Navigating your internationally mobile employees around the world

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... Read more

Blog29th Oct 2014

By Sarah Munro

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.

In our experience most 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.

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 is 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, etc.

It therefore pays to plan ahead and manage this “proactively”!

For more information contact Gary Johnstone (gary.johnstone@aab.co.uk)

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