CapRelo Blog

Build Bonus Incentives into Your Executive Mobility Policy

Posted by Amy Mergler on Wed, May 23, 2018

Businessman pressing business type of modern buttons with virtual backgroundA 2017 corporate relocation survey reported that nine out of ten firms that offer incentives in addition to the standard inclusions of a relocation package are far more successful in convincing an employee to relocate than those who don't. 

Some popular incentives among employees—and those that may be most likely to win over an employee who is having a hard time deciding—include the following:

Extended Temporary Housing benefits

While reimbursement for temporary housing is a standard inclusion of most mobility packages, being able to extend those benefits if employees have difficulty locating a permanent home can make a big difference in their decision.

Monetary Bonuses

Monetary bonuses continue to be attractive to executives when making a decision to relocate. Because the bonus is considered taxable income, a tax gross up is necessary to ensure the executive receives the full bonus amount.

Cost of Living Adjustments

Executives relocating from one area of the country to another, or from one country to another, may find their salary isn’t sufficient to cover the cost of living in the new location. Typically this is offset by a separate compensation package and not a relocation benefit, but in some cases, it may be included in the latter.

A comprehensive mobility program is critical to recruit and retain executive talent. If your program includes provisions for bonus incentives, it may encourage more executives to accept a relocation or transfer offer.

Download Our Executive Mobility Guide

Topics: executive relocation package, executive mobility program, bonus incentives

Address Real Estate Concerns in Your Executive Mobility Program

Posted by Amy Mergler on Tue, May 15, 2018

sold_home2-resized-600-2A comprehensive talent mobility program is essential to recruit and retain top executive talent. Offering a competitive mobility package is one way to attract and keep the best talent on your executive team.

Addressing concerns about selling a current home and purchasing a new home in your mobility program may play a large part in an executive’s decision to accept a relocation offer. Consider the following for your executive mobility program:

Guaranteed Buyout Program

A Guaranteed Buyout (GBO) program involves providing a buyout offer after a home has been on the market for a certain length of time. This gives your employees the assurance that they can confidently purchase a new home without the constant worry of whether their old home will sell.

Buyer Value Option Program

A Buyer Value Option (BVO) program offers similar advantages to a GBO once an outside buyer has been identified. This option often focuses on providing employees with sufficient marketing support to sell their homes.

Home Sale Bonus Incentives

A home sale bonus incentive involves providing an additional bonus for employees who sell their homes within a certain period of time. These bonuses – also known as quick sale bonuses – provide employees with motivation to sell their homes more quickly and relocate without having their attention, focus and efforts diverted by their former properties.

Loss on Sale Provisions

A loss on sale provision involves reimbursing employees for a loss incurred due to the sale price of their home. This helps assuage employees’ fear about losing money on a home sale.

Home Staging Assistance

Provide access to a third party company to stage your employees’ homes for sale to improve the chances for them to sell quickly.

New Location Orientation & House Hunting Trips

Conduct research on area neighborhoods, schools, child care, typical commute times, medical services, places of worship, etc., and provide that information to help your employees become familiar with the new location and assist them during paid house hunting trips.

Home Finding Assistance

Look for and provide access to real estate professionals in the area who have relocation experience. These professionals will be best suited to manage the time constraints of your employees’ house hunting trips to maximize the use of their available time.

Download Our Executive Mobility Guide

 

Topics: talent retention, executive relocation package, talent acquisition, talent mobility, executive mobility program, mobility package

Upcoming Mobility Shows and Events - May 2018

Posted by Amy Mergler on Fri, May 04, 2018

 

Look for CapRelo at these Upcoming Events

We will be attending and/or sponsoring the following upcoming events. If you’re attending, look for us and say hi, because it's a great opportunity for us to stay abreast of the latest global mobility trends, as well as develop and strengthen trusted partnerships. 

 

Institute for Supply Management 2018 Conference

Date: May 6-9

Location: Gaylord Opryland Resort & Convention Center, Nashville, TN

Attendees: Christopher Bloedel & Pete Larkin

More than 2,500 global supply chain and procurement professionals will be attending the ISM's annual conference. The conference includes networking opportunities, educational breakout sessions in six learning tracks, signature sessions featuring speakers from Fortune 500 companies and keynote addresses from Arianna Huffington, Gen. Keith Alexander, John Brennan and John Rossman.

