what does assignment abroad mean

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Working abroad?

• Global Guide
• Working Abroad
• Your Assignment Abroad: Its Career Impact

International Assignments and Soft Skills

Becoming a Valuable Employee

Their global perspective on their field of work and their cultural awareness make employees with overseas work experience valuable for international companies. Employers with multicultural teams, or brands and products with a multinational focus also prefer employees with this kind of experience.

In today’s globalized world, it is essential to work with people – be they colleagues, clients, or business partners – from all kinds of national, cultural, and ethnic backgrounds. International work experience will therefore make you a real asset for every employer and pave your way towards further international assignments.

Soft Skills

Among other things, an international assignment will give you the opportunity to develop new interpersonal skills. After all, you will be dealing with a different culture, work ethic, business etiquette, and lifestyles. This exposure to a new way of life is something you can benefit from in various ways during and after your assignment.

While it may take you some time to adjust to your new company environment, you’ll almost certainly gain and improve some essential soft skills such as patience, perseverance, flexibility, and communication skills. These qualities are just as important for your employer as any of your hard skills, professional knowledge, and academic qualifications.

The latter are, of course, essential as well. After all, the head of an international petroleum company will not hire you if you are a Music and Theatre major and lack any significant qualifications. If that is the case, it doesn’t matter how well you are suited for international assignments. Still, soft skills are as important as having a diploma and work experience.

Acquiring Intercultural Skills

Hans-Peter (51) works as the head of the human resources department of a big software company in Germany. When he reviews applications for international assignments, he has to keep in mind that the applicant needs to fit in with an international team of co-workers. “We do pay great attention to the international work experience of our applicants. After all, we are working with people from all kinds of cultural backgrounds here. You can really tell the difference. Those who have worked abroad blend in much easier than those who have never left Germany before. They are more readily aware of potential obstacles on an international assignment, and they find more common ground with non-German citizens who may have moved here for work-related reasons.”

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March 27, 2019 — 5 min read

How to Leverage International Assignments and/or a Laptop Lifestyle to Build Your Career

Digital nomad-ism and long-term international assignments are growing trends for ambitious professionals and creatives in 2019. According to a KPMG research study, 83% of international companies offer short-term work assignments abroad, and 97% offer long-term overseas assignments.

For businesses that are making their first forays into global markets, having an internal employee with an explorer's mindset, the courage of a pioneer and the instincts of an entrepreneur is very lucrative.  

Let's take a look at the opportunities and strengths of work-abroad assignments relative to digital nomad freelancers and full-time employees who work remotely at or close to home.

International Work Assignments

International assignments are a great way to:

Nurture the careers of future business executives

Establish a presence in an emerging market

Launch a new product

Reward a high-performing employee that has requested an international assignment

The KPMG study found that about 40 percent of international assignments fail, however many of those failures are typical because companies don't track overseas expenses accurately, and don't educate their employees on potential tax, cross-cultural and immigration issues when they are on assignment. Some assignees are cut off EAP programs and health benefits support when they move overseas, which can be profoundly isolating and counterproductive.

Paying employees for expenditures, and either a portion or all of their salary via an international money transfer is an excellent way to maintain accurate records of expenses.

Photo by Trinity Treft / Unsplash A PWC study found that 71% of millennials expect to experience an international assignment during their career. There is, however disparity in where millennials would want to work, as most would want an assignment in countries like the US, the UK, Australia or Canada. Only if the assignment would have a significant positive impact on their career trajectory would they consent to an assignment in an emerging country like India.  

Frequent overseas travel gets costly, and some employees that commute across borders on a frequent basis regularly get flagged for customs/security reasons and be denied access or visas if they decide to settle in the country on a long-term basis.  For these reasons, longer assignments, though less frequent is preferable to the opposite.

According to an SHRM study, a three-year assignment abroad for a senior professional can easily cost as much as US $3 million including benefits and living expenses.  

Many of the 60% of employees that are sent on a work assignment abroad are so successful there, and they create such a bond with the country they are assigned to that they become "accidental expats." If and when employees do return to their home country, however, their employers should have repatriation programs to get over the "culture shock" of re-acclimating to their native country.

Scott Redmond, the XE Managing Director for North America, moved his family from Australia, and he recently wrote about his experiences as an expat in the United States.

Digital Nomads Living the Laptop Lifestyle

According to a Citrix research report , by 2020, 50% of the workforce will be comprised of remote workers and telecommuters. This shift is in part a result of the ubiquitous nature of the cloud and mobile devices, and in part because of the environmental impact on ever-increasing highway congestion, urban gridlock and commute times.

Photo by Austin Distel / Unsplash Most Generation Z and millennial employees are very digitally savvy. Many companies are transitioning to having employees work remotely on a regular basis, which saves these companies significant real estate and infrastructure costs.

Whether a freelance writer, application developer or UX designer is working from their home office in the same country as their customer or a coffee house overseas is often a moot point. As long as project milestones are being met and projects are being completed on time, many businesses hiring digital expertise are happy to let their employees or contractors work where ever it suits them.

Digital nomads that change countries on the regular, and digital "slow-mads" that linger in specific countries for long periods of time are becoming more prevalent. Depending on whether they are independent contractors, freelancers or untethered full-time employees, they may be fortunate enough to have healthcare benefits . Others maintain a "home base" in their native country, but travel and work abroad as a location-independent worker.

Is your business considering starting a new venture or launching a new product overseas? Are you considering taking an international assignment, be it a short-term gig as a full-time employee, or a long term work assignment abroad as a contract consultant?

Check out our blog on a regular basis for strategies for expats, accidental expats, and even stealth expats that sometimes work among us.

For fast, easy payments abroad, such as mass payments for payroll or one-time project payments, register for a free account. Whether you are paying rental deposits on a London flat, receiving project payments or sending money to loved ones from overseas, XE Money Transfer enables you to live your best international life. And empowers your business to compete and win in international markets.

Intercultural and International Business Communication

The international assignment, learning objectives.

By the end of this section, you will be able to:

• Describe how to prepare for an international assignment.
• Discuss the acculturation process as an expatriate.
• Describe effective strategies for living and working abroad.

Suppose you have the opportunity to work or study in a foreign country. You may find the prospect of an international assignment intriguing, challenging, or even frightening; indeed, most professionals employed abroad will tell you they pass through all three stages at some point during the assignment. They may also share their sense of adjustment, even embrace of their host culture, and the challenges of reintegration into their native country.

An international assignment, whether as a student or a career professional, requires work and preparation, and should be given the time and consideration of any major life change. When you lose a loved one, it takes time to come to terms with the loss. When someone you love is diagnosed with a serious illness, the news may take some time to sink in. When a new baby enters your family, a period of adjustment is predictable and prolonged. All these major life changes can stress an individual beyond their capacity to adjust. Similarly, in order to be a successful “expat,” or expatriate, one needs to prepare mentally and physically for the change.

International business assignments are a reflection of increased global trade, and as trade decreases, they may become an expensive luxury. As technology allows for instant face-to-face communication, and group collaboration on documents via cloud computing and storage, the need for physical travel may be reduced. But regardless of whether your assignment involves relocation abroad, supervision of managers in another country at a distance, or supervision by a foreign manager, you will need to learn more about the language, culture, and customs that are not your own. You will need to compare and contrast, and seek experiences that lend insight, in order to communicate more effectively.

