Tax Gross up on Newly Taxable Relocation Expenses?
Most surveys show that the vast majority of US companies currently do tax assist on taxable relocation expenses (70-80% depending on the survey). And, of those that tax protect these expenses, the majority (65-75%) base this gross-up on the Federal and State supplemental rates. The IRS yesterday came out with the new tax rates and guidance for the supplemental rate of 22%. https://www.irs.gov/newsroom/updated-2018-withholding-tables-now-available-taxpayers-could-see-paycheck-changes-by-february. The good news for the mobility industry is that the supplemental rate has fallen and is lower than some predicted, the bad news, of course, is that previously deductible moving expenses are now taxable. One of many big questions is, how will the changes in the new tax law eliminating moving expense deductions mean that companies will change their policies? In particular will policies attempt to keep costs in line with prior years by reducing benefits, or perhaps shifting the tax burden of benefits to employees? Or will companies tax protect (gross-up) those previously tax-free items with no change in benefit? Over time there will be some shift in policies. For many years the mobility industry has been fighting the trend toward lump-sum policies and now the easiest argument against them, the tax advantages in the direct benefit program is gone. It’s basic economics, the Law of Demand, organizations are unlikely to purchase the same quantities of moving services now that it will be dramatically more costly to provide them. I’d love to hear comments, companies are clearly looking for guidance!
Five Tips for Effective Mobility Supplier Selection
At this month’s Bay Area Mobility Management (BAMM) conference, I spoke with several of my friends in the industry who’ve shared with me (usually with a very pained expressions on their faces) that they “have to rebid” parts of their mobility program. I’m not sure that anything elicits the kind of dread from the people I know in HR and Mobility that having to do an RFP or to select/reselect suppliers seems to. I understand their pain. For starters, putting together and managing an effective RFP is a lot of work. But really, none of the people I spoke to are afraid of work or are lazy. I don’t think it’s the work that bothers them, so much as having to manage through all the process steps within their own companies, the meetings etc., and then having to wade through the endless (frankly no other word for it, BS) from the dozens of suppliers who will beg to, or are asked to participate regardless of capability or fit. Let’s face it, selecting a service provider can be a painful process, sorting through all the material, the presentations and sales pitches, some of it irrelevant or immaterial, some stretching, dissembling and prevarication that might make politicians blush, and figuring out how to objectively determine what the best choice is for their organization and program. It’s also painful because much rides on the decision. The mobility people I was speaking with last week are anxious about this at least in part because they, and their companies will have to live and work with their decision for years. Think match.com not Tinder. In my career in mobility I’ve had the experience of being on both sides of the procurement or supplier process. I’ve sold and managed the RFP process on the sales side, and also as leader of the global supply chain for a major mobility company, I managed supplier selection, including producing and evaluating RFPs across numerous product lines. Because of this experience and my passion for this area of our business I’ve also been asked to consult and help companies both supplier and client better manage this process. So what are some ways that we make this process better, assure improved choice and make the process easier? I’ve put together some tips that I think apply to anyone looking to select a mobility supplier, or really any service for that matter. Please be mindful, these are tips, not a comprehensive instruction manual. Of these five, the first is probably the most critical. 1. Know your End Goal: Before beginning any supplier selection process, it’s very important to do your homework and think through all of the requirement and the goals and objectives you have for this service. Some of the important lenses to review these requirements are spelled out in the categories below: GOVERNANCE: These are the “rules” your organization has that any supplier must conform to. It includes the basic technical, contractual, and legal requirements for service providers. These usually involve managing supply chain risk for your company and includes key elements such as data privacy, conformance to legal standards, insurance standards, and more. It’s important to know these and build them into your selection process up front. VALUE: You should know what budget you have, and what cost criteria you are looking for your defined scope of work. No one should ever start an RFP process without understanding these basic criteria. Yes, you can learn a lot during the process, and sometimes be exposed to alternate cost models, better value propositions, but if you do not have a basic understanding of what value you are looking for, you aren’t ready to begin selecting a supplier/partner. Before starting the selection process, do your research in this area, even utilize suppliers to tell you what they are seeing! PERFORMANCE: What are the standards of performance for the scope of work you need and would like to see from any supplier or service in this space? These can be revised (hopefully upward) in the process, but how do you define performance and what are the baseline standards of success. What are suppliers in this space telling you they use as performance criteria and is there anything new or valuable there? FIT: These are the factors you consider important when determining the right fit for you and your company. For most mobility services there are literally dozens of good suppliers, but some would be better than others. For example, are you a data driven organization, looking for analytics for most decisions? Or, perhaps you are an organization less interested in policy, so you need suppliers capable of discernment and fluid decision-making. Define this clearly upfront and make sure you have built in ways to identify this in your selection process. These are sometimes the most important and yet overlooked parts of the selection process. 