Come see us at Booth #239! Click here if you'd like to schedule a meeting with CapRelo during the event.

Learn more and register for the conference here

 

WORLDWIDE ERC AMERICAS MOBILITY CONFERENCE 2018

Date: May 16-18

Location: Gaylord Texan Resort & Convention Center, Dallas, TX

Attendees: Patrick Cacho, Dan Keating & Scott Williamson

The WERC Americas Mobility Conference is the largest global mobility meeting in the Americas and brings together industry leaders for an innovative educational and networking experience, with more than 30 education and development sessions and opportunities to earn certification credits. Business strategist and change expert, Peter Sheahan, will headline as the opening keynote speaker. 

Come see us at Booth #303! Click here if you'd like to schedule a meeting with CapRelo during the event.

Register for the conference and learn more here

 

Forum for Expatriate Management New York
Chapter Meeting

Date: May 17

Location: KPMG, New York, NY

Attendee: Pete Larkin

The FEM NYC chapter meeting will feature a "speed learning" style, industry expert panel discussion on topics including Brexit, diversity, talent management, tax updates and technology.

Click here to find out more and to register

 

World at Work 2018 Total Rewards Conference & Exhibition

Date: May 21-23

Location: Gaylord Texan Resort & Convention Center, Dallas, TX

Attendees: Pete Larkin & Scott Williamson

The World at Work 2018 Total Rewards Conference brings together more than 1,200 total rewards professionals focused on compensation, sales compensation, executive compensation, benefits, work-life effectiveness plan design and management. It will feature more than 90 educational sessions, tech/demo sessions and networking opportunities.  

Come see us at Booth #735! Click here if you'd like to schedule a meeting with CapRelo during the event.

Register for the conference and learn more here

 

Forum for Expatriate Management Americas Global Mobility Summit

Date: May 23-24

Location: Loews Coronado Bay Resort, San Diego, CA

Attendees: Patrick Cacho & Dan Keating

Global mobility professionals, industry experts and HR specialists will come together at the FEM Americas Global Mobility Summit for interactive workshops, roundtable and panel discussions and case study presentations. This year's event will feature new Mobility Masterclasses presented by senior global mobility leaders.  

Come see us at Booth #A5! Click here if you'd like to schedule a meeting with CapRelo during the event.

To register for the summit or to learn more, click here

 

Greater Pittsburgh Relocation Council Meeting

Date: May 24

Location: PNC, Pittsburgh, PA

Attendee: Pete Larkin

The Greater Pittsburgh Relocation Council meeting will focus on Considering Cultural Differences when Relocating. 

Learn more and register here

  

If you can’t attend, please be sure to follow CapRelo on Facebook and Twitter for updates.

Topics: CapRelo Employees

CapRelo Named HRO Today Baker's Dozen Top Global Relocation Company in 2018... Again!

Posted by CapRelo on Fri, Apr 27, 2018

2018-Bakers Dozen

For a baker in medieval England, there were laws relative to the cost of wheat used to make the bread they sold. Bakers could be subject to various punishment if they sold the bread for more than what is was worth. The widely known term ‘baker’s dozen’, of 13 instead of the usual 12, originated when bakers would throw in an extra loaf of bread when selling a dozen for the fear of coming up short. 

As a provider of services to clients who rely on CapRelo to ease the mobility process for employees and their families, we never want to come up short. It’s why we are driven to give more than what is expected—just like bakers with that 13th loaf!

It’s rewarding when those with whom you do business rank you as the best at what you do. Such is the case when HRO Today again named us at the top of a list of global relocation companies with the annual HRO Today’s Baker’s Dozen Award. 

Every year, HRO Today rates companies based on three subcategories: quality of service, deal size and breadth of services. While the feedback is anonymous, it comes solely from the buyers of relocation services. These are the people for which we wake up every day and come to work. I am honored to announce we have been rated fourth Overall and second for Quality of Service.   

