Global Payroll

Global Payroll

Managing Compensation on a Global Scale
All parts of preparing and arriving for an international assignment may go well; however, “don’t mess with the money”! Whether an assignee is paid on home or host, or split payrolls, paying and reporting compensation accurately and timely is a must as there are almost always potential tax consequences to missing or inaccurate information. One key to preventing such a debacle is to identify a means to capture international compensation from all possible data sources within a global organization, no easy feat as reported by some respondents to this month’s Paragon Pulse survey.

As an indication of how important and complicated global payroll can be, 47% of Paragon survey respondents said they utilize “over 5” different payroll systems/ providers with 1 to 10 internal employees dedicated to this initiative world wide. To keep pace with reporting, 50% of respondents collect international payroll data monthly, bimonthly or quarterly with 57% further reporting the same information for tax purposes up to 13 times or more in a calendar year.

In an article featured in the October 2008 issue of Mobility Magazine(1), it states “the penalty for out-of-compliance relocation payroll practices can exceed US$10,000 per move per year.” For countries across borders, punishment varies and may result in even higher costs to the corporation.

Based on the survey, there is an indication that the frequency of compiling and reporting provides a checks and balances system that helps payroll professionals identify and reconcile any issues early that could turn into a potential problem with all (100%) of the survey respondents indicating an error rate of less than 1%.

With cost reduction measures at the forefront of goals and objectives, potential cost savings may be realized with the outsourcing of a central global reporting function whereby all cross-border payroll and compensation data is fed into one system for purposes of periodic reporting. The results are multi-faceted:

  • Total spend analysis of all costs related to a global assignment
  • Centralized reporting for corporate and tax purposes
  • Easier tracking of move related expenses for budgeting

The importance of accurate reporting can not be overstated. Not only are there monetary drawbacks to inaccurate tax reporting, but the company’s reputation could be at stake as well. Such errors may cause an organization to be bared from doing business or not be seen in a positive light by the host country government, something that cannot be recovered from easily.

(1) http://www.worldwideerc.org/Resources/MOBILITYarticles/Pages/1008giese.aspx

Survey Results
Of the total employee population, how many international assignees/expatriates do you mobilize annually?

Less than 2043%
31 to 507%
51 to 10021%
101 to 50014%
Over 50114%

How many payroll systems/providers does your company currently use worldwide?

1-233%
3-520%
Over 547%

Please estimate the number of internal employees worldwide dedicated to this process.

1-1047%
11-157%
16-2013%
Above 2033%

How often do you gather international payroll data?

Monthly36%
Bi-Monthly7%
Quarterly7%
Annually21%
Other, please define29%

How often do you report for tax purposes?

Monthly29%
Bi-Monthly0%
Quarterly14%
Annually21%
Other, please define36%

Do you track error rates? If yes, is your error rate:

Less than 1%100%
1% to 3%0%
4% to 6%0%
7% and above0%

What percent of total productivity do you estimate is dedicated to this function (Refer to questions 2 & 3 for your timeframes)?

Less than 1%50%
1% to 10%42%
10% to 20%8%
20% to 30%0%
40% and above0%

Survey Participation
The data represents results from 16 corporate relocation professionals of the following size:

1,000 to 10,00044%
10,001 to 20,00014%
20,001 to 50,00014%
50,001 to 100,0007%
100,000+21%