An efficient, effective manager in any country is desirable, but one with international experience even more so. You will represent your company and they will represent you, including a considerable financial investment, either by your employer (in the case of a professional assignment) or by whoever is financing your education (in the case of studying abroad). That investment should not be taken lightly. As many as 40 percent of foreign-assigned employees terminate their assignments early, Tu, H., & Sullivan, S. (1994). Business horizons . Retrieved from http://findarticles.com/p/articles/mi_m1038/is_nl_v37/ai_14922926 at a considerable cost to their employers. Of those that remain, almost 50 percent are less than effective. Tu, H., & Sullivan, S. (1994). Business horizons . Retrieved from FindArticles.com: http://findarticles.com/p/articles/mi_m1038/is_nl_v37/ai_14922926

Preparation

With this perspective in mind, let’s discuss how to prepare for the international assignment and strategies to make you a more effective professional as a stranger in a strange land. First we’ll dispel a couple of myths associated with an idealized or romantic view of living abroad. Next we’ll examine traits and skills of the successful expatriate. Finally, we’ll examine culture shock and the acculturation process.

Your experience with other cultures may have come firsthand, but for most, a foreign location like Paris is an idea formed from exposure to images via the mass media. Paris may be known for its art, as a place for lovers, or as a great place to buy bread. But if you have only ever known about a place through the lens of a camera, you have only seen the portraits designed and portrayed by others. You will lack the multidimensional view of one who lives and works in Paris, and even if you are aware of its history, its economic development, or its recent changes, these are all academic observations until the moment of experience.

That is not to say that research does not form a solid foundation in preparation for an international assignment, but it does reinforce the distinction between a media-fabricated ideal and real life. Awareness of this difference is an important step as you prepare yourself for life in a foreign culture.

If the decision is yours to make, take your time. If others are involved, and family is a consideration, you should take even more care with this important decision. Residence abroad requires some knowledge of the language, an ability to adapt, and an interest in learning about different cultures. If family members are not a part of the decision, or lack the language skills or interest, the assignment may prove overwhelming and lead to failure. Sixty-four percent of expatriate respondents who terminated their assignment early indicated that family concerns were the primary reason. Contreras, C. D. (2009). Should you accept the international assignment? BNET . Retrieved from http://findarticles.com/p/articles/mi_qa5350/is_200308/ai_n21334696

Points to consider include the following:

• How flexible are you?
• Do you need everything spelled out or can you go with the flow?
• Can you adapt to new ways of doing business?
• Are you interested in the host culture and willing to dedicate the time and put forth the effort to learn more about it?
• What has been your experience to date working with people from distinct cultures?
• What are your language skills at present, and are you interested in learning a new language?
• Is your family supportive of the assignment?
• How will it affect your children’s education? Your spouse’s career? Your career?
• Will this assignment benefit your family?
• How long are you willing to commit to the assignment?
• What resources are available to help you prepare, move, and adjust?
• Can you stand being out of the loop, even if you are in daily written and oral communication with the home office?
• What is your relationship with your employer, and can it withstand the anticipated stress and tension that will result as not everything goes according to plan?
• Is the cultural framework of your assignment similar to—or unlike—your own, and how ready are you to adapt to differences in such areas as time horizon, masculinity versus femininity, or direct versus indirect styles of communication?

This list of questions could continue, and feel free to add your own as you explore the idea of an international assignment. An international assignment is not like a domestic move or reassignment. Within the same country, even if there are significantly different local customs in place, similar rules, laws, and ways of doing business are present. In a foreign country, you will lose those familiar traditions and institutions and have to learn many new ways of accomplishing your given tasks. What once took a five-minute phone call may now take a dozen meetings and a month to achieve, and that may cause you some frustration. It may also cause your employer frustration as you try to communicate how things are done locally, and why results are not immediate, as they lack even your limited understanding of your current context. Your relationship with your employer will experience stress, and your ability to communicate your situation will require tact and finesse.

Successful expatriates are adaptable, open to learning new languages, cultures, and skilled at finding common ground for communication. Rather than responding with frustration, they learn the new customs and find the advantage to get the job done. They form relationships and are not afraid to ask for help when it is warranted or required. They feel secure in their place as explorer, and understand that mistakes are a given, even as they are unpredictable. Being a stranger is no easy task, but they welcome the challenge with energy and enthusiasm.

Acculturation Process

Acculturation , or the transition to living abroad, is often described as an emotional rollercoaster. Steven Rhinesmith Rhinesmith, S. (1984). Returning home . Ottawa, Canada: Canadian Bureau for International Education. provides ten steps that show the process of acculturation, including culture shock, that you may experience:

• Initial anxiety
• Initial elation
• Initial culture shock
• Superficial adjustment
• Depression-frustration
• Acceptance of host culture
• Return anxiety
• Return elation
• Reentry shock
• Reintegration

Humans fear the unknown, and even if your tolerance for uncertainty is high, you may experience a degree of anxiety in anticipation of your arrival. At first the “honeymoon” period is observed, with a sense of elation at all the newfound wonders. You may adjust superficially at first, learning where to get familiar foods or new ways to meet your basic needs. As you live in the new culture, divergence will become a trend and you’ll notice many things that frustrate you. You won’t anticipate the need for two hours at a bank for a transaction that once took five minutes, or could be handled over the Internet, and find that businesses close during midday, preventing you from accomplishing your goals. At this stage, you will feel that living in this new culture is simply exhausting. Many expats advise that this is the time to tough it out—if you give in to the temptation to make a visit back home, you will only prolong your difficult adjustment.

Over time, if you persevere, you will come to accept and adjust to your host culture, and learn how to accomplish your goals with less frustration and ease. You may come to appreciate several cultural values or traits and come to embrace some aspects of your host culture. At some point, you will need to return to your first, or home, culture, but that transition will bring a sense of anxiety. People and places change, the familiar is no longer so familiar, and you too have changed. You may once again be elated at your return and the familiar, and experience a sense of comfort in home and family, but culture shock may again be part of your adjustment. You may look at your home culture in a new way and question things that are done in a particular way that you have always considered normal. You may hold onto some of the cultural traits you adopted while living abroad, and begin the process of reintegration.

The international assignment requires adaptability. FIGURE 18.3: © 2010 Jupiterimages Corporation

The international assignment requires adaptability.

You may also begin to feel that the “grass is greener” in your host country, and long to return. Expatriates are often noted for “going native,” or adopting the host culture’s way of life, but even the most confirmed expats still gather to hear the familiar sound of their first language, and find community in people like themselves who have blended cultural boundaries on a personal level.

