Expatriate compensation management is a Bristol core competency. We coordinate all aspects of international assignee compensation for clients including initial pay schedules, foreign allowance calculations and updates, payroll reporting, compensation accumulation, year-end total compensation reporting and more, accompanied by ongoing communication with client HR and payroll departments, external tax providers and assignees themselves.
As 2019 draws to a close, Bristol is completing the critical year-end compensation collection and reporting activities for our clients. We’d like to offer some brief practical insights to help you improve your own year-end efforts.
WHY IS THIS IMPORTANT?
In a word - Compliance: Companies are obligated to report all pay and benefits provided to each assignee during the previous year, and ensure all is accounted for on official year-end wage statements such as the (U.S.) W-2 form. This includes salary, bonus, benefits, pre-tax deductions, actual and hypothetical tax withholding in addition to payments such host-location rent and utilities, car or transportation allowances, relocation expenses, cost of living allowances (COLA), tax gross-up payments, lump sum allowances… everything, including cash and in-kind benefits.
Bristol prepares a final, thorough and accurate year-end Global Statement of Earnings (GSOE) for each assignee that is ultimately delivered to your company’s third-party tax provider who will in turn ensure compliant and accurate filing to worldwide tax authorities.
KEYS TO A SUCCESSFUL YEAR-END: Start early. Communicate. Collaborate.
“Year-end is actually an all-year process” says Boris Matatov, Bristol’s Manager of Global Compensation. Each client’s process is customized to them, and includes ongoing relocation expense management and payroll reporting. “Starting early is key. We work very closely from the beginning of each relocation to confirm the applicable policy, the complete pay and benefits package, and review the reporting requirements.”
Good communication is also vital: Between Bristol, company HR and Payroll, host country business unit stakeholders, and the third-party Tax Provider to ensure a clear understanding of respective roles and accountabilities. Planning and setting expectations upfront will save time, effort and money while ensuring a thorough and compliant delivery.
Develop a year-end calendar: Bristol advises establishing a detailed schedule which should specify all necessary information including due dates, payroll cutoff dates and departmental responsibilities – making sure to allow ample lead time needed for verification and processing. And In establishing due dates remember that year-end isn’t always December 31st: Australia and the United Kingdom are examples of countries with different deadlines.
Ensuring Data integrity - The Audit Process: We recommend that data from the host countries be reported into Bristol monthly, or quarterly at a minimum, as regularity and repetition achieves an effective communications flow and manageable amounts of data, along with a clear escalation path if any questions arise along the way. As the data is received, we audit for reasonability based on our knowledge of the client’s policy and the specific allowances unique to each assignee as set forth in the Assignment Letter. Central to the process is Bristol’s Elite technology platform, which enables secure data entry and audit.
The home stretch: As Q4 approaches we normally convene an all-stakeholder conference call in late September/October to assess the status of the collection process, remind all parties of the importance of compliance and accuracy, reconfirm roles, responsibilities and reporting deadlines. Again, the involvement of your tax firm at this meeting is crucial to understand what is required and by when. With the proper steps taken all year to track and collect data, year-end then becomes a very manageable process of verification, reconciliation, reaching out to stakeholders and escalation if necessary for confirmation and to fill any gaps well in advance of reporting deadlines.
Review and Plan for 2020: How is YOUR year-end going? Please do not hesitate to reach out to Bristol if you have any questions or need assistance as the 2018 deadlines approach. If in reviewing your own processes you feel they could be improved, let’s begin laying the foundation for 2020 now.
Remember: Start Early. Communicate. Collaborate! If you have any questions on how Bristol can assist with your compensation needs, please contact your account director or reach us at, email@example.com