2. Partner with procurement: Most companies require periodic bids on services, or a defined procurement approach for service spend of a certain size or service area. Mobility professionals who leverage the relationships with their procurement colleagues by partnering find the collaboration useful. Informal feedback I’ve received from several mobility leaders has been that the most important factor in this partnership is upfront education of the assigned procurement person. This is easiest in organizations that assign procurement “leads” to the HR or Mobility organization, rather than an-hoc assignment of staff, but in either case, the upfront investment is worth it. Use the landscape discussed above as a format for the discussion and planning. 3. Learn through an RFI process: Before producing an RFP (Request for Proposal), utilize an RFI (Request for Information) to learn and shape your next steps. An effective RFI can help you discover what may have changed in the field, it can help you better define your scope of work, your expectations of suppliers, and can help you eliminate or add to the list of suppliers to participate in actual bids. A good RFI is very
Three Tips to Avoid Mobility Program Start-up Messes
One of the most common types of consulting I am involved in is in global mobility program start-up. Sometimes it’s companies moving their first international transfer. More often though, the company realizes they’ve done a couple of assignments or transfers on an ad-hoc basis and as a result they have kind of a mess to figure out. Some of the messes I’ve seen include excessive cost and overpayments, inequities between similar employees, costly mistakes and assumptions, unnecessary employee hardships, employee resignations and failed assignments. In one weird case, I was asked to recommend solutions to a situation where all local hires had been given full expat benefits to keep things fair with the sole expat employee, but that’s a whole other story! The leadership in companies involved in these messes are usually smart and want to do what’s right, so how does the mess happen? I believe the key is found in the two phrases above, “ad-hoc” and “assumptions”. Under the pressure of getting a single assignment underway quickly, HR leaders are forced to make compromises, to guess and to assume. Also, because these are typically company firsts, there is also little in the way of policy, guidelines or precedent to follow. This forces decision-making without careful or analytical eyes toward the future. What are the ways companies can avoid these mistakes and assure their mobility program gets started on the right footing? Here are my top 3 things to remember when making these initial steps: The first is not the last. Recognize that the work you are doing in getting this first employee to wherever they are going is going to set precedence for the future, whether you like it or not. This mentality allows you to think through and plan how you want to manage not just the situation but the overall program. For HR leaders it also allows you to be the strategic voice in the room with the business. It also allows the company to invest in the time and expertise to make good decisions. This isn’t about getting Fritz to New Jersey or Susan to Paris, it’s about all future employees. Be careful with the decisions you make for the individual case in front of you because it’s inevitable that patterns will be replicated from these decisions. There is no “one size” fits all. I wish I had the proverbial nickel for every time someone has asked me for a template mobility policy they could borrow. And by that, I know they didn’t mean just a policy format, they really wanted a mobility policy they could just replicate and start using. Your company wouldn’t just borrow it’s compensation or benefits policies, or it’s talent or business plans (at least I hope not), nor should it just copy a mobility policy. The decisions that drive these policies depend on numerous factors, including your industry, business goals, talent strategy, corporate culture and other factors. Approaches to mobility are incredibly diverse. I have clients successfully move 100% of their staff using almost a pure localization approach, and others that offer rich, traditional expat policies. Neither is wrong and neither would work for the other. It’s important to do the work early in devising an approach that is effective for your company. Not knowing is OK. I had a friend call me recently to ask me what I knew about assignment letters in Vietnam. This is someone with 25+ years in Mobility and a true expert in expat tax, compensation and mobility policies, someone I would and have called for advice. But in this case, he recognized this was something he didn’t know and was seeking council. HR leaders need to be unembarrassed that they must seek expertise, whether we’re talking about a US domestic transfer, or a global assignment. Recognize that mobility crosses multiple specialties, tax, employment law, immigration, compensation, benefits, relocation and components of each of these that no one should be ashamed to seek expertise and council. Fortunately, the Mobility industry is filled with resources to provide this expertise for virtually any situation imaginable. While sometimes companies are reluctant to pay for this expertise, recognizing that by doing so you are avoiding huge potential issues, not just for this single employee, but potentially all future employees. This expertise is risk mitigation, the benefits of which last far into the future. The reality is that in today’s business environment there is always extreme pressure to move things forward quickly, cheaply, and easily. Certainly, being the person to slow things down and encourage a more strategic, longer term view can range from uncomfortable to impossible. But we should at least recognize that, as in many things, when dealing with mobility decisions not addressing fundamentals early means we’re just pushing more pain into the future. We’re putting that pain on a virtual credit account payable with interest, due at some future date. Thanks for reading. I’d love to hear your comments on the topic and how HR leaders have helped their organizations adapt these three tips.
