HRO Today March 2017 - 19

Mobility
Costly Non-Compliance
Fees and penalties for organizations that don't maintain compliance when relocating an employee vary by
country. But they have one thing in common: They are costly. Here's a snapshot of what an organization could
expect if they aren't following country protocol.
* Australia: Organizations may lose the ability to sponsor future foreign transferee.
* France: Organizations can incur a fine up to €75,000 per noncompliant employee plus possible debarment from
continuing the business for up to five years.
* Germany: Fines for employees can be up to €1,000 and up to €500,000 for organizations for an offense of
negligence.
* Japan: Non-compliant organizations face a fine up to 3 million yen and/or incarceration for up to three years.
* Korea: Organizations can incur fines up to 20 million won or two-year incarceration.
* Spain: Fines are up to €60,000 or closure of the company for up to five years.
* United Kingdom: Organizations face up to a £10,000 fine per noncompliant employee.
* USA: Organizations are subject to fines from $110 to $1,100 per employee for technical paperwork violations. If
it's a first intentional violation, fines climb to $375 to $3,200 per employee and up to $16,000 per employee for
repeat offenses.
Source: Global Mobility Solutions
foreign employees. In Japan, a non-compliant employee
can be incarcerated for up to one year and be barred
from future entry to the country. In Korea, a two-year
incarceration is possible. In Germany, an employer can
be fined up to €500,000 for non-compliance. In France,
the fine is €75,000 euros per non-compliant employee.
A particularly disturbing scenario is one in which an
employee inadvertently violates a country's reentry
regulations. " We've seen situations where an employee
is detained for days at a foreign airport before the
situation is resolved, " says Fernandez.
Employees working in a country for a specific duration
of time may be required to pay income tax and social
security tax on wages earned during the assignment
period. Not all countries require the latter, however.
Many nations have signed bilateral social security tax
treaties that exempt the assignee from having to pay
social security taxes in the host country to avoid dual
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HRO TODAY MAGAZINE
| MARCH 2017
taxation. The U.S., for instance, has 25 such agreements
in place.
Employees even may be required to pay a tax on the
income they derive from dividends on the corporateprovided
stock they hold. " If the employer provides
equity to an employee who is abroad in certain
countries for a longer period that is allowed by law, the
dividends may be construed as taxable income by the
host country, " Gibson says.
This hodgepodge of different regulations also confronts
companies in domestic U.S. employee assignments.
States with an income tax typically require out-ofstate
assignees to pay state taxes on their income
if they spend at least 183 days in the state, either
consecutively or in total. This can be a rattling surprise
for an employee from a state without an income tax. " If
you live in a state without a state income tax, but work
half the week in another state with the tax, there is a

HRO Today March 2017

Table of Contents for the Digital Edition of HRO Today March 2017

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