Expat Playbook; Best Practices for Sending Employees Abroad

transcript

EXPATPLAYBOOK BEST PRACTICES FOR SENDING EMPLOYEES ABROAD

Deploying and maintaining talent around the world is a

critical priority for multinational companies.

There are myriad reasons why companies choose to send employees overseas on

assignment, but employers typically must navigate a common set of challenges with regard to properly managing their expats.

Make no mistake: The stakes are high.

Download your playbook

Employing an expat typically costs two or even three times more than the simple cost

of the individual’s home-country salary.

Expat assignments can and do fail, and improper immigration or tax compliance

management can lead to serious legal trouble for the employer and/or the employee.

The Expat Playbook addresses the most common challenges faced by multinational companies sending employees abroad. Effectively managing a mobile global workforce is highly complex, touching on everything from immigration to taxes, insurance to talent development.

Immigration

Ensuring that an expat is legally permitted to work in a host country

is an essential preliminary step to any deployment.

Permission to work in a host country CAN NEVER BE ASSUMED, and securing proper immigration status should always be considered ‘step one’ in the expat process.

The length of stay, nature of work and whether or not the employer has a local legal presence are all likely

to influence the steps required to ensure that an expat is legally permitted to work in the host country.

China is an excellent example of a country with a complex immigration landscape.

Short-term expats must apply for a so-called F visa, which permits them to work in the country for up to six months. Long-term expats must apply for a so-called Z visa. No matter which visa the expat holds, if they stay longer than 30 days they must

also apply for a residency permit.

Tax and Payroll

When you send employees to work in other countries, you often expose them to

tax considerations.

The tax and social security laws and treaties of both the home and host countries will determine how an expat employee will be taxed when on assignment, together with the length of the assignment, which

is a key taxation trigger.

As a general rule, when an expatriate spends less than 183 days in any 12-month period in a country, it is usually possible to avoid triggering income tax and payroll withholding obligations

in that country.

Tax equalization ensures that an expat employee’s take-home pay on non-assignment income will be the same as it would have been

had they remained at home.

Typical expat payroll options: ›

• Using a host-country payroll

• Paying the employee from a “split payroll”

• Paying the employee from a “shadow payroll”

A shadow payroll pays the employee from the home-country payroll but also

reports compensation in the host country, from which taxes can be calculated and

paid to host-country tax authorities.

Compensation

The most fundamental expat compensation decision an employer must make is whether to adopt a HOME-BASED or HOST-BASED approach.

The home-based approach to expat compensation remains prevalent. Under this system, expats continue to receive the salary they received in their home country, often in

addition to assignment incentives.

Under the host-based approach to compensation, expats’ pay is determined

based on the local labor market.

Other Considerations

Expat assignments can affect EVERYTHING from corporate structuring and intercompany agreements to employee health and safety policies.

Employers must take reasonable steps to protect employees by understanding the risks of specific assignment areas and by having in place

monitoring programs and contingency plans.

Don’t forget about the process of repatriating your assignees,

including related travel and moving expenses and any

outstanding payments in the host country.

Download your copy of the Expat Playbook.

Be prepared for the challenges you will face when your employees enter a country.

Get global updates and other important information delivered to your email.

www.radiusworldwide.com

Subscribe to the Blog

Expat Playbook; Best Practices for Sending Employees Abroad

Business