Managing Remotely
Navigating Supply Chain Success with Clear Objectives
In my consulting practice, I consistently engage in projects centered around optimizing the Mobility Supply Chain. From governance and implementation to contracting and supplier management, my expertise lies in driving efficiency and effectiveness throughout the supply chain. A significant aspect of my work involves leading projects that navigate the intricate landscape of supplier selection within various mobility specialties, including immigration, technology, and comprehensive mobility management. I have an extensive list of best practices that are useful for these kinds of projects to ensure fairness and transparency, get the best understanding of what suppliers will deliver, get the best cost or pricing, and other essential criteria. The number one recommendation, however, is to be clear on the objectives of the project. In most projects, establishing clear objectives is the first task. Why are we doing this? What are we trying to do? It’s basic. In my experience, these objectives tend to get lost in supply chain projects. This is particularly true when the project involves a long or complex RFP. The complexity of RFPs, selection criteria, and moving parts seem to lead to muddiness around objectives. RFPs within the mobility space leads groups into all the selection elements quality, services, scope of work, pricing, metrics, compliance, technology, culture, and other areas of evaluation. All this is good stuff, but often it separates groups in this process from their primary business goals. In some ways, the sales and marketing people have done their job well in these circumstances. They’ve shown us so much shiny pretty stuff that we’ve forgotten what we are there to buy in the first place! Objectives Setting: Clear, Concise, Measurable Like the much-quoted late Yankee catcher opined” “If you don’t know where you are going, you’ll end up someplace else.” Having a well-defined roadmap is indispensable for any expedition, and in a supply chain project, clear, concise, and measurable objectives are that map. I recommend building three to five objectives derived in collaboration with all stakeholders. A quick acronym to use is Doran’s SMART framework, Specific, Measurable, Achievable, Relevant, and Time-bound. Understand, I am not just thinking about objectives for the success of a project or process, though those are important. But rather, these are about the ultimate business objectives that indicate the goals for engaging in the project. These might be obvious such as “Save 20% on service fees on immigration within the first twelve months of implementation” or “Reduce service failures to five per-quarters and improve employee satisfaction by 10 points.” Objectives can also be more strategic, complex, and subtle such as “reducing the demand of internal staff engagement in transactional work,” “providing better-administered benefits,” “creating an avenue for strategic talent guidance,” and “assuring supplier governance” are all common and worthy objectives. But remember to take the time to define these as closely as possible in the SMART framework. The investment pays off in the end. The Process: Driven by the Objectives Having these objectives clarified makes all the following steps much clearer. They will drive the process you follow, the questions you ask, the evaluations you perform, and the people you involve. It also clearly dictates what suppliers to invite to participate. In any vendor selection process, there are two kinds of criteria to look at. The first are the baseline requirements. Any supplier must have these capabilities or commit to these requirements. Without possessing the baseline requirements, the supplier cannot be considered. The second are the variables or extras. These are the wows, the nice to haves, the “specials,” or differentiators of one vendor to another. Going back to our objectives, if these are well defined, we can easily separate all of the shiny objects that help us reach our goals from those that may be super cool or exciting but do not really help achieve goals. Understand, I am not saying we don’t learn in this process. I have found the process of running RFPs to be one of the best and most exciting ways to learn about our industry, the trends, what’s happening, and all about the absolutely wonderful, creative, and inspiring people that populate it. At some point, we do have to make decisions, occasionally very hard ones, and having the objectives in front of us makes that process much easier. Clear Sites and Clear Queries The temptation in any RFP is to ask every question that can be asked. You want to know everything, right? I’ve been involved in RFPs, some recently where indeed that has happened. But that strategy comes at a cost. At the end of the day, your team, whether that is a team of stakeholders or an outsourced consultant like me, must read and evaluate all these responses. Then, these need to be compared to one another. This is time-consuming, true, but more importantly, this risks the integrity of the process and may lead to results you do not want. Instead, our objective lead approach takes us to a place where we separate the content and style of our queries in an RFI, RFP, or in interviews, into the two buckets we described above. Baseline requirement questions are best asked as Yes/No, True/False, and “prove-it” queries. For these questions, we are not really interested in the quality of the response. We want to know if the vendor candidate meets the criteria and if they can prove it. That’s it! These are really qualifying questions, and in most circumstances, the vendor qualifies and is in or is out. That frees our time and efforts for the qualitative analysis needed to determine how this supplier candidate will help us reach our goals. Sometimes these questions become an iterative process. As suppliers learn more about what we need and the circumstances for providing it, they can provide further information and even creativity to help us get there. A Crew United: Stakeholder Buy-In In my career, I’ve been involved in hundreds of RFPs and other vendor selection efforts. I’ve been involved in hundreds more on the other side of