Living and Working Abroad

In order to learn to swim you have to get in the water, and all the research and preparation cannot take the place of direct experience. Your awareness of culture shock may help you adjust, and your preparation by learning some of the language will assist you, but know that living and working abroad take time and effort. Still, there are several guidelines that can serve you well as you start your new life in a strange land:

• Be open and creative . People will eat foods that seem strange or do things in a new way, and your openness and creativity can play a positive role in your adjustment. Staying close to your living quarters or surrounding yourself with similar expats can limit your exposure to and understanding of the local cultures. While the familiar may be comfortable, and the new setting may be uncomfortable, you will learn much more about your host culture and yourself if you make the effort to be open to new experiences. Being open involves getting out of your comfort zone.
• Be self-reliant . Things that were once easy or took little time may now be challenging or consume your whole day. Focus on your ability to resolve issues, learn new ways to get the job done, and be prepared to do new things.
• Keep a balanced perspective . Your host culture isn’t perfect. Humans aren’t perfect, and neither was your home culture. Each location and cultural community has strengths you can learn from if you are open to them.
• Be patient . Take your time, and know a silent period is normal. The textbook language classes only provide a base from which you will learn how people who live in the host country actually communicate. You didn’t learn to walk in a day and won’t learn to successfully navigate this culture overnight either.
• Be a student and a teacher . You are learning as the new member of the community, but as a full member of your culture, you can share your experiences as well.
• Be an explorer . Get out and go beyond your boundaries when you feel safe and secure. Traveling to surrounding villages, or across neighboring borders, can expand your perspective and help you learn.
• Protect yourself . Always keep all your essential documents, money, and medicines close to you, or where you know they will be safe. Trying to source a medicine in a country where you are not fluent in the language, or where the names of remedies are different, can be a challenge. Your passport is essential to your safety and you need to keep it safe. You may also consider vaccination records, birth certificates, or business documents in the same way, keeping them safe and accessible. You may want to consider a “bug-out bag,” with all the essentials you need, including food, water, keys, and small tools, as an essential part of planning in case of emergency.

KEY TAKEAWAYS

• Research one organization in a business or industry that relates to your major and has an international presence. Find a job announcement or similar document that discusses the business and its international activities. Share and compare with classmates.
• Conduct a search on expat networks including online forum. Briefly describe your findings and share with classmates.
• What would be the hardest part of an overseas assignment for you and why? What would be the easiest part of an overseas assignment for you and why?
• Find an advertisement for an international assignment. Note the qualifications, and share with classmates.
• Find an article or other first-person account of someone’s experience on an international assignment. Share your results with your classmates.
• Communication For Business Success. Authored by : anonymous. Located at : http://2012books.lardbucket.org/books/communication-for-business-success/ . License : CC BY-NC-SA: Attribution-NonCommercial-ShareAlike

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Gareth Wadley

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International assignments: Key issues to consider

What legal issues do you need to consider when it comes to sending employees overseas?

The number of employees working abroad is increasing. As it becomes more common, some assume this will lead to greater standardisation, with template assignment letters the norm.

However, the legal, tax, pension and other variables involved in international assignments require a more bespoke approach, leaving little room for standard documentation. We outline some key issues to address below.

What is an assignment?

Also referred to as a secondment or transfer, an assignment might be internal (to a different role abroad with the same employer) or to an external employer. A key characteristic of an international assignment is that an employee from one legal entity and country ('home' country) temporarily performs services in another country ('host' country).

Potential assignment structures

There are a number of different ways in which assignments can be structured and documented. Which approach is appropriate will depend on a range of issues including employment law, tax, pension, social security and regulatory implications as well as the expectations of employees. Five frequently used assignment structures are:

• the employee continues to be employed solely by the home employer;
• the contract with the home employer is suspended and the employee enters into a local employment contract with the host employer for the assignment;
• the contract with the home employer is terminated with a promise of re-employment at the end of the assignment. In the meantime, the employee enters into a local employment contract with the host employer;
• the contract with the home employer is suspended and the employee enters into a contract with an international assignment company (IAC) within the employer group; or
• the contract with the home employer is suspended and the employee enters into a contract with both an IAC and the host country employer.

Which is best?

When deciding on the best structure for the circumstances, some questions to consider are:

• Do the host country’s laws require employment by a local entity, ruling out sole employment by the home employer?
• Where there is no contract of employment in place with the host employer, could local laws presume that the host is the de facto employer?
• If the home contract is “suspended”, is the home employer prepared to accept the legal uncertainty, in employment law terms, that this status brings?
• In a dual contract structure, who will bear the greatest risk of being liable for employment claims – host, home (or the IAC)?
• Will the employee accept the termination of his/her home contract?
• What is the impact on pension and benefit schemes, social security and tax?

Are there key terms in the home contract that require special consideration and protection, for example, restrictive covenants and confidentiality?

Which national law applies, when and to what? Which courts would have jurisdiction in the event of a dispute?

Who pays for, and manages, the employee during the assignment and will the employee return to the home country?

Looking forward

It is inevitable that documenting assignments will become a smoother process as employers become more familiar with the issues involved. However, the range of significant personal, legal and financial implications will mean that a degree of tailoring will always be necessary, in order to avoid negative repercussions.

Gareth Wadley is principal associate at Eversheds

Further reading

Paying your way: International tax and benefits

Companies expect to increase international assignments

How HR can improve LGBT+ employees' access to international assignments

How territorial jurisdiction works

How to get the most out of global mobility

Hot topic: Key issues for the new government

Three-quarters of Europeans would consider international roles

Gender divide over approach to international assignments

International Assignments: Managing Benefits and Taxes for Expatriate Employees

Written on February 28, 2019

Given the complexity of the U.S. tax code and the myriad regulations related to ERISA plans, managing benefits for domestic employees is a complicated undertaking. But managing benefits for employees who your U.S. company sends to work overseas—known as expatriates, or expats—adds several layers of complexity.

As globalization continues to be a defining characteristic of the economy, many U.S. companies are finding opportunities to grow abroad. But before their employees ever step on foreign soil, employers need to learn about the various taxes other governments may impose on benefits and compensation and think through the various questions that go into developing a sound policy for managing benefits for expatriate employees. Employers also need to help their employees understand what the foreign assignment means to them with respect to taxes and benefits.

Understand the Basics of Expatriate Taxation

For purposes of this article, an expatriate is a U.S. citizen or green card holder who is sent by their U.S. employer to work at a branch or other linked organization in a foreign country. Assignment duration may vary anywhere from six months to several years. Employees must obtain a work visa, and—depending upon the host country—may be eligible for certain benefits offered by that country while working abroad.

U.S. citizens, green card holders, and their employers need to understand that expatriates will still have an income tax liability and income tax return filing obligation at home regardless of where they work globally. The United States is unusual in this regard with respect to taxing their citizens and permanent residents (green card holders) who are living and working abroad; many foreign governments allow their citizens to fall under the host country’s tax code when working abroad and home country taxation is often suspended until the individual returns to their home country.

The United States’ unusual approach, however, doesn’t mean that U.S. expatriates will always face double taxation. The U.S. tax code looks to offset this, at least partially, by allowing certain foreign tax credits and/or the foreign earned income exclusion. Employers take these credits, the foreign earned income exclusion, and the foreign country’s tax policies into consideration when developing the compensation package for the employee.

In addition to understanding how the U.S. will tax the expatriate’s foreign compensation and benefits, employers also need to understand how the host country will tax this income. Almost every country requires some kind of tax to be paid by foreign workers. While taxation of salary and bonuses may be relatively straightforward, things can get quite complicated when it comes to how benefits—such as retirement matching contributions or profit sharing—are taxed.

Consider Your Options for Making Expatriates Whole

Employers need to study foreign countries’ tax laws and be aware of each country’s nuances so a fair, balanced and competitive compensation package is developed. The good news is that employers have flexibility in navigating these issues and developing their policies.

The first option is to do nothing. Sometimes, in this scenario, the expatriate is responsible for the taxes and other costs incurred while working in the host country. A more common strategy is to equalize the tax burden on the employee. This is a tax-neutral policy, often referred to as tax equalization, where the employee is no worse or better off while working abroad. In this case, the goal of the compensation package is to keep employees whole—which means maintaining roughly the same financial standards they would have experienced at home.

