Global Mobility Policy Best Practice Advice and Tips
Is your business growing internationally? Do you have employees working in different countries? As the world becomes a smaller place we are finding more and more of our clients are working “in” multiple jurisdictions not just exporting services or products…
Blog22nd Aug 2016
Is your business growing internationally? Do you have employees working in different countries? As the world becomes a smaller place we are finding more and more of our clients are working “in” multiple jurisdictions not just exporting services or products abroad.
This invariably means employing people from varying nationalities in different countries and sending them to other countries either on secondment as expatriates or rotating in and out of multiple countries.
At AAB we have established a unique capability in helping companies “proactively” manage the financial and compliance risks of employing people across borders and we think some of the practical insights we’ve gained are worth sharing.
What? Other countries have finance and compliance laws too?
Of course being serious, most of us realise this must be the case, but in our experience many employers only become aware of their financial (social security & employment tax) and their compliance (“filing and reporting”) obligations in a foreign country after they have deployed employees there. In most cases they only realise that they have this unbudgeted cost and unexpected legal obligation when they get a reminder letter, warrant for information, or fine notification from the relevant foreign government regulatory authority.
Unexpected costs can add up
Invariably this unexpected cost has not been priced into the contract and therefore cannot be recovered from the client receiving the service and so has a direct impact on the company’s profit and loss. In addition to the direct cost of the “in country” employment tax and social security there is the secondary cost of engaging local advisors to assist in ensuring all the filing and reporting obligations are met.
The other dimension to this that’s often overlooked is the legal and contractual employment status of the individuals. This can have implications on whether there is an “obligation” to employ the person “in” the country and run a local payroll to pay them in local currency, deduct PAYE, and so on. While many costs can’t be avoided, it pays to plan ahead and manage this “proactively” in order to save money and time on needless expenditure; this is where a properly thought out global mobility policy that’s relevant to your expanding international business.
Just a final thought. Don’t dismiss the option of engaging a company specialising in global mobility issues like tax efficient cross border restructuring; you might be surprised at the cost effective (and time saving) advantages to be gained.
The Employer’s Guide to Cost Savings is a recently published AAB eBook, and an effective global mobility policy is one of the topics we discuss. If you’d like to learn more, click the link below to get your copy.