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Commonly Used And Misunderstood Terms In Global Mobility
Global Mobility Glossary
A1 Certificate :
A document used within the European Union (EU) to verify which country’s social security system covers an employee working in the EU
Assignment policy :
Guidelines and rules set by an organization to manage the terms and conditions of an employee’s international assignment
Balance sheet approach :
A compensation approach used in expatriate assignments where the goal is to keep the employee financially whole compared to their home country situation
Certificate of Coverage :
A document issued to employees who are working abroad, to certify that they continue to be covered by their home country’s social security system
Cost of Living Allowance (COLA) :
An allowance given to expatriates to account for differences in living costs between the host and home countries
Cost projection :
An estimated financial analysis to forecast the total cost of an employee’s international assignment, including all expenses. and taking into account the duration of the assignment, differences in living standards and costs, tax differences, and fluctuations of exchange rates
Cultural training :
Training provided to employees and their families to help them adapt to the culture of the host country
Destination Services :
Services provided to assist an employee in settling into the host country, including house hunting, school search, and orientation tours
Dual Career Support or Spousal Support :
Assistance provided to the spouse or partner of an expatriate in finding employment or other productive activities in the host country
Economic Employer :
A concept used in international taxation to determine which entity is considered the actual employer for tax purposes, especially in cases of cross-border employee assignments or secondments, as opposed to the traditional legal employer, i.e. the entity that formally employs and pays the individual
Expatriate (expat) :
An employee who is sent by their employer to work in another country for a temporary period
Global Mobility :
The act of relocating employees to different countries for the purpose of work, including assignment planning and management
Global nomad :
Also referred to as a professional expat, this is an employee who moves frequently between different countries for work assignments, without a fixed long-term base
Hardship allowance :
Additional compensation provided to employees assigned to locations where living conditions are considered difficult or hazardous
Home country :
The original country where the employee is based before being assigned overseas
Host country :
The country to which an employee is relocated during an assignment
Hypo tax :
Hypothetical tax or hypo tax is the theoretical tax calculated on the income, usually in the home country
Immigration compliance :
Ensuring that all visa, work permit, and legal requirements are met for an employee to work legally in the host country
Local plus package :
A compensation package offered to expatriates, typical including local salary with some additional benefits to cover the costs of living abroad
Long-term assignment :
An international work assignment that usually lasts more than a year
Mobility Premium :
Additional compensation or benefits provided to encourage employees to accept international assignments
Permanent Establishment :
In international taxation, this refers to a fixed place of business through which the business activities of a foreign company are wholly or partly carried out in a host country, and which may incur tax and compliance liabilities for the foreign company in the host company
Permanent Transfer :
When an employee is relocated to another country without a defined end date, effectively changing their home country for employment purposes
Relocation package :
The package of allowances and benefits afforded to an employee to cover the cost and provide support when moving to a new country
Repatriation :
The act of returning an expatriate employee to their home country after completing their assignment
Secondment :
A temporary transfer or assignment of an employee to a different role within the same organization or to a different organization
Shadow payroll :
Shadow payroll is treating an employees salary and benefits as if they were paid in the host country, for tax and social security calculations, but keeping payment in the home country. In this way the home payroll is shadowed into the host to ensure compliance
Short-term assignment :
An international assignment typically lasting less than twelve months
Tax equalization :
A tax policy designed to make sure employees are kept to the same tax level during the assignment as they would have had in their home country
Tax protection :
A tax policy designed to make sure the employee is protected from a higher tax level during the assignment as they would have had in their home country
Tax reconciliation :
A document and exercise dividing the responsibility for tax between the employee and the employer, as well as allocating deductions etc.
Third country nationals :
Can refer to an employee who is working in a country that is neither their home country nor the country where their employer is based