Our dedicated team helps to empower employers make the best decisions that drive their global talent. We listen to the needs of global HR teams to find ways to better connect with their cultures and help solve challenges. I’m very proud of our team on this important achievement. 

Would you like to learn more about custom relocation solutions? Leave a comment below or give us a call!

Topics: HRO Today, Baker's Dozen

Global Compensation Services (Part 3)

Posted by Amy Mergler on Thu, Apr 05, 2018

FormsA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is the last post in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Global Statement of Earnings (GSOE)

The global statement of earnings (GSOE) provides a comprehensive, detailed overview of what was paid to (or on behalf of) each assignee. It is sent to the tax provider for ease of preparation of tax returns. In addition, it’s used as a data source for shadow payroll. The GSOE is reconciled to the U.S. Box 1 Form W-2 at year’s end.

The GSOE is critical to accurate reporting. It ensures that the company is in compliance both at home and in the host country, as well as that all taxes are properly recorded for reporting purposes. Furthermore, it makes sure assignees are paying taxes as needed and enables the employer to provide assignees with tax return preparation assistance, which can be an important benefit.

Shadow Payroll

Shadow payroll, also referred to as “ghost payroll,” reports compensation that is paid to an assignee from another country. Running a shadow payroll concurrently in the host location simplifies income and tax reporting and facilitates compliance efforts.

Compensation reporting can be complex, because the various components of an assignee’s total compensation may originate from different locations. The base salary and any bonuses are usually paid from the assignee’s country of origin, but many assignment-related costs such as housing allowances, dependents’ allowances and taxes are paid from the host country. Keeping records in both countries ensures timely and accurate reporting. For this reason, compensation services providers send shadow payroll reports that show all payments made to the host location and/or the company’s tax provider. They also send an “add to earnings” file to the payroll department in the home country for the payments made in the host location. This ensures that there’s a full and accurate report of all costs associated with an assignment in each location.

Balance Sheet Updates

Balance sheet updates are adjustments to the initial balance sheet that was created at the beginning of the assignment and affixed to the letter of assignment. Balance sheet updates can be performed during an assignment for a number of reasons, such as a change in salary or family size. They’re also required at regular intervals to revise the cost of living adjustment (COLA) as needed. Compensation service providers work with the company’s data provider to obtain updated COLA indexes and exchange rates.

Tax Equalization

The fundamental principle of tax equalization is that the assignee will not suffer financial hardship nor experience a financial windfall as a result of the tax consequences of a global assignment. Tax equalization plays an important role in helping employees make a balanced decision about accepting an global assignment. Without it, an employee might not want to go to Sweden, where the income tax rate is currently more than 57 percent, while others could be lining up for assignments in countries with low tax rates like Saudi Arabia.

During the tax equalization process, the company’s tax provider calculates what the assignee’s tax liability would have been in his or her own country for non-assignment compensation. That means that base pay is taken into account, but things like cost of living allowance, education allowance, relocation costs and other similar costs are not included in the calculation. The resulting sum indicates whether the assignee’s compensation needs to be adjusted up or down, and the tax provider prepares a settlement accordingly. Consequently, the compensation services provider processes the payment. If the employee owes the employer money, the compensation services provider will collect it and send the company the relevant reports.

Year-End Reporting

Year-end reporting involves the collection of all payroll and tax reports for all assignees, as well as the subsequent filing with all relevant national and state entities. A compensation services provider coordinates the tax eligibility list with the company and its tax provider. Throughout the year, it also provides preliminary reports to the tax provider to make sure any safe harbor (estimated tax) payments are being made. When all compensation data is collected, the GSOE is sent to the tax provider. This can be done in the currency of the home country, host country or the country where the company is headquartered.

 

The Value of Global Compensation Services

 

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

Upcoming Mobility Shows and Events - April 2018

Posted by Amy Mergler on Fri, Mar 30, 2018

 

Look for CapRelo at these Upcoming Events

We will be attending and/or sponsoring the following upcoming events. If you’re attending, look for us and say hi, because it's a great opportunity for us to stay abreast of the latest global mobility trends, as well as develop and strengthen trusted partnerships. 

