Multinational companies increasingly have internationally mobile employees (IMEs) who perform services in more than one country, other than their country of citizenship, during a single taxable year. It can be quite challenging to manage legal compliance and tax risks with a globally mobile workforce using a typical secondment arrangement. Under this arrangement, an IME is employed by the home country (usually the place of citizenship) employer and is then assigned or seconded to work in a host country. This approach can result in several entities within a multinational company’s controlled group having multiple assignment letters for each IME, without having any common administration.
A global employment company, or GEC, is an entity established by a multinational company to employ its IMEs. In effect, the GEC serves as a leasing company that is responsible for the employment, compensation and benefits, immigration and income and social tax matters for IMEs. The GEC provides the assignment letter to the IME, pays – or arranges with a third party to pay – compensation and benefits, and handles all required administrative support for the assignment. The GEC in turn charges a service fee to each entity that uses the IME’s services.
For more details about GECs, read the full article here.