Karina had been asked by her Norwegian employer, ABC AS to work in Shanghai for a couple of years to lead a project. Karina was willing to take the next step in her carrier and started the negotiation with her HR Manager. Initially, she wanted to make sure that she would be compensated properly and that she would not lose the basic rights to her pension and insurance coverage that she was promised with ABC AS if she accepted the offer.
Company’s International Assignment policy document and the guidelines helped Karina to understand the basic requirements and compensation structure for international assignments in ABC AS. After a few hours of discussions with her HR Manager, she agreed to the following compensation and benefits;
Contract was signed and they went on with practical arrangements for the move.
Earning salaries in China on an L (“tourist”) visa or an X (“student”) visa is illegal. So Karina had to apply for a “Z visa” to enter China. Upon arrival, Karina needs to obtain her work and residence permits which will allow her to legally work in the country.
Karina left Norway on the 31st of January 2013 and arrived in Shanghai on the same day. She spent the first three days to make some practical arrangements and joined the office on Monday the 04th February.
Karina received very good services by the local relocation company, who assured that Karina moved into the apartment and bought all relevant household articles the first week after she arrived. She also attended a day-long cultural training course arranged by the selected provider in Shanghai. Karina enjoyed working in a multinational environment and found herself adapted to the local management style in an impressive speed.
Back home, the HR manager starts with the application for the social security membership in Norway as well as the practical issues related to tax deductions and cost reimbursement arrangement for Karina’s expense claims through ABC’s payroll in Norway. Everything seems to be in place and both parties are happy so far.
On a Monday morning three weeks after, the Tax advisor from Shanghai sends an email to HR manager, explaining the process they are about to start towards the Chinese tax/social security authorities. There is a cost estimate attached to the email, explaining the need for payments as soon as possible in China. The HR manager was not expecting this additional expense to be paid in China and he made a phone call to the tax advisor to get some explanations. Here are the facts that made the HR manager a bit confused;
Well, since there is no bilateral social security treaty between Norway and China, there is a double coverage and additional costs for ABC AS. The Company has to accept the additional cost in order to secure the appropriate benefits for Karina, as promised in her contract. Ok, the next item is Tax.
In practice, a careful allocation between cash/non-cash benefits prior to making Assignment compensation package could have saved ABC AS a considerable amount of tax costs in China. This is not good news to the managers of the project, - the HR manager needs to reconsider his initial cost estimate and make some accruals to meet the additional costs.
Good knowledge, reliable and constructive advice as well as thorough preparation and planning should enable your company a good financial and HR overview throughout the assignment period. It is our aim to become your provider in this respect.
You may send a request for informal meeting with us to see how we can help to organize your international assignments.
This program consists of a customized presentation of possible challenges your company will be facing when sending your employees on temporary assignments to other countries
Our training program can be set up as workshops with the key decision makers in your company to identify the tasks and agree upon the steps to be taken care of in each employee mobility case.
We provide the practical assistance to make sure that the steps that are identified in the workshop session are taken care of in both home and host countries. You will save time and money by outsourcing the mobility process to us.