One of the realities in human resources is that people are more mobile than ever, and often will need to relocate to another country for family, personal or financial reasons. When this happens with one of your employees, you have to make a decision on how to handle it if you want to retain their skills. It’s not an issue if the move is temporary, but for long term relocation to a new residence, a compliant payroll solution is needed to keep them on board.
Relocation of employees has come up more than usual in 2020, due to the global pandemic which ushered in an increase in remote work. Some employees decided if they were working from home anyway, maybe it was time to find a new place to live abroad or return to their home country.
Can my employee stay on the home country’s payroll?
It may seem like an employer could just keep the employee on the home country payroll, and then remit their net salary to the new location. The problem with trying a ‘remote payroll’ is that the employee is going to have to pay taxes and make contributions on income in the new country as well, so it subjects them to dual tax liability. Many countries forbid remote payrolls for just this reason.
Instead, you will have to find a way to pay them in compliance in their home country, while removing them from your current payroll. There are a few ways to accomplish this, with varying degrees of cost and effort.
3 Ways to Pay Your Employee in a Different Country
1. Incorporate a local entity and hire the employee directly
If your company has expansion plans in your employee’s country, you might be considering incorporating a branch or subsidiary. The new entity could then hire the employee directly, and run a local payroll for them. Otherwise, the cost and time involved make this less practical for only hiring a single remote employee...read more
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