 

Southern California Relocation Council Lunch & Learn Spring Program

Date: April 5

Location: Wilshire Loft, Los Angeles, CA

Attendee: Patrick Cacho

The SCRC Spring Program will feature an interactive "Ask the Experts" panel discussion with talent mobility representatives from Adidas, Square, Allergan and Blizzard Entertainment. 

Learn more and register for the program here

 

Midwest Relocation Conference 2018

Date: April 10-11

Location: The Sheraton Westport, St. Louis, MO

Attendee: Christopher Bloedel

The 2018 Midwest Relocation Conference will include corporate and peer-to-peer roundtable discussions, keynote addresses and educational sessions on domestic and global topics for all levels of mobility professionals.

Click here to find out more about the conference and to register

 

Global Business News Global HR Business

Date: April 11

Location: ROAM Buckhead, Atlanta, GA

Attendee: Scott Williamson

The Global Business News event will include presentations on achieving ROI with mobile talent, employer branding, talent and mobility life cycle, tax law changes and their implications on global mobility and more.

Register for the event and learn more here

 

Tennessee Relocation Council 2018 Spring meeting

Date: April 12

Location: Nissan Stadium, Nashville, TN

Attendee: Christopher Bloedel and Robert Brizuela

The TRC's spring meeting features a corporate roundtable, an introduction to DISC Assessment, the second annual TRC Knowledge Hop and a keynote address on vendor partner relationships.

To register for the meeting or to learn more, click here

 

Arizona Relocation Alliance 2018 Annual Conference

Date: April 19

Location: Marriott Courtyard Salt River, Scottsdale, AZ

Attendee: Patrick Cacho

The ARA's annual conference's educational sessions will include a corporate panel on General Data Protection Regulation moderated by CapRelo's Patrick Cacho. The conference will conclude with a networking happy hour and silent auction to support the Melonhead Foundation, an organization that provides for the needs of children with cancer and their families. 

Learn more and register for the conference here

 

North Texas Relocation Professionals April Breakfast Panel Meeting

Date: April 19

Location: Omni Frisco Hotel at the Star, Frisco, TX

Attendee: Scott Williamson and Rick Bruce

The NTRP panel meeting will discuss "A Relocation View from the RMC Lens" and will feature CapRelo's Rick Bruce as a special guest panel member.

To find out more and register, click here

 

Rocky Mountain Relocation council 2018 Spring Conference

Date: April 24

Location: Arvada Center for the Arts & Humanities, Arvada, CO

Attendee: Patrick Cacho

The RMRC will host its first full-day event, featuring a keynote address by motivational speaker Brad Montgomery, who will discuss how fulfillment in the workplace translates to bottom-line increases in profits and employee satisfaction.

Click here to learn more and register.

 

Forum for Expatriate Management Dallas/Fort Worth Chapter Meeting

Date: April 24

Location: CapRelo Dallas Office, Dallas, TX

Attendee: Scott Williamson

Details for the FEM Dallas/Fort Worth chapter meeting are not yet available. Please check back, as information will be added when it becomes available.

 

New Jersey Relocation Council Spring Conference

Date: April 26

Location: Galloping Hill Golf Course, Kenilworth, NJ

Attendee: Pete Larkin

The NJRC spring conference will focus on what's new and what's next in global mobility with presentations on key industry trends and changes, diversity and inclusivity and tax reform.

To register, click here.

 

Pacific Northwest RELOCATION COUNCIL 2018 SPRING Meeting

Date: April 26

Location: Museum of Flight, Seattle, WA

Attendee: Patrick Cacho

The PNwRC spring meeting includes networking activities, an industry update and a session on lessons from 2017 and what it means for 2018.

Register and find out more about the meeting here.

 

If you can’t attend, please be sure to follow CapRelo on Facebook and Twitter for updates.

Topics: CapRelo Employees

Tax Rates by Country - Global Wages vs. Take-Home Pay

Posted by CapRelo on Wed, Mar 28, 2018

There are precious few certainties in life but as the old saying goes, taxes are one of them. With America’s tax season in full swing, that inevitability is sure to be on the minds of many in the United States.

