The document summarizes the key topics from a global immigration workshop, including an overview of global compensation, social security, income tax, and payroll processes for international employees. It discusses various components of expatriate compensation, rules for cross-border compensation reporting, and social security agreements between countries. It also identifies common challenges with international payroll compliance and proposes training, system improvements, and collaboration between home and host country teams as ways to address these challenges.

1. Day 1 : Global Immigration Workshop
The sea of global compensation and social security agreements

2. Objectives of this session
Trace the “New Normal”
Overview of Global Compensation
Overview Social Security Tax
Overview of Income Tax
Overview of Payroll

3. Overview of Global Compensation

4. General Compensation
may include:
Base Salary/Wages
Bonus
Deferred compensation
Stock options/Share awards
Benefits in Kind
Retiral Benefits
Expat Compensation
may additionally include:
Cost of living allowance
Housing
Family allowance
Tax reimbursements
Tax preparation fees
Hypothetical tax
Home leave
Foreign service premium
Foreign taxes
Relocation allowance

5. Sourcing Rules for Cross Border Compensation Reporting
Time Basis:
•Compensation other than fringe benefits
•Base salary
•Vacation pay
•Incentive awards
•Stock option income (special rules)
•Flexible compensation
Geographical Basis:
•Certain listed fringe benefits
•Housing: location of principal place of work
•Education: location of principal place of work
•Local transportation: location of principal place of work
•Foreign Tax reimbursements:
•Tax reimbursements:
•Hardship duty pay: the duty zone
•Moving expenses:Cost of Living Allowance
Alternative Basis:
•Facts and circumstances

6. Overview of Income Tax

7. • Presence Days Test
• Domicile TestResidential Status
• Stay At Home
• Expat AllowancesIncome Subject to Tax
• Under Domestic Law
• Under Dependent Personal ServicesExemptions
• Monthly/Periodic withholding
• Annual Tax Filing or exemption
Tax Payment and other
Obligations
• Monetary penalties
• Non MonetaryPenalties
Determining the taxability

8. Overview of Payroll Process

9. Data
Gathering
Validation
per Policy
Check Tax
and Soc.
Security
Payroll
Instruction
after
corrections
Payroll
Delivery
Post
Payroll
delivery
validation
Reporting
&Analytics
to Business
Utopian Payroll Process

10. Consideration for setting up Payroll
Labor Laws Tax Law
Social Security Law
Double Tax
Avoidance
Agreement
Payroll
Setup

11. Social Security

12. Social Security is an additional ‘tax’ over and above income tax levied by certain tax authorities on
employment income.
Payments primarily refer to a field of social welfare concerned with social protection for
conditions like:
►Old age
►Poverty
►Unemployment
►Family Benefits
►Disability
The amount of social security tax vary considerably throughout the world and the relative share
of liabilities between employee and employer also differ widely
Overview

13. • Many of the countries have signed the Totalization Agreements
• The following Totalization agreements are effective with India.
• Belgium, Germany, Switzerland, Luxembourg, France, Demark, Korea, Netherlands, Hungry, Finland,
Sweden, Czech, Norway, Austria, Canada, Australia, Japan, Portugal
Totalization Agreements

14. Compensation
&
Social Security Pitfalls

15. The New Normal

16. Transparency
• Within Government – Various Departments like Immigration, Revenue and Local Labor
Compliance
• Between Governments
.
Emphasis on
Compliance
• Greater scrutiny
• Heavy penalties/ More severe processing /refusals
• Deportation / denial to business operations
• Legal proceedings

17. Industry Sources
0% 10% 20% 30% 40% 50% 60%
Insufficient knowledge of cross border payroll reporting
External audit issues
Internal audit issues
Domesting payroll team handling international payroll
Delay in Payroll set-up
No formal process of payroll validation
60%
36%
40%
39%
22%
40%
Payroll Readiness

