When sending employees abroad on foreign assignments, employers must deal with certain logistical complexities such as reporting of housing or cost of living allowances, payrolls operating in two jurisdictions, net pay in multiple currencies, expatriate-specific tax laws, and employer-provided tax payments.
A key to effective expatriate payroll administration is understanding the intricacies around accurate reporting, pay, and tax remittance through the host country payroll, also referred to as a “shadow payroll.”
Shadow payroll administration can prove to be difficult if the basics are not well understood and the proper procedures and controls are not in place. The purpose of this presentation is to demystify shadow payrolls for payroll professionals and to provide them with the following:
- Working definition of shadow payroll
- Basics of expatriate policy and how to reflect policy elements correctly in the shadow payroll
- How to ensure accurate net pay is delivered when multiple payrolls (home and host) are involved
- Key considerations when grossing up shadow payroll taxes
• Comprehensive example of shadow payroll transactions
- Accounting transactions for shadow payrolls
- Best practices
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