Expat Payroll Compliance: An Annual Checklist for Companies
With the year now well underway, it is an ideal time to focus on refining payroll compliance processes. Managing payroll compliance for expatriates remains a critical and complex aspect of global mobility, requiring organisations to navigate diverse tax systems and adhere to regulatory obligations.
To minimise risks and ensure compliance, companies must take a proactive and strategic approach to these challenges.
This checklist offers some practical steps to streamline efforts and keep your payroll processes up to date.
1.Payroll Structure Choices
Understanding and implementing the right payroll structure is essential for compliance, and companies should clearly define their payroll structures.
✅ Define Payroll Structures
- Review payroll structures (Split, Shadow, or Localized) and their alignment with company policies.
- Ensure split payrolls meet host country thresholds for immigration and provide adequate income for employees.
- Account for currency exchange volatility and its impact on costs and payroll accuracy.
- Assess the cost of dual payroll management and explore automation for efficiency.
2. Global Mobility Planning
This entails proper planning and audits, collaboration, and monitoring to ensure alignment with company objectives.
✅ Pre-Assignment and Ongoing Reviews
- Conduct detailed pre-assignment planning and periodic reviews to document statutory obligations.
- Track expatriates’ residency, income, and work hours to maintain compliance.
✅ Collaboration and Monitoring
- Engage with local tax advisors to address payroll setups and obligations.
- Collaborate with line managers to identify “surprise” assignees triggering unexpected statutory requirements.
3.Regulatory Awareness
Staying informed on global and local requirements is crucial for compliance such as:
✅ Global Payroll Compliance
- Integrate worldwide income reporting and legislative treatments into payroll systems.
- Use automation for real-time Year-to-Date summaries, reducing data collation costs.
- Leverage technology to streamline multi-source payroll instructions.
✅ Tax and Social Security Obligations
- Regularly update income tax and social security withholding tables.
- Verify special rulings or exemptions and ensure continued compliance.
- Monitor thresholds that may affect compliance or tax treatment, and seek expert advice as needed.
- Obtain certificates of coverage to meet social security requirements.
✅ Employment and Immigration Compliance
- Verify employees’ work permits and visas.
- Adhere to local laws on minimum wage, severance, and working hours.
✅ Statutory Reporting
- File accurate and timely reports with authorities.
- Manage employee registrations and deregistration, updating payroll accordingly.
4.Leveraging Technology
Integrated tools and automation are game changers for payroll compliance, and some benefits are highlighted below:
✅ Benefits of Technology
- Combine compensation data from multiple sources for streamlined payroll instructions.
- Automate updates for regulatory changes and ensure year-end compliance.
- Monitor exchange rates to calculate salaries and benefits accurately.
- Digitally store payroll records for easy access and audit readiness.
Summary
Expat payroll compliance demands a meticulous approach that blends planning, regulatory awareness, and technology. While this checklist provides a good foundation, each company must tailor it to their specific needs. By prioritizing compliance, companies can mitigate risks, ensure accuracy, and strengthen trust with their global workforce.
Where do I start?
At Global Expat Pay, we offer a comprehensive solution for payroll automation, data management, and compliance. The tools include real-time data management, reporting, and year-end reconciliation, helping organizations enhance efficiency and gain actionable insights.
A short video demonstration is provided here – Simplifying Global Mobility data and payments on Vimeo, and you can request a demo by sending an e-mail to info@globalexpatpay.com.
