Cookie cutters were not made for global compensation programs

I love tapping the KISS principle whenever possible. It gets used frequently in the design process. Whittling tasks or processes down to their most simplest, seems...efficient and smart. Uncomplicating the complicated, a relative saying to KISS ("keep it simple, stupid"), is in essence what our client teams try to do to help clients develop effective solutions. 

But some things are simple, and some things just are not. And global compensation programs that seek to collect, track and report compensation for filing taxes in multiple countries around the world...well, that's just not always simple. Or maybe it is simple in theory and more challenging in reality? Let's look at a couple of the realities that add complexity to the global compensation collection process:

• Reality 1: Compliance is based on well-done expatriate tax filings, which are powered by a highly detailed and accurate global compensation collection program. As stated in last year's post, expat tax filing is part of that monstrous, pesky goal of keeping your global mobility program clean and compliant. Mobility programs that do this effectively usually have a well-oiled, collaborative process with their expatriate tax partners, their relocation management company (RMC) and their own internal stakeholders like payroll, AP and internal tax. 
• Reality 2: Looking at other best practices is a great starting point. Best practices can help make year-end a little easier as you determine your authorization list for employee tax support, consider any policy adjustments, and handle year-end compensation collection and reporting. However, while best practices are worth considering, but be sure to adapt to your program because...
• Reality 3: No company has the exact same program! The reality is that no company does it the exact same way. There is no "cookie cutter," "one size fits all" or "copy/paste" way of replicating the entire process of one company to another. The fact that every country has its own unique tax laws adds monster complexity to the challenge of global mobility program compliance. Add to that a variety of unique expatriate needs and support — some of which may be paid locally, some by an RMC and others via payroll — and you have a highly complex collection process.

COVID-19 or no COVID-19, failure to file accurate returns, pay overdue employment taxes, file employment tax returns, and/or furnish correct wage and tax statements on a timely basis can result in significant fines. A compliant program is a more cost effective one, so be sure to collaborate with your RMC and tax partners to design the most accurate and efficient expat comp collection processes to prevent you from getting hit by unseen and unpredictable issues.

Looking for further guidance on some of the year-end compensation challenges of having a compliant global mobility program? Try one of these:

• Eliminate the double tax "shock and awe" moment for your expats
• Companies need to address compensation in a hybrid working world
• If things are different (#newnormal), is your global mobility program ready?