During this time of the year it is easy to forget that America isn’t the only country where tax considerations loom over the population, as well as how different tax rates and financial realities can vary around the globe.

With that in mind, CapRelo decided to take a look at salaries, taxes and take-home pay from a number of countries all over the world, and to contextualize that information for an American audience. Here’s what we found.

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To get a baseline on how the average citizen in each country can expect to be taxed, it’s necessary to know how much the average citizen makes. CapRelo examined a report from an intergovernmental economic organization listing the average annual salary for the countries we analyzed. After converting local currencies to their equivalent in U.S. dollars, it was possible to assemble the map above, which illustrates how much the average worker can expect to make around the globe. The countries in darker red are nations where workers are compensated the most.

 

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Of course, the taxman will take a cut, and we were able to find the overall percentage of salary that someone making an average wage can expect to pay in taxes in each country. This was done by taking post-tax earnings and dividing them by pre-tax earnings. We felt this was the best way to produce a consistent comparison across countries, given the occasionally complex nature of various tax codes.

 

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Once taxes have been paid, we get a better picture of exactly how much money the average annual wage is for workers around the globe. This chart shows post-tax take-home pay, once again converted to U.S. dollars. Countries in dark red here have the highest take-home pay.

 

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Comparing maps can make it challenging to ascertain the exact scope of tax impact, so we decided to visualize the data an additional way to show how much of the average wage in each country is consumed by taxes.

 

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Many in America comment on how much they have to pay in taxes, so we thought it would be fun to look at how that rate would change in other countries. By taking the average annual American wage and factoring in the rate it would be taxed in other nations, it is possible to see where things could be better or worse. Only ten of the surveyed countries would produce a lower tax bill than Americans already experience, with the rest taking more… at times, significantly so. Bet you never thought you’d be happy with your current taxes!

 

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Finally, CapRelo wanted to provide an even more detailed examination of taxes around the globe. The result features much of the same data that has already been presented, like average annual salary and post-tax take-home pay for every country (and the average American wage), as well as some new information. First is a more detailed breakdown of the specific tax rate as it applies to the average wage in each country, and second is an analysis of purchasing power.

The latter feature utilizes the Big Mac Index, a metric devised by The Economist that takes the price of a McDonald’s Big Mac in two countries to determine the relative value of money in each place. Utilizing this tool, we were able to find out how much the post-tax take-home pay was actually “worth.” As a result, we see that while somewhere like Russia has an average post-tax take-home pay amount equivalent to just $8,456, that money allows someone to buy the same amount of “stuff” as someone with $19,488 in America. On the flip side, Switzerland’s average take-home pay of $84,006 only goes as far as $65,567 would in the United States.

While taxes may be constant, the information above demonstrates how actual cost impact definitely isn’t. Hopefully seeing how taxes compare across the globe—along with the extra two days afforded by this year’s April 17 deadline—takes a little bit of the sting out of filing this year!

Download Talent Mobility & US Taxes: What You Need to Know

 

Topics: relocation taxes, mobility and taxes, taxes

Global Compensation Services (Part 2)

Posted by Amy Mergler on Tue, Mar 27, 2018

PayrollsA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is Part 2 in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Certificate of Coverage

When an employee of a company is sent on an assignment to another country, he or she may be required to pay social security taxes both at the home and host locations—unless those countries have entered into totalization agreements. These are bilateral social security agreements that eliminate dual taxation by assigning coverage to only one of the countries, which is usually the one where the work is being performed. As a result, employees on global assignments and their employers are exempt from having to make social security payments in the other country. Currently, the U.S. has totalization agreements with 26 countries. The certificate of coverage is the document issued by the country that is assigned coverage of the employee’s work.

It’s important to understand social security coverage implications for global assignees. Employers need to be aware of the exact social security regulations of a country before sending employees on assignment, and if applicable, apply for a certificate of coverage before the assignment starts. This will protect both the company and its employees from dual taxation, preventing potential problems with employees who are relying on their employer to manage (or at least inform them about) these matters on their behalf. Moreover, it will safeguard the company from compliance issues.