18. India’s compensation policies - NOT complicated!!
Therefore, it is difficult for us to relate to:
1. The complex policies of other countries
2. Repercussions of non-compliance in other countries
It is even more difficult to accept that there is:
1. No standard global compensation structure
2. No uniform social security agreement
3. Increased dependency on the Political Agreements between Home and Host Countries
Our Understanding

19. To list a few of:
1. Compensation and Social Security
2. Possible solutions – Organization-wise
3. Possible solutions – Operations-wise
Possible Pitfalls and Solutions

20. Complications
• Components • Possible to forget Questions!
Home & Host -Employer & Employee
• Fixed
• Variable pay,
• Deferred pay,
• Home country entitlements,
• Share awards, cash benefits (bonus etc)
• Benefits in kind – conveyance
accommodation; etc
• Pension / Social Security contributions
• Tax equalization
• Exchange rate protection
• DTAA / Social Security Agreements –India has
with which countries?
• What components are NOT standard?
conveyance accommodation; etc
• What components are taxable?
 Conversion cost
 Tax equalization amount
 Social Security Reimbursement
• How to identify other hidden components – that
could be taxable?

21. Not Obvious vs Obvious

22. Minimum wages -Petition
Vs Deserved /Actual
Change of location/s –
result change in COLA
Change of Position–
Restructuring / promotion
H and L wage
differences
Arrival and Departure
for Tax
Documents – amendments
for Work Permits; Cert. of
Coverage for Social Security
Signing of documents
without understanding

23. Non-
Compliance
Heavy
financial
Penalties
Legal
Process &
Jail Term for
Org. Head
Assignee –
legal &
deportation
Restrictions
on business
operation
Reputation
of the
organization
ruined

24. 1. Invest financially in a one-time requirements gathering process on Labor, Tax,
Immigration & Social Security Law to do business in the Host Country
Organizations must then have:
2. Compensation policy – Uniform, consistent and transparent global policy and workflow in place.
3. Country specific Manuals - on Employee global assignments
4. Technology – Ensure there is a system that connects HR – Global Mobility with checks and balances
5. SMEs – availability for consultation at Home and Host teams
Ensure Continuous Monitoring of Process
Possible solutions – Organization Level

25. • Training – regularly for GM, Payroll and HR, Immigration and tax teams
• Connect for better collaboration - - Local GM, Payroll, tax and HR teams and not
work in silos
• Connect for greater collaboration - Home and Host GM, Payroll, Tax and HR teams
• DATA – feed in clean & authentic data; tracking assignees and their dates; monitoring
they dues / payments
Continuous Monitoring of Process – A Necessity
Possible solutions – Operations Level

26. Critical Factor -1. Training
• Background:
1. Limited responsibilities and
exposure to International
travel
2. Working in silos
3. Limited risk awareness of
non-compliance
• Training will help:
1. Equipping teams with essential
knowledge of Immigration,
global assignee payroll
reporting; tax; social security
withholdings and compliance
2. Better connect at Home and
with Host GM teams
3. Higher risk awareness of non-
compliance

27. Critical factor – 2. System & Data
• Background:
• Assignee data gathering – biggest
challenge
• Data gathered from different
sources – so non-uniform,
inconsistent and un-validated
• Reducing human error while feeding
data or calculation of tax / social
security etc
• Robust system application will
help to:
1. Reduce human error
1. Ensure uniform policy
application
2. Validated and consistent data
1. Provide checks and balances
2. Reports generation – to support
& advise all stake holders

28. Benefits of a well managed Payroll
• Help identify areas for cost savings
• Indicate of the overall value for money generated by assignments.
Oversight of total program and individual country can:
• Localization, local hires
• Outsourcing to fill skills gaps.
This, in turn, can help in strategic decisions to explore
alternatives:

29. Global Mobility and HR teams have and extremely challenging job in the
current world of Global assignments and International travel
Extremely critical for GM Teams to:
• Understand changes and complexities and ensure compliance in Home and
Host countries
• Educate Business Heads – compliance has to be always Top-down
Add VALUE by assessing & advising compliance and financial implications for:
 Assignees
 Businesses
 Organization
A Message to GM & HR Teams

30. Thank You