The Power of Grit – Setbacks to Success
It is humbling and gratifying that sometimes I have an opportunity to coach and mentor others at an earlier stage in their career. It’s a humbling experience because I sometimes help people who are, candidly speaking, far brighter and more capable than I am. It is gratifying because it is wonderful to know that sometimes the hard-earned lessons, occasional battle scars, and the small glimmer of wisdom I have acquired may help someone else. One lesson about an often-underrated quality called ‘Grit’—or resilience, tenacity, perseverance—is incomparably difficult to share.” Whatever you call it, Grit is something you can speak to others about and, hopefully, challenge someone to achieve. But, like the proverbial “horse to water,” you cannot instill this in others; they must choose it for themselves. What is Grit? If you’ve not seen the Ted talk from Angela Duckworth, I recommend it: https://www.ted.com/talks/angela_lee_duckworth_grit_the_power_of_passion_and_perseverance?language=en In short, Grit is a characteristic often used to describe those who exemplify resilience and a relentless dedication to their goals. But what does it mean to have Grit, and why is it so important? According to Duckworth, Grit is the marriage of passion and perseverance. It’s about having an enduring interest in your pursuits and persistently working towards them, even when faced with setbacks and failures. This blend of resilience, ambition, focus, and self-control helps individuals keep their eyes on the prize and stay the course. The value of Grit lies in its power to help us push through challenges and overcome obstacles. Whether acing a critical meeting, thriving in your career, or reaching a long-term goal, Grit is often the driving force behind your success. Grit keeps you focused amongst distractions, persistent when encountering obstacles, and committed over the long haul. Do you have Grit, and why does it matter? Professor Duckworth and her team have developed the “Grit scale.” This tool measures the two components of Grit: consistency of interest and perseverance of effort. Take the quiz here to evaluate your Grit: https://angeladuckworth.com/grit-scale/. It’s interesting, though I find myself irritated taking it. I think of myself as tough, resilient, and stubbornly persistent, but I also sometimes suffer from the attention span of a Golden Retriever in a yard full of squirrels. That is not Grit! In business, entrepreneurship, and leadership, we admire Grit and talk about it. Often our examples, though, come from sports. Stories like Michael Jordan overcoming getting cut from his High School team or Tom Brady being drafted 199th in the NFL draft in 2,000 are Grit legends. Indeed, no one doubts that either athlete personifies Grit. But people from all walks of life, and all levels of society, can show Grit, and the evidence is that this can determine their ultimate success. Anyone who demonstrates a willingness to keep going, despite obstacles and failures can be a testament to the importance of Grit. Grit Heroes We all love the great human dramas, the true stories of people who overcome tremendous challenges to succeed. One of my favorites is the true story of Ernest Shackleton’s Antarctic Expedition in 1914. Aiming to cross the Antarctic via the South Pole, before they even reached the continent, their ship, the Endurance, became trapped in pack ice in the Weddell Sea and was slowly crushed. Under Shackleton’s leadership, he managed to keep the 28 men of the expedition alive on the ice for months and then led them on a dangerous and long journey to an uninhabited island where they could survive. He and five of his crew embarked on a 16-day, 800-mile journey across the ice-filled Southern Ocean in a tiny boat. Ultimately he reached a remote whaling station, where he had to cross mountainous terrain to reach help finally. Twenty months after the Endurance was first trapped in the ice, all 28 of his crew were rescued and survived. Unbelievable Grit! It’s not just sports or adventure that give us examples of Grit. Misty Copeland, the acclaimed ballet dancer, overcame a late start at Ballet in a family so poor there were periods of homelessness for her and her mom. Never entirely fitting the typical ballet dancer’s mold, she was seen as too muscular. She rose through the ranks, through tenacity, perseverance, and a work ethic that stood out to ultimately make history by becoming the first African American woman to be named principal dancer in the American Ballet Theatre’s 75-year history. We all have our Grit heroes, and while we may aspire on some level to be Shackleton, Jordan or Copeland, I am realistic enough to recognize that neither the NBA nor the Ballet is in my future. But that’s not the point, is it? Remember, one definition of Grit is the marriage of passion and perseverance, and just as we all have different passions, we all follow different paths. My Dad is easily the Gritiest person I know. He started loading trucks as a casual laborer just after I was born. He overcame injuries, terrible bosses, and economic turmoil and ultimately retired as a successful terminal manager for a large trucking company. By the way, his passion was never trucking, it was building a good life for his family, and he persevered through everything to make that happen. That is Grit. How do you build Grit? Angela Duckworth’s book “Grit: The Power of Passion and Perseverance,” is a great place to start to understand Grit and how to develop it. Carol Dweck’s research on “growth mindset” – the belief that abilities and intelligence can be developed through hard work, good strategies, and input from others – ties in closely with Grit and is very much worth reading. Martin Seligman has much to say about optimism, resilience, and learned helplessness, and his book “Grit: The Power of Passion and Perseverance” explores these themes in detail. There are more of course, Paul Tough and Cal Newport, as well as many other areas of thought and culture, from the “growth mindset” of education to the entrepreneurial spirit of startups. Assuming you want