Beware Double Taxation of Retirement Benefits

Expatriates are allowed to participate in U.S.-based retirement plans while working abroad. They can contribute pre-tax dollars to their traditional 401(k) plans, and employers can offer a match to the employee deferral. Unfortunately, many foreign countries consider the deferral to be taxable income.

What’s more, the employer contribution may be considered regular income subject to foreign taxes as well. In this case, the employee is double taxed: first by the host country for the “income” sent to the retirement plan, and then by the United States when it’s time for the participant to withdraw assets. (Double taxation may also happen in a Roth situation, where participants pay taxes up front when making the deferral.)

In these situations, employers will need to decide whether expatriates should be excluded from the plan and possibly compensated outside of the benefit to avoid the double taxation—or utilize a tax equalization policy where the expatriate is made whole. The latter approach would be in keeping with the U.S. system, in which qualified retirement plan contributions are only taxed once when the employee takes a distribution from the plan at or after retirement.

Insight: Take a “No Surprises” Approach to Your Expatriate Benefit Policy  The goal of any expatriate compensation package should be to ensure that neither the employee nor the company encounter any surprises. To achieve this, employers need to think through many issues well before sending an employee abroad.

The first issue is to decide whether or how to make employees whole. After that major issue is resolved, employers need to focus on finer points such as evaluating foreign tax policies, reviewing plan documents to determine eligibility and analyzing foreign tax credit structures to maximize value.

It’s also important to have strong communication strategies and resources for employees. A solid two-way communication plan aids expatriates in clearly understanding what they will be receiving and responsible for, and offering them access to experts who can help them feel that they are not alone in navigating the oftentimes complex tax structures in host countries.

Employees working at different companies often compare notes about their employer’s compensation policy for expatriates with other expatriates they meet abroad, so understand that there are competitive reasons for developing a fair, robust approach.

When sending employees abroad, employers have a lot to manage from a benefits perspective, between adequately rewarding employees, understanding individual countries’ tax rules, filing the appropriate forms in the foreign jurisdictions and keeping costs under control.

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Whom to send where? International assignments and multinationals

In multinationals with subsidiaries scattered around the world, communication is key — and complex. So what's the best way to get firm knowledge flowing in the right directions?

One of the greatest changes to global staffing practices over the past two decades has been the dramatic rise of international assignments as a means to transfer knowledge where it needs to go.

Sending a trusted manager from headquarters to a foreign subsidiary is the most common kind of international job assignments. These are your traditional "expatriates." Next to them, researchers have observed an even more significant surge in the number of "inpatriates" — i.e., managers who are local to the subsidiary site and have been sent to HQ. Mirroring the expat logic, these inpats are meant to help knowledge flow between multinational offices and HQ.

So, does it work? Research published in Human Resource Management , co-authored by Anne-Wil Harzing, Markus Pudelko and IESE's B. Sebastian Reiche , says yes and reveals quirks specific to certain international posts. The large-scale survey of more than 800 majority-owned subsidiaries across Asia, Europe and North America reveals both the benefits and the limitations of international assignments for managers as a means to better transfer knowledge within multinationals.

The role of the manager sent abroad

The international assignee arrives from another country, either to headquarters or to a subsidiary unit, with the goal of promoting knowledge transfer. But what does that mean on the ground?

Staff members may transfer knowledge directly — by sharing information on HQ culture and management practices with their colleagues and relaying learning outcomes back to the home unit. Knowledge is often complex and tacit and requires direct personal contact to impart.

Employees may also transfer knowledge indirectly — by acting as bridges to link home and host-unit staff, developing social capital between units and acting as facilitators and connecters. The survey developed and updated by Harzing et al. captures both types of knowledge flows.

Where you come from and where you're going

Expats are old news. What's novel in the 2015 research is that inpats are almost as easy to find at a multinational. In fact, in this extensive survey, the co-authors find that for every 100 employees at a subsidiary, on average, 1.22 are expatriates from HQ and 1.16 are former inpatriates (i.e., back from an assignment at HQ).

Granted, different countries continue to approach staffing in different ways, the study reveals. Japanese multinationals, for example, are still more prone to post parent-company nationals to manage subsidiaries, as are Korean and Chinese companies. Meanwhile, multinationals based in Northern European countries are most likely to hire local managers or third-country nationals to manage their foreign offices, which has its advantages.

When expats are found in subsidiaries, they are likely to take the top spot (managing director). In fact, 33 percent of subsidiaries in the survey have expats on top. Meanwhile, local R&D and marketing departments are also relatively likely to be led by expats (weighing in at 18 and 16 percent, respectively). While conventional wisdom might suggest a local hire to best understand local market needs, tapping expats to direct the marketing department is still surprisingly common, the co-authors find. At the same time, expats head up fewer than 10 percent of manufacturing departments and 6 percent of human resources departments.

Knowledge flows

The research finds the presence of expats and former inpats in subsidiaries usually helps knowledge flows — but not always.

More specifically, the presence of an expat manager at a subsidiary helps knowledge transfer from HQ to that subsidiary in all functions studied except marketing. Benefits are especially visible when there's an expat heading a subsidiary's manufacturing department, where HQ's technical knowledge may help not only manufacturing, but HQ understanding in other units, too.

Summing up detailed analyses presented for different cases, the co-authors conclude that expatriates are more effective transferring knowledge from HQ than doing the reverse. To achieve knowledge flows to HQ, it makes more sense to inpatriate local hires (i.e., send them from subsidiaries to HQ) and then send them back home again. It's an office shuffle that may make multinationals grow wiser on the whole.

Is knowledge transfer a challenge in your company? The first question to ask yourself might be which direction you need the knowledge to flow in. It could make all the difference as to which company employees pack their bags.

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What Are the Differences Between a Seconded Worker and an Expat?

• Expat Assurance
• Publié le 14 April 2022

The seconded worker is sometimes confused with an expatriated. In both cases, they leave their countries to work abroad. But they have different rights and obligations that are important to know.

Here, you are going to find the answer to questions like what is a secondment and how long can it last.

You will also find out what are the differences with expatriation, some notes about your rights in both situations, and information about secondment insurance.

Differences Between a Seconded Worker and an Expatriated

The seconded employee and the expatriated employee both have differences in their status.

These differences mainly concern the employment contract, the duration of the work abroad, and social protection.

Here is a table showing the main differences between an expatriate employee and a seconded employee:

Seconded Workers Have a Contract in Their Home Country

Secondment consists of carrying out an assignment abroad on behalf of an employer who is established in your home country. The seconded worker retains his or her employment contract and is still part of the company’s workforce for the duration of the assignment.

They remain subordinate to their employer and return to their position at the end of their job.

The task is governed by a letter of assignment or an amendment to the employment contract specifying how long the secondment will last and its location. It can go from a few months to several years, depending on the country of destination, and can be extended under certain conditions.

The Expatriates Are No Longer Subject to Their Countries’ Law

The term “expatriation” is used in the case of a seconded worker who continues to work abroad after the end of the maximum authorized period.

And for employees working in their countries and are sent by their employer on an assignment abroad in another company. Now that you know what is a secondment, it’s time to talk about expatriation.

The difference lies in the fact that this last one breaks temporarily the subordination link: the original employment contract is suspended and replaced by a local contract that applies for the entire duration of the expatriation. This duration does not have to be defined in advance, and the conditions of the employee’s reintegration upon return must be negotiated in advance. Finally, expatriation also applies to employees who are recruited directly to work abroad.

Secondment: Rights in Terms of Social Protection

Expatriation or secondment: unequal situations.