In general, a certificate of coverage has a duration of five years. However, a country’s social security administration may grant extensions, although there is usually a processing period of four to six weeks involved. Compensation services providers can apply for certificates of coverage on behalf of their clients. In addition, they can help them track expiration dates so there isn’t a lapse of coverage.

Payroll Instructions

For each global assignment, payroll instructions must be developed based on the financial data as detailed in the assignee’s letter of assignment and initial balance sheet. The first objective of these instructions is naturally to ensure that all elements of the assignee’s compensation are accurately incorporated into payroll. The second objective is to make sure that all components are accurately recorded and that necessary withholdings are made and the funds sent to the appropriate governmental bodies—something that can be extremely complicated, depending on the location.

The payroll departments both at home and in the host locations need to receive and understand each assignment's payroll instructions. Some compensation services providers not only prepare payroll instructions, they also provide training on what the content of payroll files should be, as well as what data will be needed for payroll file returns. Instructions regarding payroll reporting can be flexible, with companies receiving instructions for full payroll details per cycle or only updates about any applicable changes.

Payroll Reconciliation

Payroll reconciliation is necessary to ensure that the payroll instructions are being carried out correctly. It verifies that the amounts are correct and for the appropriate time period, as well as that the monies are being directed to the correct accounts. When this is done by an external company, it’s an additional layer of protection against errors.

During payroll reconciliation, compensation services providers may also collect all payroll detail as a part of the compensation accumulation process.

Compensation Accumulation

Compensation accumulation is a critical component of a company’s global mobility reporting. Compensation accumulation is the collection of all assignment-related, off-payroll costs that are made to, or on behalf of, assignees through accounts payable (housing, for example) or finance (taxes). All reports are reconciled to the relevant assignee’s letter of assignment and balance sheet, as well as to company policy.

Compensation accumulation can be very challenging for companies that have assignees in multiple countries. Collecting the required data often involves interacting with multiple locations and departments. It can even involve interacting with service providers to whom a company has outsourced business processes. Nevertheless, it’s important to report all of these expenses accurately to remain compliant.

A compensation services provider collects the reconciled payroll data needed for compensation accumulation on a monthly basis and stores it in a central location. This keeps the process streamlined; plus, it organizes and eliminates the issues that can arise from decentralized, untimely data collection.

 

Check back next week for Part 3!

 

Managing Global Assignment Costs

 

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

Global Compensation Services (Part 1)

Posted by Amy Mergler on Thu, Mar 22, 2018

Global CompensationA global mobility program can offer significant value to a company, not only because of the business opportunities it presents, but also because it helps to attract and retain quality talent. However, to remain in compliance with the rules and regulations of various countries, a well-run global mobility program needs accurate, timely administration and bookkeeping. Working with a global compensation services provider offers companies a cost-effective way to gain access to the expertise, manpower and resources needed to maintain centralized, organized payroll and tax reporting.

Today is the first in our series of posts about the services offered by global compensation services providers. Keep checking back to learn more.

Cost Projection

A cost projection is a comprehensive, high-level estimate of expected costs specific to the global assignment. This is based on the client's mobility and compensation policies, as well as all additional assumptions that have been agreed upon for a specific assignment. In addition to the employee’s base compensation, which consists of his or her salary and any bonuses, it includes all estimated assignment expenses and hypothetical expenses. This can involve a range of expenses such as relocation expense reimbursement, cost of living allowance, home leave, housing allowance, expatriate premium, tax services and more, depending on the individual case. It also includes a breakdown of the projected domestic and host country taxes. Costs are assessed based on reliable data sources and projected for the duration of the assignment. For assignments that are longer than two years, inflation may be taken into account. However, it’s important to understand that actual costs may vary due to economic fluctuations that impact the cost of living, as well as other factors such as hardship, emergencies, changes to family size and more.

The main purpose of a cost projection is to create a data-driven estimate of costs that the company can use to make strategic decisions regarding its workforce needs in that location. With an accurate and comprehensive overview of the required financial investment, the company can determine whether the assignment is financially viable. If necessary, it can be used as a tool to consider alternative solutions that require a lower investment such as sending a less senior—and therefore less expensive—employee or working with a local staffing agency to hire short-term, local professionals.