The $100,000 H-1B Fee: Why Smart Companies Are Adapting, Not Panicking
The U.S. just implemented a $100,000 fee for new H-1B visa petitions, and the tech world is recalibrating. While this isn’t the apocalypse some predicted, it’s not nothing either. Smart companies are treating this as a significant shift that requires strategic adaptation—because when your per-hire visa costs just jumped from under $10,000 to over $100,000, you’d better have a plan. The Reality Check We’ve Been Avoiding Let’s be honest about what’s happening here. For years, the H-1B program has been two completely different things wearing the same regulatory clothing. For companies seeking genuinely specialized talent, AI researchers with PhDs, architects of complex distributed systems, engineers with expertise you literally can’t find domestically, it’s been essential infrastructure. These companies will absorb the fee because they have no choice. When you need someone who understands quantum computing applications in cryptography, you pay what it takes. But for others, and we all know who they are, the H-1B has been something else entirely. When your business model depends on filing hundreds of petitions annually for roles at $65,000 salaries, when your “innovation” consists of undercutting domestic labor costs by 30-40%, this fee doesn’t just sting. It destroys the entire business model. And frankly? That might be the point. Let’s Talk About That “Talent Shortage” Here’s what every mobility professional knows but few say publicly: the “desperate talent shortage” narrative has always been more complex than headlines suggest. Yes, there’s a genuine shortage of certain specialized skills. No, there isn’t a shortage of competent developers willing to work for reasonable wages. What there’s been is a shortage of developers willing to work for 60% of market rate with no job mobility and the constant threat of deportation hanging over their heads. The $100,000 fee makes that arbitrage model significantly less attractive. Suddenly, that $120,000 domestic developer doesn’t look so expensive when the alternative includes a six-figure visa fee. What We Know (And Don’t Know) About Impact Here’s what we don’t know yet: The fee just went into effect in September 2025. We won’t see real filing data until the April 2026 cap season. Anyone claiming to know exact impacts is guessing. What we DO know is how companies are positioning themselves and what strategies they’re discussing in boardrooms: Large Tech Firms: Absorbing but Adapting The companies with genuine talent needs and deep pockets are treating this as a cost of doing business—painful but manageable. They’re accelerating existing strategies: Mid-Tier Companies: Getting Creative Fast Companies that need specialized talent but can’t treat six-figure fees as rounding errors are innovating: High-Volume Operators: he IT services and consulting firms that built their entire U.S. operations on high-volume H-1B filings are discovering what happens when your labor arbitrage model hits a $100,000 wall. These firms have been gradually reducing U.S. H-1B dependency for years, but this fee transforms that gradual shift into a cliff dive. We’re already seeing dramatic pivots to pure offshore models, with minimal onsite presence maintained through short-term L-1 rotations and strategic use of visa-exempt business visitors for client meetings. Why Alternative Strategies Work (With Reality Checks) Companies acting surprised about alternatives to H-1B are either new to this game or haven’t been paying attention. These options always existed—they just required more effort than the H-1B assembly line. L-1 Transfers: Playing the Long Game Hire in London or Toronto, wait a year, transfer on L-1. No cap, no lottery, no $100,000 fee. The catch? You need foreign operations and 12 months of patience. But if you’re a serious global company, you should have international offices anyway. O-1 Visas: Not Just for Nobel Laureates That senior engineer with GitHub contributions and conference talks? They probably qualify for O-1. The bar isn’t as high as people think—it just requires documentation effort that H-1B didn’t demand. Cap-Exempt H-1Bs: The Academic Backdoor University partnerships aren’t just for recruiting anymore. They’re pathways to cap-exempt hiring. Though let’s be clear: this works for R&D roles, not your average development work. The Uncomfortable Truths This Exposes The fee is forcing overdue reckonings: The Geography Myth: The assumption that all tech work must happen in Silicon Valley or Seattle? Dead. If the work can be done by someone fresh from university at below-market wages, it can probably be done from Bangalore or Bucharest. The Training Taboo: Companies that swore for decades they couldn’t find qualified Americans are suddenly discovering training programs. Amazing how a $100,000 fee clarifies your thinking about investing $30,000 in developing domestic talent. The