Whether your expatriate program is new or entering a new location, there are myriad considerations that businesses must plan for. While humbling to admit within a daily tax news publication, tax is not even the most important one.
When entering a new location for the first time, employers must put the safety and wellbeing of their employees first. This includes ensuring that all corporate activity within a jurisdiction abides by the relevant laws, including immigration laws. Sending an employee to a foreign country without an appropriate visa can put their liberty and future international travel at risk.
Key ‘non-tax’ considerations include:
That said, from a cost and compliance perspective, it is important the organisation understand the impact of the international tax and social security framework in which they operate. Many countries have entered into bilateral agreements for both income taxation and social security which seek to alleviate double taxation or double social security coverage by agreeing to allocate taxing rights between the two countries.
However, if the above gives the impression that the international tax world fits together neatly like a big jigsaw puzzle with no overlaps or gaps, this is unfortunately not accurate.
In an employment context there are several areas including the taxation of pensions (e.g. superannuation), employee share schemes and fringe benefits whose disparate treatment across different jurisdictions can produce illogical and penalising outcomes made all the more painful if not anticipated upfront.
Appropriate planning will mitigate unnecessary tax leakage, and cost projections assist the business understand the true cost of an assignment (a well-known industry rule of thumb being 3 times base salary).