Quick Cost Projection

A quick cost projection tool is a standalone tool that the company can use to plan and compare different scenarios. Whereas a cost projection is a detailed document that’s tailored to a specific assignment using the most current data, a quick cost projection tool uses more general data based on country-specific information. Based on the user’s input, it calculates cost of living, education costs, tax data, housing costs, health care expenses and more to create quick cost projections that can be used to compare the investment associated with various scenarios.

For example, a company might want to compare the costs of sending a senior manager with a spouse to Frankfurt for two years to the costs associated with sending a lower level manager who has a spouse and a child on the same assignment. Or a multinational company might want to compare the costs of sending an engineer from Detroit, Michigan on a 12-month assignment to London with the costs required to send an engineer with the same skills but who’s currently based in Milan on the same assignment.

Many quick cost projection tools are web-based platforms that companies can access themselves and use at any time. This makes them both easy to use and much more affordable than in-depth cost projections—although an in-depth cost projection will be required further on in the assignment process.

Letter of Assignment

A letter of understanding or letter of assignment outlines the details and benefits of the assignment. It’s a legally binding document that basically serves as an addendum to the assignee’s regular employment contract and lays out any varying or additional terms that apply for the duration of the assignment. As such, it must be signed by all parties. In addition to the start and end date of the assignment, job title and location, the letter of assignment must specify all contractual agreements, code of conduct, compensation and benefits, assignment-specific benefits such as moving expenses and repatriation allowance, tax equalization and other fiscal matters.

It’s important that the letter of assignment lay out all pertinent details of an assignment in a manner that leaves no room for misinterpretation. Any lack of clarity could lead to misunderstanding, which in turn could lead to costly and time-consuming problems. This can be a drain on resources, and it can create a distraction for the employee and impact the success of his or her assignment.

Initial Balance Sheet

The initial balance sheet is typically affixed to the letter of assignment. It provides details regarding the assignment allowances the employee will receive.

 

Check back next week for Part 2!

 

Global Assignment Guide

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

What Are Global Compensation Services?

Posted by Amy Mergler on Fri, Mar 16, 2018

Piled currency symbols in 3D isolated over white.jpegDue to increased globalization and cross-border projects, a growing number of companies are sending employees on short- and long-term global assignments. While this offers benefits for both employers and employees, it also makes payroll, as well as income and tax reporting, much more complex. This is further complicated because global assignments include relocation-related benefits that may or may not have to be reported. Nevertheless, employers are not only responsible for ensuring their employees are compensated adequately and in a timely manner, but also that all local income and tax reporting regulations are adhered to.

Compliance with regulations and timely, accurate tax reporting are vital to protect both an organization and its employees from potential issues with revenue services, regardless of whether they’re those of the host country or in the country of origin. This can become highly complex, especially for companies with multiple assignment locations, a range of assignment lengths and types, different pay scales and employees with varying nationalities.

For companies with employees on global assignments, navigating the complexities of international regulations and reporting requirements can be a significant burden on their payroll and bookkeeping departments. Many do not have staff with the diverse, precise knowledge required. For example, a company might have seven employees on assignments in four different countries. If these employees are of varying levels of seniority, their wages and benefits will all be different. To enable accurate reporting, knowledge is needed of the regulations and employment tax laws of all four countries. If the employees also have varying countries of origin, the situation becomes even more complex. Additionally, the duration of an assignment has an impact on the taxability of compensation items associated with global assignments—such as household goods storage.

Even if a company does have professionals with the required knowledge on staff, the time and investment needed to ensure correct and comprehensive reporting may be a drain on resources that are needed elsewhere.

For this reason, a growing number of companies are outsourcing this business process to global compensation services providers. These are third-party service providers that assume the responsibilities associated with collecting, controlling and reporting all the compensation data of employees on global assignments on the employer’s behalf. They assist employers from the very beginning of an assignment, ensuring transparency for all parties, as well as correct and complete documentation. Furthermore, they provide accurate, comprehensive administration and reporting that complies with all applicable regulations.

The Value of Global Compensation Services

Topics: global mobility, compensation services, compensation and benefits, global assignments, global compensation services

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