Mobility Trap: Here’s what nobody’s talking about: your current H-1B employees just became incredibly expensive to replace but unable to leave. They’re essentially trapped, creating retention through restriction rather than satisfaction. That’s not a sustainable talent strategy. Your Pragmatic Response Framework Instead of lamenting change, here’s what forward-thinking companies are implementing: Short-term Medium-Term Build nearshore capabilities: Toronto is looking very attractive right now Long-Term Accept that geographic distribution is the future The Questions That Keep Mobility Leaders Up at Night These new fees raise critical questions that will land squarely on mobility departments’ desks: Moving Forward With Clear Eyes The $100,000 H-1B fee isn’t killing American innovation, it’s forcing a reckoning about what innovation actually means. Companies built on genuine technical advancement will adapt and continue. Companies built on labor arbitrage will struggle. The market is working exactly as intended. For mobility professionals, this is actually an opportunity. The organizations that navigate this successfully will need sophisticated global talent strategies, not just visa processing. They’ll need professionals who understand total talent economics, not just immigration law. They’ll need strategic thinking about global workforce distribution, not just relocation logistics. The fee has accelerated trends that were already emerging: distributed teams, offshore delivery, alternative visa strategies, and actual investment in domestic talent development. Companies that accept this reality and build accordingly will thrive. Those waiting for the old normal to return will be waiting a long time. The Bottom Line At Global Mobility Adviser, we help companies navigate these transitions with strategies that acknowledge both business imperatives
The Hidden Cost of International Assignments: Why Totalization Agreements Deserve a Spot in Every Mobility Program
The $150,000 Oversight A mid-sized tech firm once called me with what sounded like a routine payroll and benefits question. They’d sent an American engineer to Japan and wanted to be sure they were handling taxes correctly. I asked a single question: “Did you request a Certificate of Coverage under the U.S., Japan Totalization Agreement?” Silence. The price of that pause? Roughly $150,000 in avoidable social-security taxes, and it was still climbing. This wasn’t an incompetent company. It was a smart team with a blind spot that shows up everywhere I look in global mobility. Even experienced HR and finance groups miss this step, and it costs them tens or hundreds of thousands of dollars per assignment. What Totalization Agreements Actually Do Totalization Agreements are bilateral Social Security treaties. Their job is simple: stop double taxation and keep workers eligible for benefits in both systems. When an American employee works abroad, both governments want their slice. The U.S. wants FICA; the host country wants its version of social-security contributions. Without an agreement, everyone pays twice. With one, the employee and employer normally keep paying into just the home system. As of 2025, the United States has 30 such agreements — with countries like Australia, Belgium, Brazil, Canada, France, Germany, Italy, Japan, South Korea, Spain, Sweden, the U.K., and others. Still missing are some of the world’s largest markets: China, India, Mexico, Singapore, and Hong Kong. That absence makes planning even more critical. What Happens When You Miss It Let’s put numbers to it. Example 1 – U.S. employee in Germany A software engineer earns $150,000 and spends three years in Munich. Without a Certificate of Coverage: U.S. FICA ≈ 15.3 % (7.65 % each for employee and employer) German pension-insurance ≈ 18.6 % each, plus other social charges above that Combined effective rate easily tops 50 % That’s about $78,000 a year, $236,000 over three years. With a valid Certificate of Coverage, only U.S. FICA applies, about $23,000 a year. Savings: roughly $160,000 per assignment. Example 2 – U.S. executive in France A marketing VP earns $200,000 and spends four years in Paris. French employer contributions run around 40–45 % of salary; employee contributions add 20–23 %, depending on ceilings. Combined with U.S. FICA, the total burden can hit 60 % of pay. With a Certificate of Coverage, those French contributions are waived. Result: about $360,000 saved over four years, and no messy refund requests later. These aren’t scare tactics. They’re real-world examples of what happens when HR and payroll skip a fifteen-minute form. How It Works 1 – Who Qualifies If a U.S. employee is temporarily assigned (typically five years or less) to a country with an agreement, they remain covered by U.S. Social Security and are exempt from the host’s system. Some treaties allow extensions, but the five-year window is the standard starting point. 2 – The Certificate of Coverage This is the proof. The Social Security Administration issues it, confirming that the worker is already covered under U.S. Social Security. Presenting that certificate tells the host authorities, “We’ve got this one; no local contributions needed.” 