When you are considering moving employees across international borders, it is vital that you have control and full visibility of the associated costs. This can be particularly challenging when you are dealing with unfamiliar jurisdictions where tax rates can vary widely from country to country. Equally important is timely remuneration planning in order to optimise potential tax breaks.
Understanding the cost of international assignments
Sending employees on international assignments can be an expensive exercise for employers. Moreover, it is very difficult to accurately estimate the total cost of any given assignment, particularly given the vastly different fiscal regimes and varying income tax and social security rates around the globe.
In the course of planning an international assignment, whether long or short term, it is important to understand what home and host country liabilities might arise and the interaction of taxes payable in one or more jurisdictions. Receiving upfront information on tax-efficient delivery of remuneration in each location, and planning accordingly, can significantly reduce the cost of an assignment.
Obtaining a cost projection that gives clear and current information on the total cost, over the life of an assignment, allows you to make informed commercial decisions about the structure of any given assignment.
For shorter term assignments, cost projections can provide an early warning of tax and social security liabilities that employers may be unaware will arise.
- projections can provide a simple and relatively accurate costing in almost any given scenario
- where an assignee will be tax equalised, projections can be completed using gross pay, or the desired net pay
- variations in remuneration delivery can be modelled to demonstrate potential planning opportunities.
How can BDO help?
In addition to providing you with cost projection calculations, we can discuss alternative assignment/remuneration structures with you and assist in arranging commercial, cost effective assignments for the business.
Using our extensive global network of BDO colleagues, we can advise so that potential tax and social security efficient ways of delivering remuneration in the relevant countries are both fully understood, and wherever appropriate, implemented.
Where tax and social security obligations are identified, we can support you in ensuring that those obligations are discharged in a manner that fully accounts for risk and commercial needs.
Contact our Expatriate Tax team for specific help and advice.