A shadow payroll can lower your company’s risks when you send an employee abroad. Find out why in this short video.
Tax authorities everywhere are intent on collecting taxes from foreign nationals working within their borders, and shadow payrolls have become an increasingly important way for multinationals to avoid paying fines. This post gives you an understanding of what shadow payrolls are and why they’re used. If you’re considering sending an employee abroad, understanding why shadow payrolls are important is a critical first step to lowering your company’s risks.
Processing multinational payrolls, paying employees on time, managing expense reporting, vacation-tracking and complying with local regulations can leave room for error and potential exposure to significant compliance penalties.
If your company sends staff abroad, there are advantages to having a tax equalisation policy. It will offset employee tax burdens associated with overseas assignments while ensuring employer tax compliance in home and host countries. Many of these policies are shaped more by company philosophy than legal requirements. But making the right decisions about what to include in the policy is critical to achieving a balance between attracting and retaining top talent, maximising tax advantages, and streamlining expatriate tax reimbursement processes and payroll administration.