3 – Who Pays What The employee and employer keep paying normal U.S. FICA. They do not pay host-country social-security taxes. The employee continues accruing U.S. benefits as if they’d never left. 4 – Self-Employed Individuals Totalization Agreements also cover the self-employed. In many cases, an American consultant or business owner abroad can request a Certificate of Coverage and pay into only one system, which one depends on the specific treaty. The point is to avoid paying both. Applying Is Easier Than Most People Think The host country must have an agreement with the U.S., the assignment must be temporary, and the worker must remain on a U.S. payroll or be self-employed in the U.S. Go to opts.ssa.gov Enter employee data, employer EIN, assignment dates, and destination. The form takes maybe 20 minutes. The SSA typically processes requests within a few weeks. There’s no fee, but it’s wise to file 60–90 days before departure. Send it to your local HR or payroll team abroad so they can document the exemption. If you prefer paper, SSA still accepts mailed or faxed requests through its International Programs office Where Companies Go Wrong You can’t rely on retroactive fixes; refunds abroad are a nightmare. Having an agreement in place isn’t enough, the Certificate of Coverage must exist. Most certificates expire at five years. Miss that, and you owe back contributions. Once a move is permanent, local coverage applies. Coverage depends on which system the employee is in at assignment start, not citizenship. A German national working in the U.S. and sent to France may still qualify under the U.S.–France agreement. When There’s No Agreement Assignments to China, India, Mexico, Singapore, or Hong Kong still face dual social-security taxation. There’s no treaty relief yet. Some countries allow short-term or special exemptions, but these are country-specific — not the familiar 183-day income-tax rule. Plan assignments carefully, model the costs, and decide whether to rotate staff, hire locally, or just budget for the extra payroll load. Strategic Uses Beyond Compliance Cost modeling: Knowing when Totalization applies can shift the math on whether to send an assignee or hire locally. Assignment duration: Design rotations around the five-year mark instead of stumbling into extra contributions. Talent negotiations: Explaining this up front builds trust and can be a meaningful financial perk. Retirement clarity: Employees keep their U.S. Social Security record intact a quiet but powerful retention tool. Building It Into Your Mobility Playbook Every outbound assignment should trigger a short checklist: Is there a Totalization Agreement with the host country? Is the role truly temporary and within the treaty’s time limit? Who files the Certificate of Coverage and when? Has the certificate been presented to the host authorities? Are payroll systems aligned to reflect the exemption? In smaller firms, one person should own this process. In larger ones, it sits naturally within the Global Mobility or Payroll Compliance team. Choosing
International Group Moves: Joining Policy and Resources for an Effective Program
International mobility programs are typically designed to help organizations and their employees manage the transfer or expatriation of employees and new hires across international boundaries. There are a variety of policy and program approaches to manage this process effectively, and a wide variety of literature is associated with developing these types of programs and how to support, compensate, and provide logistical assistance for international transfers and expats. When the transfer is not managing an individual but rather groups of people over a compressed period, the challenges multiply quickly, and the traditional approaches soon fall short. Some Common Issues Before examining the best practices and solutions for what has come to be known as “International Group Moves,” let’s look at several challenges associated with these types of moves. Issue #1 Accepting the Assignment or Transfer I once worked with a company moving its entire offices and staff from Dubai to Saudi Arabia. Dubai has a reputation for being relatively open and certainly cosmopolitan compared to Saudi Arabia. Getting employees to accept an international move rather than to leave the company required a careful crafting of the benefits and compensation strategies and an even more careful communication strategy. Not every location has the challenges associated with Saudi Arabia, but all locations have their challenges. So anticipating these and the most common concerns for employees and families is crucial to obtaining acceptance to a group move. And being strategic in how these are communicated is no less critical. Making sure that communication is carefully controlled, winning advocates who can help present the plan, and having clear solutions to possible problems are all essential elements of the plan. Issue #2 Managing Housing One challenge became quite apparent when working with a company to manage a move into a rural area in Alabama. The new factory’s location did not have the resources to support the new population moving into the small town. The arrival of several hundred new employees meant there were not enough hotels and temporary living accommodations in the town, let alone viable long-term housing options for employees. The company overcame these issues by working with suppliers, local real estate, and hospitality vendors to develop new alternatives to both issues. In the end, combining local and nearby commuter resources solved the problems. Company-provided buses allowed employees to seek family housing in a nearby community. While remote, rural, or small markets all present special challenges, sometimes solved with purpose-built housing, company-leased housing, or commuter families, even in relatively large markets, companies must be prepared to assist employees in locating temporary and long-term- accommodations. Issue #3 Immigration Hurdles In international moves of all types, complications are common due to immigration rules. As in any international transfer or assignment, immigration is critical to address a group move, with many moving parts representing special circumstances subject to roadblocks and delays. Remember, it is not just the employee’s situation