One of the most difficult aspects of a supporting a globally mobile employee is delivering their pay. Generally, there are three options:

  • Home Country Pay Delivery
  • Host Country Pay Delivery
  • Split Pay Delivery

This newsletter highlights the benefits and drawbacks of each option and provides a summary of other issues to consider when delivering pay to globally mobile employees.

Home Country Pay Delivery

Under this method, the employee continues to be paid from the home country payroll in home country currency, just as before the assignment. This option is generally used when the employee is an extended business traveler or on a short-term assignment. This pay delivery method can be used for long term assignments where the company has support in place to deliver allowances or make certain payments in the host location.

For example, the company sends an employee from the US to Ireland for a four month training project. The employee stays on US payroll and is paid in US Dollars; they continue to participate in US benefits and US retirement plans.


  • The employee can remain on home country benefits, continue funding social tax payments easily, and receive funds "at home" to cover home country expenses such as a mortgage.
  • The company can continue current practices--no administrative changes in pay delivery are necessary.


  • The employee is receiving funds in the home country currency, but may have to pay bills in the host country currency. The employee, therefore, bears exchange rate risk for expenses they pay locally in the host country. Funds paid in the host country must often be converted (e.g., by wire transfer or credit card), sometimes incurring costly fees.
  • Tax implications in the host country typically do not directly correspond with compensation delivery. Accordingly, earnings may need to be reported, and tax paid, in the host country (even if the employee's pay is delivered entirely from the home country payroll). Business traveler or supplemental medical coverage may need to be purchased to ensure there are no gaps in coverage while the employee is in the host country.

Host Country Pay Delivery

For this method, the employee is no longer paid from the home country payroll, but rather is 100% paid from the host country payroll. This option is typically used when the employee is a permanent transfer.

To illustrate, the employee terminates employment with the US company and transfers (permanently / indefinitely) to the subsidiary in Brazil. They are placed on the Brazilian payroll and are paid in Brazilian Real. They are removed from the US payroll, benefits, and retirement plans, begin contributing to the Brazilian retirement plan, and enroll in Brazilian benefits.


  • The employee has funds in local currency to pay local expenses.
  • The employee is supported in their efforts to integrate into their new location; they are paid like other local employees.
  • The employee's benefit plan is locally appropriate.
  • The employee begins contributing to the retirement plan of their new country, consistent with their plan to remain in the host country.


  • If an employee is paid entirely from the host country payroll and has previously terminated employment with the home country company, they may (if they ultimately return to their home country) lose out on some or all of their retirement benefits. Credit for years of service may help alleviate some of this impact.
  • The employee may have continuing financial obligations in the home country. They will have to manage the cash flow and bear the cost or benefit of any exchange rate fluctuation for these home-based expenses.
  • If the employee is an outbound US citizen, they have an ongoing (annual) US tax reporting obligation, and potentially a US tax liability. Since they are no longer on US payroll, no US tax will be withheld. They will need to make any US tax payments required directly to the US Internal Revenue Service.

Split Pay Delivery

Under this method, a portion of the employee's pay is delivered from the home country payroll and a portion is delivered from the host country payroll. The payroll delivery is thus "split" between two payrolls and two currencies. This method is often used when the employee is a long term assignee with continuing financial obligations in, and the intention to return to, the home country.

As an example, an employee is going on a two year assignment to Germany, after which they will return to the US. A portion of their pay would be delivered from the US company payroll in US dollars, and the balance from the German company payroll in Euros. They participate in the US social tax system and the US retirement plan, while receiving sufficient net pay in Germany to fund ongoing expenses.


  • The employee receives funds in the currency they need, in the country where they need the funds. Thus, exchange rate risk and banking fees are minimized
  • The employee enjoys uninterrupted participation in the home country retirement plan and social tax system.
  • The company can monitor cost of living in the host country and adjust the delivery split for changes in cost of living in the host location if necessary or at the employee's request.


  • The employer takes responsibility to administer the "split" payroll using the balance sheet approach. Management of this can be challenging without established procedures.
  • The home and host country payrolls must be coordinated to ensure the payments are made correctly (and that duplicate payments are not made to the employee).
  • Compensation reporting is complicated due to payments being delivered in multiple locations.

Other issues to consider

Specific country regulations may limit your options when setting up a compensation delivery strategy. In some countries, the employer may prefer to deliver a limited amount of cash in the host country currency to avoid having a large cash balance in that currency (e.g., in Argentina or other countries with currency controls). Immigration regulations may also impact planning, as some work permits require that a minimum salary level be paid in the host country.

Further, by properly structuring the compensation elements and managing the timing of the delivery of compensation and allowances, the company may achieve significant tax savings. For example, assignment length or tax reimbursement methodology may have an impact on whether an item is subject to tax. We recommend exploring these opportunities with your mobility tax professional before the start of a global assignment.

While payroll reporting is outside the scope of this article, each pay delivery method outlined above entails specific compensation reporting issues. The specific facts and circumstances of each country, and the individual's situation, must be evaluated to ensure an appropriate strategy is implemented.


In the above examples, the company implemented the pay delivery method that was (based on their needs) best suited to the type of assignment. In each case, the company tried to ensure the employee was (to the extent possible) protected from currency fluctuations, had the appropriate currency to pay bills in both countries, and participated in the retirement plan that best reflects their needs.

We've mentioned a few issues to consider when implementing a home, host, or split payroll delivery method. Employee convenience and compliance with regulations should be considered and balanced with the company's capacity and willingness to undertake additional administrative work. As we reach mid-year, now may be a great time to re-evaluate your organization's process for compensation delivery so the appropriate procedures and controls can be implemented.

If you have any questions regarding your global mobility pay delivery challenges, please feel free to contact your GTN account manager or Brett Sipes at

The information provided in this newsletter is for general guidance only and should not be utilized in lieu of obtaining professional tax and/or legal advice.

mobility tax blog