Expatriate Games

Katie Lenehan, SGMS, CRP
Katie Lenehan, SGMS, CRP Senior Vice President, Global Mobility klenehan@ineomobility.com

If handling the compliance needs of the expatriate population is the hardest part of global assignment management, the hardest part of this hardest part is capturing total pre-, on-, and post-assignment-related costs. And to do this accurately, in a timely manner, and presented in a single report that is typically called a Global Statement of Earnings (GSE). 

Let’s start by defining terms. By “global,” of course, I mean world-wide global payrolls and non-payroll payment sources.

By a “global statement of earnings” I mean a reporting tool that houses all financial attributes and logistical information related to an expat assignment into one location — anything from a system-generated or an Excel-based report to a Word document.

Sound easy? It’s not. Because GSE data includes a wide range of subjects — including but not limited to home and host location, family size and duration of assignment…allowances and payroll, automobiles, and relocation expenses…or potentially deferred compensation such as stock and equity holdings. And because you’re looking for things that might have been paid locally and which aren’t even in your line of sight, you have to rely on multiple individual stakeholders in multiple locations to help gather all these data into one location. It’s nitty-gritty, black-and-white accounting. Like I said, it’s hard.

Sound easy? It’s not. Because GSE data includes a wide range of subjects — including but not limited to home and host location, family size and duration of assignment…allowances and payroll, automobiles, and relocation expenses…or potentially deferred compensation such as stock and equity holdings. And because you’re looking for things that might have been paid locally and which aren’t even in your line of sight, you have to rely on multiple individual stakeholders in multiple locations to help gather all these data into one location. It’s nitty-gritty, black-and-white accounting. Like I said, it’s hard.

Which takes me back to definitions. By “hardest part” I mean that every single GSE requires comprehensive, detailed research, because every single GSE impacts the assignment it represents…and it does this either positively or negatively. Say an expatriate and their employer — your customer and client — has a highly successful assignment, but you as the mobility provider don’t report it correctly. What can happen? You could potentially expose that expatriate and/or client to a personal or a corporate audit — and not just from one country, but from several. And poof, there goes the successful assignment.

So yes, the global statement of earnings can be the stuff of headaches. It’s no wonder so many global assignment specialists put it on the back-burner — only to be panicked when tax filing deadlines come due or when an assignment is completed. And trust me…filing deadlines always come due. An assignment is always completed. There’s no way around a GSE but through.

But here’s the good news: There are proven ways to make it easier, if not easy. There’s a process to follow that’s logical, timely, simple, and smart. I call it the “WHO, WHAT, WHEN of GSEs.” Here’s how it works.

WHO: Start by talking to your client about exactly which employees they foresee needing global reporting — and have specific conversations about each engagement. Don’t make assumptions about the eligible population; “expat” doesn’t always mean long-term assignments, and internal practices and tax or country requirements will vary. Next, establish roles and responsibilities. Who will be responsible for creating the GSE and who will supply the data for it — mobility providers? Tax experts? Company A for long-term assignments and Company B for permanent transfers? And who will be choosing which reporting tool to be used? There’s no one right or wrong way to do it, but remember: rules change, reporting requirements change, population eligibilities change. So make sure you dust off this procedure each year, and don’t rely solely on prior experience. Your goal each time is for someone to raise their hand and say, “I’ve got it all here, this is everything. This is a single point of data coordination. This is the system of record.”

WHAT: So what exactly is in a global statement of earnings? Anything financial that happened for a particular employee within a said period of time: salary, deductions, bonus, commission, meal plans, automobile, a final en-route trip, housing allowances in the host location, maybe some stock. It’s also payments to a third party on behalf of the employee or the family, payments made locally…and on and on. Home or host currency? Start and end dates? The point is: you have to ask questions. Always audit back to the facts of the policy benefits and the individual assignment letter. And then ask some more questions.

WHEN: For a pain-free GSE, the “When” is…now. It’s yesterday. It’s tomorrow. If you initiate the GSE as a formal and regular part of assignment planning — and do that the minute you know an assignment is starting — it takes away the daunting sting of the data collection process. I promise, doing this will make your life infinitely easier.
So don’t run away from your GSEs — run toward them. Think of a GSE as the foundation of your reporting, and you’ll build a strong end-product. Think of it as a way of methodically assembling a giant data haystack, and you’ll never have to search for another hidden needle. Think of it as the pulse of your assignment, and breathe life into your work process.

Or think of it this way: A properly created global statement of earnings is the most critical component of compliance. It’s the thing on which everything else rests. And you could do it better than anyone, just by playing the game to win.

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