Expatriation and secondment do not have the same consequences: for example, an expat is no longer a tax resident in his/her home country. But a seconded worker is still considered as one. But it is mainly from the point of view of social protection that the differences are felt. The secondment keeps the employee under the protection of the national Social Security system: employer and worker contributions do not change, neither with the health insurance nor with the pension funds, without any impact on the quarters acquired during the mission period. The employer is responsible for taking the necessary steps to maintain the employee’s rights. In European Union countries, it is possible to apply for local health insurance, but it will not cover work stoppages or accidents. An expatriation or secondment insurance might be a better option

The Expatriate Is No Longer Covered by Social Security

Expatriates are no longer covered by their national Social Security system: their health and retirement depend on the local system. Depending on the country of expatriation, this protection may be quite satisfactory or, on the contrary, completely insufficient (absence of a mandatory system, very high health care costs, etc.). Sometimes the employer provides for the employee’s social protection, but it is essential to verify that the level of coverage provided is satisfactory.

The Importance of Getting a Secondment Insurance

Advantages of international secondment insurance.

After having discussed what is a secondment, an expat and their rights, it’s time to look at the importance of having an international insurance policy.

Getting one is often an interesting solution, no matter if it’s taken out by the employer or the employee. In countries where health care costs are higher than in the country of origin, it allows for better reimbursements than those provided by Social Security. In countries where the health system suffers from poor infrastructure or sanitary conditions, international secondment insurance optimizes access to care through partnerships with private health care networks. It is also a way to obtain extended coverage (civil liability, baggage protection, etc.) and repatriation assistance. Unlike national plans, international insurance protects the seconded worker or the expatriate during their stays outside their host country. Finally, an international secondment insurance policy makes it possible to manage procedures and reimbursements in a simplified manner, and to benefit from assistance in your language.

Choose Your Secondment Insurance to Be Well Covered and Contribute to Your Retirement

Among the interesting international insurance offers in the case of seconded workers and expats, you can find options in your home country.

Depending on your personal situation and the destination of your relocation, each offer will be more or less adapted. Many packages and formulas also exist for specific destinations. Using an online comparison tool such as Expat Assurance, you can easily obtain several quotes to make the best choice. Please note: taking out an international insurance policy for expatriation or secondment does not exempt you from your obligations to pay your contributions or to join a local scheme.

Frequently Asked Questions

A secondment consists in carrying out an assignment abroad on behalf of an employer from your home country. The employee has the status of a seconded worker.

We speak of expatriation when: – Seconded workers continue to work abroad at the end of the maximum period authorized for a secondment – Employees working in their countries are sent by their employer to work abroad in another company – Employees that are recruited directly to work abroad.

There are 2 categories of secondments: – Short-term: This is a maximum of 6 months, extended to one year for secondments abroad or in certain overseas territories, and is not renewable – Long-term: This is for a maximum of 5 years with a possible renewal.

While on secondment, the employee benefits from their national Social Security coverage. However, if you are expatriated abroad, you cease to be covered by it. In both cases might be interested to get secondment insurance.

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10 Best Things About an Expat Assignment

Why you should say yes to an expat assignment.

If offered an expatriate assignment, would you accept it? What would be your main motivation for accepting an expatriate assignment? In this article, we will discuss ten best things about an expat assignment if you are considering relocating to another country.

Moving Between Countries

Through international travelling, you will have the chance to experience the cultural and natural wonders of the world. We have gathered extensive region and country information for expatriates, including tips and information on the health systems in each country. Please select a geographic region or country to read about the latest country information.

Making International Friends

Starting New Projects

Learning new things is part and parcel of an expatriate’s life. If you’ve been working on projects that you’re good at back home, then going on an expat assignment will allow you to expand your horizon. You may be working on a project that’s entirely new for you, and this is the chance to upgrade your skillset. Plus, you will be working with your new coworkers, and it is also a great way to improve your communication skills.

Building New Relationships

Gain Attractive Compensation Package

Accepting a job abroad means access to an excellent expat package. Of course, the package will vary according to your industry, profession, and level of responsibility. It includes relocation expenses, allowances, especially if you’re in a developing country, housing, and education allowance, automobile allowances, home travel allowances, and many more. You may also benefit from improved taxation possibilities depending on where you are moving. For example, countries in the Middle East and the Caribbean often have low tax rates. An expat tax advisor may be able to provide more information on this.

Obtain Promotional Opportunities

Furthermore, when you exemplify great skills through your expat assignment, you have a chance to advance within the company abroad. You are likely to get a promotion when you’re proactive and perform well in your job, but even more so if you take a position abroad. It also means more pay and a financial bonus. So if you get the opportunity to work abroad, grab it, as it may open the door to other big opportunities.

Learn New Languages

Personal Development

When you focus on all the new things an expat assignment offers you, you’re also gaining insights and perspectives for personal growth. Similarly, having an open mind when living and working abroad allows you to discard conditioned learning and evolve into a better person. Being a better person also dramatically helps you with your work . You get to be a better leader and team player that leads to the successful completion of your expat assignment.

Experience the Local Cuisine

A Chance to Tour the City before Settle Down

Generally, international expatriate assignments can last from one to two years. It gives you ample time to check out and live in the city like a local . The timeline allows you to blend in with the locals, make friends, pay bills, and get to know the culture in and out. It also gives you a chance to find out if the work environment allows you to find a balance between work and life. Ultimately, before you end your contract, you will know if it’s the place for you to settle down.

Don’t Forget to Bring International Health Insurance with you.

To ensure you have a successful trip abroad, you must have the right international health insurance coverage.  Make sure your expat employer provides adequate coverage or enough money for you to buy your own coverage Note that not all companies provide proper coverage, so make sure you have a conversation with your employer or hiring manager about adequate international health insurance . Ultimately, it should cover an expat employee, their dependents, and even trailing dependents.

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International Assignments: New Roles and Responsibilities for HR

The crucial role of hr in managing international assignments.

The process of managing international assignments can be complicated. HR departments play a crucial role in making sure they run smoothly. Our managing partner, Stefan Remhof , lays out the specific tasks and challenges in this process, including additional complexities like sensitivity to our rapidly changing world and new roles within a company.

The challenge of international assignments for everyone involved

Sending employees abroad is challenging for everyone involved. From the employees and their families to the employer and company, international assignments are a huge change. More than a geographical shift, there are logistical, operational and operational nuances to consider. Financially, committing to international assignments signifies more than a mere allocation of resources; it symbolises a strategic investment in a company’s human capital. Navigating the complexities of international assignments requires a modern approach. Gain additional perspectives on this topic through the collaborative insights found in LinkedIn’s article on Managing International Assignments Effectively , which explores the challenges and strategies in managing these assignments effectively.

International assignments as part of career development

International assignments are designed to give employees’ careers a boost. Traditionally, they focused on knowledge transfer across borders. But this can now occur in a digital environment. Although international assignments remain an attractive asset, how people approach them has changed. Employees want to further their personal and cultural enrichment, as well as enjoyment. They have a desire to learn from foreign cultures, enhance their educational level and professional development. Their quality of life is more important to them than workplace performance. This modern shift places greater emphasis on employer attractiveness and employee retention.

The Growing Importance of HR’s Role in International Assignments

For a successful company attachment, structured collaboration from all stakeholders is vital. This is where the HR department becomes increasingly important. It’s their job to ensure the entire expat management process occurs without issues. HR helps provide solutions to support employees and their families, allowing them to successfully complete their objectives during the assignment. For a comprehensive understanding of how HR managers can ensure a smooth transition for employees, ARC’s detailed guide offers a Guide for HR Managers and Employees .

