Employees abroad: your obligations as an employer

In these times of the COVID-19 pandemic, the health and safety of employees has become a priority issue for companies. For companies looking to deploy employees overseas, this can become a real headache. Because in addition to health and safety issues, companies posting employees overseas need to do good planning.

In addition to making sure they are in good standing with immigration, they must also take into account several tax and social issues. Do you want to deploy employees abroad? Here are your tax obligations as an employer.

Factors to consider

Tax authorities in foreign countries ensure that foreign workers meet their local tax and social obligations. These depend on several factors, including:

  • the corporate structure used;
  • the territory of origin of the seconded employees;
  • the company’s activities in the host country;
  • the presence of a tax treaty between the posting territory and the host territory;
  • the presence of a social security agreement between the posting territory and the host territory.

It therefore becomes very important to assess the situation surrounding your secondment in order to optimize the cost of it. It will also be wise to use the different applicable agreements depending on your situation.

Employers’ tax obligations

A business that posts employees overseas should be aware of the tax obligations of the foreign country where its employees work. This will allow him to meet his tax reporting, withholding and remitting obligations, which may vary depending on the situation.

So, if a tax treaty between the two countries is in effect, your employees may not be subject to foreign tax.

In some cases, you may also be considered, within the meaning of the law, to carry on a business in that country. Much will depend on the type of work your business does overseas. If so, you may be required to register for taxes and file an annual income tax return showing income earned in that country.

As you can see, there are several things to consider when a company wants to deploy employees overseas. Given the complexity of the rules surrounding secondment, we invite you to consult our tax experts in order to validate what applies to your situation.

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About the author

Éric Jobidon, tax expert, B.A.A., D. Fisc.

Holder of a bachelor's degree in business administration (B.A.A.) and a graduate degree in taxation (D. Fisc) from Université Laval, Eric has more than 15 years of experience in expatriate taxation. During his career, he was able to perfect his knowledge in the tax field by working in companies as well as in large accounting firms. With his in-depth knowledge of Canadian and US individual taxation, Eric helps his clients to maximize their tax situation. His expertise in the analysis of tax treaties and social security agreements also allows him to advise them on the structure to use for their employees posted abroad.