware’ of local tax regulations, when arriving in Latin America

• ‘Planismo’ report shines light on challenges and opportunities facing expat professionals working in Latin America.
• 69.3% of professional expats working in Latin America are ‘completely unprepared’ for local bureaucracy upon arriving in their new country of residence.
• More than one-in-ten (11.6%) are concerned about their family situation in their new country of residence, with 8.2% worried that their family member’s visa/residential status may not be renewed.

Bogotá, Colombia - The vast majority (90.8%) of expatriate professionals living and working in Brazil, Mexico, and Colombia were ‘not at all aware’ of local tax regulations before moving, according to a new report by global HR, business expansion, and employment solutions provider Mauve Group.

The research - conducted among over 500 professional-level expatriates currently working in Latin America - also revealed that 69.3% admitted to being ‘completely unprepared’ for local bureaucracy upon arriving in their new country of residence. Meanwhile, more than one-in-ten (11.6%) have concerns about their family situation in their new country of residence, with 8.2% worried that their visa/residential status of family members not being renewed.

The Group’s ‘Planismo’ report documents expatriate professional experiences in three of Latin America’s most popular relocation destinations - Brazil, Mexico, and Colombia - from the perspective of professionals moving from the US, Europe, and Asia. It reveals their motivations for relocating, the social aspects and challenges of adapting to another country, the issues of local bureaucracy and taxation, as well as their future plans.

The term ‘Planismo’ - inspired by the Uruguayan art movement of the same that ‘flattened’ traditional boundaries of foreground and background to create an intersection of different planes - reflects the global business reality where physical location has shifted from a barrier to a strategic choice.

“Latin American business has entered the age of 'Planismo', where physical location and relocation are no longer the rigid constraints they once were. Instead, ‘place’ has evolved into a third ‘p’, alongside price and product features, allowing brands and companies to extract value and gain a competitive edge. And as our research confirms, Latin America is at the heart of this trend,” explains Jaime Bustamante, Mauve Group’s Business Development Director for Latin America.

According to the data, when comparing their current expatriate lifestyle with what they enjoyed in their home country, nearly two-thirds (64.5%) described their current situation as ‘better’ (51.1%) or ‘much better’ (13.4%). Almost two-thirds (63.9%) of respondents claim that their current expat salary/benefits are either ‘better’ or ‘much better’ than before they moved. Unsurprisingly, perhaps, over half (54.3%) - are considering staying in their current, expat country of residence for ‘less than five years’, while 17.2% are considering staying there permanently.

“This data confirms, not just the role that the region is playing as host to increasing numbers of expatriate professionals, but the challenges that they face logistically, professionally, and socially. A key concern revealed by our survey is the lack of awareness among expats about tax obligations and administrative duties before their arrival, as well as worries about their family members' immigration status once they are settled.

While many of these issues are clearly the individual’s responsibility - such as correctly filing personal tax returns, as required by their new country of residence (and any fiscal obligations to their native country or former residence) - good employers also play an important role in providing support and ensuring full compliance.”

Jaime goes on to cite the research data to highlight the importance of the employer's role in supporting expatriate professionals.

“According to our data, more than one-in-ten expats (10.4%) require a year or more working in their new location to feel fully productive. This is a vital consideration for employers, particularly considering high-value employees where a return in investment is expected within a given timeframe and any preoccupations regarding their fiscal or immigration are likely to become unwelcome - and unproductive - distractions,” he says.

These are just a few of the fascinating findings from the new report, which Mauve hopes will kickstart a new conversation about the roles that companies should be fulfilling when it comes to expatriate relocation. This is especially necessary, as we are now entering a new age of ‘Planismo’ – according to the international business expansion experts.

However, companies looking to capitalise on this new spirit of internationalisation must also make sure they are getting the so-called ‘hard’ issues right, such as compliance, visas, and tax, on behalf of their employees.

“So often, relocation is understood as moving companies, finding schools and accommodation, but as our survey clearly shows, the more fundamental aspects of expatriate professional life - such as fiscal obligations and immigration status - have a clear knock-on effect on not only workplace productivity, but the quality of life and long-term satisfaction for all involved.”

“Our report is essential reading for companies looking to expand into Latin America, as well as those already established which want to ensure that their operations are running as smoothly and efficiently as possible,” he concludes.

About Mauve Group: With over 28 years of experience, Mauve Group is a leading global provider of HR solutions, Employer of Record, and business consultancy. The group has developed global knowledge to support companies of any size planning to expand internationally. For more information, visit: www.mauvegroup.com.