CapRelo Blog

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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