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Business Officer Magazine

Ready for Ventures Abroad

As colleges and universities in the United States extend beyond their home campuses with study programs, research projects, and business collaborations around the world, business officers and their staffs are rapidly educating themselves about the operational and legal considerations as well as the many compliance areas related to international outreach.

Collaborate on Campus to Get Started Properly

In the session “Operating Overseas: The Legal Landscape,” panelists outlined the trends toward internationalization of curriculum in America and framed the initial considerations for institutions embarking on educational activities conducted abroad.

William Nicholson, assistant attorney general, University of Washington, explained that for any operation abroad, it's essential for the institution to identify the appropriate legal status in the “host” country. Legal status will define the authority granted by the host country to your entity to operate and impact your institution's legal actions in that country: the hiring/firing of employees, entering into and enforcing contracts, and so on. Registration is the process by which you obtain legal status in a foreign country.

The legal status selected for the international operation will determine how its regulatory obligations to the host country—such as payroll taxes or annual audits and filings—are formally initiated. Options for institutions are to retain a U.S. legal status for a program or activity, to seek an alternative U.S. status, or to create a foreign-based legal entity to carry out the mission of the program.

Factors to consider include level of activity of the foreign operation (such as budget size, number of employees, overall planned length of operations), the desired level of institutional control, and how important it is to potentially isolate liability. Nicholson emphasized the need to engage top-level academic and executive administrators to own the decision-making process with regard to international activities.

Compliance Requirements: Here and There

In addition to U.S. tax requirements that apply to overseas operations, campus administrators need to track foreign bank accounting reporting requirements, payroll taxes (both U.S. and host country), Social Security and totalization rules, and treaty obligations and benefits in host countries. During a session titled “The Global University: International Tax Issues for Institutions,” panelists highlighted the many areas of tax administration and compliance that factor into doing business abroad.

Award-Winning Approach

During a roundtable session on globalization, attendees asked questions and shared common institutional hurdles to streamlining the oversight of overseas programs. Ann Anderson and Kate Riley from the University of Washington facilitated the discussion, along with Carrie Nelson from Carnegie Mellon University. The Global Support Project at the University of Washington, which conducts primarily research-oriented activities in foreign countries, was awarded a NACUBO Innovation Award this year.

The three panelists stressed the need for strong collaboration among campus stakeholders: finance, accounting, legal, human resources, procurement, and provost. More information about UW's Global Operations Support is available on the university's Web site.

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