7 essential HR responsibilities in managing international assignments

• Preparing Employees: HR plays a crucial role in properly preparing employees for their expat assignment. This can include simple things like information about the destination country, its culture, lifestyle and work ethic. And it can also include more detailed intercultural training.
• Visa and Work Permits: This involves the procurement of all necessary visas and work permits, not just for employees but also their families. Here, HR plays a vital role in minimising stress for the employee and ensuring a smooth transition to their international assignment.
• Legal Issues and Compliance: International assignments can involve complex legal issues. But by closely monitoring legal standards and staying up to date, the HR team works to make sure international assignments align with both global regulations and the company’s internal compliance policies.
• Housing and Relocation Support: Relocation is complicated and cause unnecessary stress for employees when trying to adjust to a new environment. Taking an active role in supporting employees in the search for suitable housing makes a huge difference to the entire international assignment experience.
• Health Insurance Support: Ensuring employees and their families receive comprehensive and correct health insurance coverage throughout the entirety of their international assignment relieves the burden of trying to navigate new healthcare systems.
• Payroll and Taxes: Handling payroll processes and taxation in accordance with local regulation to ensure accuracy and compliance at all times.
• Post-Assignment Support: Extending support beyond the international assignment by assisting in the repatriation and reintegration process supports employees and reduces challenges upon return.

Naturally, HR departments may not have enough resources to manage all these responsibilities. External service providers can take over some or all of these tasks, with support and coordination from HR. Companies can choose how to delegate these responsibilities but they are nonetheless highly important and should not be overlooked. In order to support and offer international corporate global mobility, companies must develop the structures to offer security to employees and help contribute to their personal learning and professional development.

Developing a Global Mindset

Companies that operate on a global scale face the challenge of trying to maximise opportunities but minimise risks with global mobility. Strategically planning for staffing needs, especially for highly skilled workers, gives them a competitive edge. H2: The Evolving Role of International HR Management International HR management is constantly changing and adapting. Managing a culturally diverse global workforce across countries and cultures is a significant challenge requiring innovative solutions. Developing a global mindset is essential here, as well as ensuring an understanding of leadership among executives.

Sensitivity to a Changing World is essential for HR strategies

As the world undergoes shifts from globalisation to nationalisation once again, public sentiment is changing. Companies are now re-evaluating their global activities. Transparency is vital as companies relocate more of their operations back to their home countries.

Adapting to Changing Needs in International Assignments

The need for and importance of international assignments is changing for global companies. HR professionals and expat management specialists must integrate into different value systems to create a common work environment that encourages effective communication and common goal achievement.

More than ever, global companies need a deep understanding of local business practices and must understand the needs of local customers and stakeholders. Developing a global mindset among leaders and employees is essential. International HR management must take on a new role with different strategies and solutions in order to guide organisations through the uncharted waters of globalisation. This changing and modern role around the global workforce should also be reflected in university and college curricula.

Visit our content page for more information on expat management, international assignments and HR solutions for the global workforce.

Author: Prof. Dr. Stefan Remhof is a Professor of International Management at IU International University and Managing Partner of the People Mobility Alliance. He has many years of professional and management experience in the fields of education management, politics, the consumer goods industry, and financial services.

The Keys to Effective Expatriate Selection: Adaptability and Competence

Navigating global leadership: the essence of a global mindset, benefits of language proficiency in global talent acquisition, the transformation from hr tech to people tech, the evolution of the pma, the rise of workation as an employee benefit: key insights from leading german companies, the impact of remote work on the physical health of employees, how roles and capabilities of global mobility and talent management changed during covid-19, 6 experts explain the impact of remote and hybrid work on employee mental health, employee housing solutions: a key to hr success.

Alexia Schmolling Consultant

Alexia joined the pma in 2024 as transformation consultant. her focus lies on international hrm and mental health. she is responsible for content and partner management, and brings valuable insights from her international experience..

Stefan Remhof Managing Partner

Stefan joined the people mobility alliance at the beginning of 2023. he brings valuable insights into the academic side of people mobility into the alliance. together with co-founders daniel and mira he is part of the pma management team..

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Mira currently works for airinc in germany and has been working in global mobility since 2006. of german-indian origin, she has lived and worked in different countries but spent the majority of her working life in london before moving back to her native germany in 2019. she believes that personal connection and experiences are the key to successful business interactions. and that even in business, it’s the person behind the employee that makes all the difference..

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Daniel is a global workforce consultant, podcaster and investor. cultural diversity and global collaboration have been his passion for more than 20 years. he has worked in global mobility for various corporations in many different countries, but is currently based in berlin, where he enjoys the city’s creativity, diversity and open mindset., the members of the people mobility alliance are united by the same passion: fostering cultural diversity and embracing technological advancement. we welcome everyone who is open to new perspectives, likes to give and receive new ideas and who will therefore help shape this alliance. find like-minded people and exchange ideas about relevant topics, such as hr strategy, digitization, transformation processes and more. most importantly, help drive change in how people mobility is performed. join today..

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What Is an Expatriate?

Understanding expatriates.

• Retiring Abroad

Foreign Earned Income Exclusion

Foreign tax credit, expatriation tax.

• Pros and Cons of an Expatriate

The Bottom Line

• Taxpayer Types

Expatriate (Expat): Definition, With Pros/Cons of Living Abroad

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

Investopedia / Julie Bang

An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another.

Key Takeaways

• An expatriate is somebody who has left their country of origin in order to reside in another country.
• Expats may leave home for work reasons and seek more lucrative employment in a different country.
• Expatriates may live for a while overseas or completely renounce their citizenship of one country in favor of another.
• Retiring abroad has become an increasingly popular option.
• The IRS may impose an expatriation tax on individuals who renounce their citizenship, usually based on the value of a taxpayer's property or income in the United States.

An expatriate is a migrant worker who is a professional or skilled worker in their profession. The worker takes a position outside of their home country, either independently or as a work assignment scheduled by the employer, which can be a company, university, government, or non-governmental organization.

If your employer sends you from your job in its Silicon Valley office to work for an extended period in its Toronto office, you would be considered an expatriate or "expat" after you arrive in Toronto.

Expats usually earn more than they would at home, and more than local employees. In addition to salary, businesses sometimes give their expatriate employees benefits such as relocation assistance and housing allowance. The expat will need to open a local bank account that will allow them to function in their new home.

Living as an expatriate can be exciting and present an excellent opportunity for career advancement and global business exposure, but it can also be an emotionally difficult transition that involves separation from friends and family while adjusting to an unfamiliar culture and work environment. Hence, the reason behind the higher compensation offered to these migrant workers.

Special Considerations: Retiring Abroad

Much expatriation occurs during retirement. While most Americans spend their retirement in the U.S., a growing number are opting to retire overseas . People are motivated to relocate abroad at an older age for several reasons , including lower cost of living, better climate, access to beaches, or some combination of those and other reasons. However, it can also be tricky to navigate taxes, long-stay visas, and the language and cultural differences experienced when settling down in other countries.

Popular retirement destinations include countries in Central and South America, the Mediterranean, and parts of Europe.

A common choice presented to a retiree expat is between permanent residency and dual citizenship. Note that neither dual citizenship nor residency gets you out of filing a U.S. tax return every year. It is both surprising and burdensome, but Americans still have to pay income taxes wherever they live, and they owe it no matter where their income was earned.

