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Expat Payroll Management

When you send employees to work in other countries, you often expose them to complex tax considerations. Expats can incur higher taxes and double taxation when crossing borders, depending on the countries in question, the length of their assignment and the types of compensation they're getting. ​

As the employer, you need to ensure you thoroughly understand local tax and social security obligations, which in turn will enable you to make critical decisions that will affect the tax status and reporting obligations of both the company and the employee. Failing to do so can result in tax violations.​

An employer must also address two primary tax-related questions before deploying workers overseas. First, whether or not the company intends to protect expat employees against potential increases in their personal tax burdens (or recover any tax savings they may realise) while on assignment. Second, consider a payroll structure to fulfill withholding tax and social security obligations in the home and host countries, including remitting taxes, social security and the expatriate’s net pay and allowances.​

We can support you with a range of expat payroll options, including: ​

  • Using a host-country payroll​
  • Paying the employee from a split payroll, in which some compensation passes through the home-country payroll and some through the host-country payroll​
  • Paying the employee from the home-country payroll while establishing a shadow payroll in the host country, from which taxes can be calculated and paid to host-country tax authorities.
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The US Congress passed the Corporate Transparency Act in 2021 to create a beneficial ownership registry for US legal entities. The US Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, has recently issued final regulations on the act. The regulations clarify who must file information, what information they must submit and when they must file. FinCEN’s new reporting requirements go into effect 1 January 2024.
Regulators, customers, investors and employees are demanding that environmental, social and governance principles drive how organisations operate and what they report on.
To take advantage of the global talent pool, companies are increasingly offering stock equity to attract and retain employees. The equity is usually awarded at a low cost in a pre-IPO phase, and in some cases involves globally mobile employees. Granting stock options to expatriate employees can introduce important tax obligations and risks in the home and host countries that are sometimes not fully understood by multinational employers.
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