With businesses being conducted across the countries, organisations mobilise their human capital across the borders. Mobility of the work-force is a significant task involving planning from various perspectives. Further, in addition to the planning, various compliances as prescribed under the different laws also need to be complied with.
Issues normally faced by multinationals in human resource mobility
Multi-national organisations usually come across the following challenges on assignment of their expatriate employees across the globe: –
- What laws to be complied with in the host country and how such laws will be complied with?
- What will be the cost to the company on account of employee mobilisation, how can such cost be optimised?
- What will be the tax implications on account of expatriate assignment both to the companies as well as the expatriates?
- Whether there will be any PE risks on employee assignment, including deciding on who will be the ‘economic employer’ and if yes, how these can be dealt with?
- Whether any exemptions under tax treaties be claimed?
- Does economic employer have to comply with social security contributions?
Our team of experts assist clients in mobilisation of its human resource, by developing unique solutions customised to the needs of the clients in an efficient and law compliant manner.
We provide a broad spectrum of services for assistance in all necessary compliances for the employer as well as the expatriate employees. An illustrative list of our services is as under: –
- Planning and advisory in relation to assignment of employees to India before the expatriates’ arrival in India;
- Advising on assignment structure based on specific facts of a multinational employer so that both the employer as well as employees are compliant with Indian laws in an efficient matter;
- Handholding of employee from date of entry into India till completion of assignment;
- Addressing BEPS and PE risks for foreign companies in India on assignment of expatriate employees;
- Advisory on secondment agreements and cost recharges for such secondments, both from withholding tax as well as transfer pricing perspective;
- Advising on the compensation structure, ‘take-home’ pay of the employees and the prospective investments which may be undertaken by the employees for availing the tax benefits provided under law;
- Employee Stock Option structuring in a tax friendly manner both for the employers as well as employees and advising on necessary tax implications in relation to issuance of ESOPs;
- Advising on any exemptions / benefits that may be available under the Indian domestic tax law and/or the Double Taxation Avoidance Agreement;
- Advisory on eligibility of the employees for taking foreign tax credits and documentation required for claiming such tax credits from Indian income tax perspective.
- Assisting the companies in applying for the visas/ work permits of their employees;
- Obtaining registrations/ approvals from immigration authorities;
- Determination of residential status of the expatriate and in case of dual residence, advising on applicability of ‘tie-breaker rule’;
- Assisting the clients in obtaining registrations both with the tax authorities and the social security authorities;
- Monthly computations of withholding tax and social security contributions of the employees so that cash flows of the employers are optimised throughout the year;
- Filing of the withholding tax returns with the tax authorities and social security returns with the concerned Social Security department authorities;
- Obtaining ‘No-objection certificates’ for the expatriate employees upon their departure from India;
- Other compliances as prescribed under various laws.
- Handling the audit before the tax authorities in case the tax returns are picked for audit by the tax authorities;
- In case any variation to the returned income is made by tax authorities, assisting in representation and litigation before the various forums (such as Commissioner-Appeals, Tax Tribunals, High Courts, Supreme Court).