You may also have to file an income tax return in your country of residence, although most deduct the amount American residents pay to the U.S. via treaties that minimize double taxation.

If you're a retiree or near-retiree who's on the fence, you face a tough decision that will require some soul searching and research—and maybe a trip abroad (or several) to test the waters before you make any decisions. Some Social Security benefits might travel abroad with you, but you might have to forego benefits like Supplemental Security Income (SSI).

For Americans working abroad as expatriates, complying with United States income tax regulations is an added challenge and financial burden because the U.S. taxes its citizens on income earned abroad. To avoid double taxation , the U.S. tax code contains provisions that help to reduce tax liability . Taxes paid in a foreign country can be used as a tax credit in the U.S., which when applied against the expat’s tax bill, reduces it.

The Foreign Earned Income Exclusion (FEIE) , for example, allows expats to exclude from their tax returns a certain amount of their foreign income, which is indexed to inflation. For 2023, this amount is $120,000. For 2024, it is $126,500. An expat that earns, say $180,000 in 2023 from their job in a foreign country that is tax-free will only need to pay U.S. federal income tax on $180,000 - $120,00 = $60,000.

The FEIE does not apply to rental income or investment income. Therefore, any income made from interest or capital gains from investments will have to be reported to the IRS. The Foreign Tax Credit (FTC) is a provision that ensures expats are not double-taxed on their capital gains.

For example, assume an expat falls in the 35% income tax bracket in the U.S. This means their long-term capital gain on any investment is taxed at 15%.

Since the FTC provides a dollar-for-dollar credit against taxes paid to a foreign country if the expat paid 10% tax to the country where they work, they'd only have to pay 5% tax to the U.S. Likewise, if they pay no tax to the foreign country, they’ll owe the full 15% tax to the U.S. government.

If the income tax paid to a foreign government far exceeds the amount of the credit (because the foreign tax rate far exceeded the U.S. rate), the expat will forfeit that amount. The credit, however, can be carried into the future.

An individual who has renounced their citizenship in their home country and moves to another is also referred to as an expatriate for tax purposes and is subject to an exit tax known as expatriation tax .

According to the Internal Revenue Service (IRS), the expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes .

This emigration tax applies to individuals who:

• Have a net worth of at least $2 million on the date of expatriation or termination of residency
• Have an average annual net income tax liability that is more than $190,000 if the expatriation date was in 2023 ($201,000 if the expatriation date is in 2024) over the five years ending before the date of expatriation or termination of residency
• Do not (or cannot) certify five years of U.S. tax compliance for the five years preceding the date of their expatriation or termination of residency

Advantages and Disadvantages of Becoming an Expatriate

Living and working in another country for an extended period of time can have its benefits. These can range from new experiences and adventure to more practical considerations like a lower cost of living or being closer to extended family abroad. Depending on where you settle, you may also get government perks like free healthcare and education and more favorable taxation.

There are also some potential drawbacks. Regarding taxation, unless you fully relinquish your American citizenship, you will still need to file tax returns each year and may need to pay taxes to Uncle Sam, even on income earned in your new country.

You'll also be a long way from home, potentially. This can make seeing friends and family more difficult, and time zone differences can also interfere with finding a good time to link up by phone or video chat. Learning a new language and customs can also be difficult for some, and certain items or products that you like may not be available where you live. And remember that not all countries enjoy the same level of political and economic stability that the U.S. does.

New experiences and maybe a better climate

Potentially lower cost of living

Potential access to affordable healthcare

Potential for double taxation

Long way away from friends and family

Language, cultural, political, and economic barriers

Potential challenges securing the proper visa

What Does It Mean to Become an Expatriate?

An expatriate or "expat" is somebody who leaves their country of origin and settles abroad for an extended period of time, often permanently.

What Is Expat Taxation?

Americans living overseas still have to file U.S. tax returns unless they relinquish their American citizenship. Several international tax treaties exist to help minimize double taxation.

What Is an Expat Community?

When people relocate to a foreign country, they often find comfort in seeking out other foreigners, especially from their home country. Expat communities are enclaves of people from a similar national origin, often with their own school and shopping options. In many countries, English-speaking enclaves are called "Anglo" communities.

Expats typically have to navigate a complex web of tax rules and regulations, which can be challenging to understand and comply with. Though retiring abroad to a lower cost of living, there are retirement considerations to comply with. In addition, expat U.S. Federal taxes are complicated, though they may rely on tax credits and income exclusions to receive favorable U.S. tax treatment.

Bonache, Jaime, and et al. " The Interaction of Expatriate Pay Differential and Expatriate Inputs on Host Country Nationals' Pay Unfairness ." The International Journal of Human Resource Management , vol. 20, no. 10, October 2009, pp. 2137.

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International Living. " The World’s Best Places to Retire in 2023 ."

World Economic Forum. " The World's Best Retirement Destinations Might Surprise You ."

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Internal Revenue Service. " IRS Provides Tax Inflation Adjustments for Tax Year 2024 ."

Internal Revenue Service. " Foreign Earned Income Exclusion ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ," Page 15-16.

Internal Revenue Service. " Foreign Tax Credit ."

Internal Revenue Service. " Topic No. 409, Capital Gains and Losses ."

Internal Revenue Service. " Foreign Taxes that Qualify for the Foreign Tax Credit ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ," Page 24.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ," Pages 23-24.

Internal Revenue Service. " Expatriation Tax ."

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions; Rev. Proc. 2023-34 ," Page 21.

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions: Rev. Proc. 2022-38 ," Page 19.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ," Page 24.

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Structuring Expatriate Postings

Multinationals inevitably post expatriates abroad. But in setting up expat postings, employers too often either ignore the question of how best to structure the expat assignment or else they struggle with the expat structuring issue. The reflexive or default approach to structuring expat assignments is simply to grab whatever expat assignment package got used for the last expat posting, change the names, make some tweaks and move on. But this approach is dangerous. When posting an expatriate, focus instead on the most ideal structure for the particular assignment.

Expatriate assignments traditionally came about when a multinational tapped an employee and assigned him to go off to work abroad for one of three reasons: to support a foreign affiliate, as a broadening assignment, or to serve as a “foreign correspondent” performing tasks overseas for the benefit of the home-country employer. But multinationals these days increasingly see these traditional expatriate assignments as less effective.

The wider range of expat postings we see today raises ever more questions of expatriate assignment structure. How best to structure a given expatriate assignment requires addressing four topics:

• Who is, and is not, an expatriate?
• Understanding the four expatriate structures.
• Selecting among the four expatriate structures.
• Expatriate agreements.

Who Is, and Is Not, an Expatriate?

It is always dangerous, and almost always needlessly expensive, to structure a nonexpatriate’s employment as if he were an expatriate. Before structuring any expatriate assignment, first verify whether the candidate really is a business expatriate.

Broadly speaking, an “expatriate” is anyone who lives in a foreign (non-native) country. Relevant for our purposes, a business expatriate is an employee originally hired by and working for a multinational in one country whom that employer now reassigns to work temporarily abroad in a new overseas place of employment. A business expatriate always expects to return home—to be “repatriated”—at the end of the assignment. An overseas assignee with no expectation to repatriate is a “permanent transferee,” not a business expatriate.

