Sending staff to work abroad for periods from a few weeks to several years can be a very costly move depending on how long they are sent for, exactly where they are going, the level of allowances being provided to them while they are away and, of course, the risk that they might decide not to return to the home country employment afterwards. In many situations there can be tax deductions or special expat regimes available for people sent into or out of the UK on assignment, and so assignments can often be structured to take advantage of some of these provisions. Should the employer have a global assignment policy detailing how an expat remuneration package will be structured, whether the assignment is to a low-tax area like Dubai or a high-tax area like Stockholm? Can the employer recoup any costs? What can be provided tax-free by the company?
There are considerations at the employee level too. What will happen if the employee has to pay tax in two countries simultaneously? The employer may need to give them a financial helping hand if so much of their income is being taken away by taxes but how will the employer be sure to get that extra money back from the employee in due course? What if the employee is reluctant to accept the assignment because the taxes abroad are so much greater than the taxes in the home country? What will happen to their home country tax-favoured savings accounts, pensions and so on while they are away?
If you’d like to talk to us about efficient ways of structuring your assignment policy please, Contact Us.