Watch out for false expats—internationally mobile employees who are not genuine business expats and who should therefore not get structured as expats. For example, some short foreign postings and assignments get staffed by business travelers who, as mere travelers, are not genuine expats. A business traveler remains employed and payrolled by his home-country employer entity, and his place of employment remains his home country. The traveler goes abroad to render services, sometimes on a “posting” or “assignment” of several months that requires a visa or work permit. But his time working abroad is short enough that the host country never becomes his place of employment, not even temporarily.

When a business traveler stays overseas long enough, as a matter of host-country law his place of employment shifts at some point to the host country. He then becomes a so-called “stealth expat” or “accidental expat.” Stealth/accidental expat status is an internal misclassification that triggers legal problems under host-country immigration, payroll and employment laws, as well as “permanent establishment” issues. Multinationals should of course be careful to classify stealth/ accidental expats as actual business expatriates. On the other hand, multinationals should also be careful not to classify mere business travelers as business expatriates.

Another example of a false expatriate is the foreign hire. Multinationals often recruit candidates in one country for jobs in another country. For example, American multinationals recruit security guards and technicians in the United States to work jobs overseas on compounds in the Middle East or oil fields in Africa. And Silicon Valley tech companies recruit graduates from universities in India to come stateside to work jobs in California. These are foreign hires, not business expats—these employees may be emigrants and they may need visas to work in their places of employment, but they are not business expatriates because all their work for the employer is performed at one place of employment in one country. Some foreign hires get to participate in rich company expat benefits plans, but—contrary to a widespread misunderstanding among human resources professionals—eligibility under a company’s expat benefits program does not convert a foreign hire into a business expatriate.

Always clarify internally who is, and is not, a genuine business expatriate. Never structure nonexpats (like business travelers and foreign hires) as expats, even if they get to participate in an expensive expat benefits program.

Understanding the Four Expatriate Structures

Only genuine business expatriates should get structured as expats, but how best to structure an expat assignment? There is no one single best way to structure an intracompany business expatriate posting because there are four viable types of expat structures. Different circumstances point multinationals to select various options among these four. And yet in one way or another, all business expatriates end up falling into one of these four categories: direct foreign posting, secondment, temporary transfer/localized, and dual-/co-/joint-employment.

Direct foreign posting. In a direct foreign posting, a business expatriate remains employed and payrolled by the home-country employer entity but his place of employment shifts to a new foreign host country. The expat renders services directly for the home-country entity, not for a local host-country affiliate. Direct foreign postings are easy and attractive to set up, but compliant ones are rare, because host-country immigration and payroll laws make this a fragile status tough to structure legally.

Secondment. “Secondment” means “employee loan.” Not all secondees (lent-out employees) are expatriates, and not all expatriates are secondees. In an expatriate secondment, the expat remains employed by his home-country employer entity. He moves abroad to a new host-country place of employment and starts rendering services for a new host-country employer entity, usually an affiliate or joint venture partner of his home-country employer. The secondee might be payrolled by either the home or host-country entities, or by both (via a split payroll). Some secondees stay on the home-country payroll while the host-country entity issues a “shadow payroll” to comply with local payroll laws.

Temporary transferee/localized. An expatriate transferee, also called a “localized” expat, moves abroad and gets both hired and payrolled by a new host-country employer, often an affiliate or joint venture partner of the home-country employer. The transferee resigns from his home-country employer and simultaneously signs on with the host-country entity, which usually extends retroactive service/seniority credit. While working in the new host-country place of employment, the transferee renders services exclusively for the new employer without retaining any lingering employment relationship with the old home-country employer, other than perhaps a side-letter or e-mail addressing post-assignment repatriation expectations. Yet an expat transferee’s localization is temporary; he expects some day to repatriate and get relocalized at his original home-country employer location.

Dual-/co-/joint-employee. A dual-/co-/joint-employee expatriate is an expat who simultaneously serves two masters, the home and host-country entities, essentially on a moonlighting basis—one employee simultaneously working two jobs, or working one job actively while retaining status as “on leave” from another employer entity. A dual-/co-/ joint-employee expat may be payrolled by either or both employer entities via a split payroll.

Selecting Among the Four Expatriate Structures

With these four distinct expat structures, the question becomes: Which of the structures is most appropriate for a given expat assignment? Answering this is a lot like selecting among business entity structures—sole proprietorship, closely held company, publicly traded company, limited liability company or partnership. We actively select the best business entity structure each time based on specific needs—not on how we may have structured some other entity at some time in the past.

So with expat assignments, always select the most appropriate of the four expat structures for the particular assignment, without regard for whatever may have been the best selection last time. Your last expat may have gone off to a country where you have an already-operating host-country entity affiliate, whereas this current expat may be off to a place where you have no on-the-ground infrastructure. Or your last expat may have participated in your company expat benefits program, whereas this current expat may be transferring abroad for personal reasons that render him ineligible for a company package. Or your last expat may have gone abroad to serve an overseas affiliate, whereas this current expat may be off to work as a foreign correspondent directly for the home-country entity. In posting a given expat abroad and selecting among the four expat structures, factor in three sets of variables: immigration laws, payroll law compliance and corporate tax presence. How these three variables play out as to any given expat posting will point to the structure most appropriate for the particular expat assignment.

Expatriate Agreements

Having selected the most appropriate of the four types of expatriate structures for a given expat assignment, a multinational next needs to decide how best to memorialize (document) its expat assignment. There are two very different kinds of expat agreements: an expat assignment agreement between the expat and the employer and an inter-affiliate assignment agreement between a home-country employer entity and a host-country affiliate entity, to which the expat is not a party. Document an expat assignment using one or both agreements, as appropriate.

Donald C. Dowling is a partner in the New York office of White & Case.

Republished with permission. © 2013 White & Case. All rights reserved.

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How to Return Home After an Assignment Abroad

• Andy Molinsky
• Melissa Hahn

The reverse culture shock may surprise you.

You’d think that the biggest cultural challenge when going abroad for an assignment would be acclimating to the foreign culture you’re moving to. But sometimes coming back home can be even more difficult. After working in a new location, you may discover that you’ve adapted your cultural style to meet the new culture. You may be stunned to feel alienated in your own culture when you’re acting “naturally” based on aspects of a new culture you’ve just learned. When reverse culture shock hits, it can be discouraging, but if you approach it right, it can be a productive growing pain, rather than a permanent condition. First, anticipate and prepare for your return home in a similar way that you prepared for your initial sojourn abroad. Second, incorporate your new cultural style in different ways. Finally, find a way to appreciate, honor, and make sense of the new “you.”

You’d think that the biggest cultural challenge when going abroad for an assignment would be acclimating to the foreign culture you’re moving to. After all, it’s well known that expat life compels people to stretch beyond their cultural comfort zones; whether moving from Barcelona to Beijing, or from San Francisco to Stuttgart, you will encounter cultural challenges. These are challenges that you can generally anticipate and prepare for, and they are also ones that tend to come with some degree of support and resources, whether through your company or a local expat community. What you likely haven’t prepared for — and what can sometimes be even more challenging — is the cultural adjustment of moving home.

• Andy Molinsky is a professor of Organizational Behavior and International Management at Brandeis University and the author of Global Dexterity , Reach , and Forging Bonds in a Global Workforce . Connect with him on LinkedIn and download his free e-booklet of 7 myths about working effectively across cultures .
• Melissa Hahn teaches intercultural communication at American University’s School of International Service. Her new book, Forging Bonds in a Global Workforce (McGraw Hill), helps global professionals build effective relationships across cultures.

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