that causes complications. It’s the families and dependents that create challenges. Same-sex couples moving to some locations, unmarried “common law” couples, and family members who in one culture are seen as part of the nuclear family, such as parents or grandparents, may not to allowed under dependent visas. These and other variables must be addressed in advance of the project. By working through pre-screening protocols and employee education, this process can be managed effectively to reduce hardships. Issue #4 Cultural Challenges Crossing cultures can be challenging for any employee and family. For companies attempting to move groups of people from one culture to another, it can be disastrous. While people’s cultural adaptability and aptitude will vary, most individuals seek to adapt to the new culture. With some guidance and support, individuals will try to understand the culture they are living in and attempt to become effective and happy participants in it. The dynamic for groups can often be very different. Groups of people will often retreat. A group will isolate themselves from the dominant culture and retreat into the culture they feel most comfortable in. This may be okay when the situation is an expatriate compound in a mining or oil and gas development, however, in a more typical business or manufacturing environment, it can lead to disaster. Resentment, poor working cooperation, failure of skills transfer, loss of productivity, assignment failure, and lack of engagement will all result. Proactively developing a plan for cultural adaptation and applying solid resources to the process can eliminate these problems and make an international group move an exciting experience for all employees involved. Numerous other challenges are associated with Group Moves, particularly international group moves, beyond those highlighted above. Numerous questions must be answered. How will employees and their families travel? How will children be educated, especially where there may be language issues? How will spouses adjust to a new environment where they may be displaced, unable to work, and without home resources? How will the company support the employees with all the logistical challenges, such as buying or leasing a car without credit, opening a bank account, getting a driver’s license, finding a home, finding a doctor or dentist and the thousands of other challenges international transferees face? A group move represents exceptional challenges and wonderful opportunities in these areas. Solutions working in concert Three main pillars form the solution to all these challenges: Policy, Project Resources, and Program Management. For the overall project to be successful, all three of these must work in concert, seamlessly guiding, assisting, and supporting the company and employees in this transition. Pilar #1 Policy Most companies recognize the need for a comprehensive policy. A policy provides clarity to all parties, defining the resources and boundaries for employees and managers. Some of the critical elements of any Policy include: Pilar #2 Project Resources Companies will usually identify internal resources to lead and support the Group Move. This is important, and selecting the right resources for the project is critical. Effective planning, superior communication skills, and solid decision-making skills are all essential elements. In addition to the
Global Expansion: Considerations for accessing a Global Talent Pool with a PEO strategy.
A client recently contacted me with a pressing need. They are a US-based company looking to place employees in two European countries—one through local hiring and the other by sending a US-based employee on assignment. Their question was simple: “How can they do this quickly, efficiently, and cost-effectively?” There was a time in recent memory (at least my recent memory) when this question might have generated condescending laughter and headshaking, starting with the word “immediate” and ending with “cost-effective.” But the rise of Professional Employment Organizations (PEOs) has changed the game. PEOs offer significant opportunities for businesses to employ, attract, and retain foreign talent while navigating complex employee benefits and immigration processes. The prevalence of Professional Employment Organizations (PEO), has shifted this equation and generated huge opportunities for companies looking to employ, attract and retain foreign talent while navigating complex employee benefits and immigration processes. Today’s world represents a startling dichotomy. Complexities related to employment laws, cross-border requirements, taxes, rules, and processes have become exponentially more complex, while the expectation that we will be able to travel, move and operate globally and seamlessly is taken completely for granted. PEOs represent an important resolution to this dichotomy. What is a PEO? A Professional Employer Organization (PEO) is a third-party entity that partners with businesses to manage various aspects of human resources (HR) and employment administration. In a co-employment relationship, the PEO becomes the employer of record for certain employment-related purposes, such as payroll processing, benefits administration, compliance, and risk management. While the client company maintains control over day-to-day operations and retains responsibility for the direction and supervision of its employees, the PEO takes on key HR functions, providing expertise, resources, and support to streamline HR processes and ensure compliance with employment laws and regulations. The primary goal of a PEO is to help businesses save time, reduce administrative burdens, and access comprehensive HR services, allowing them to focus on their core operations and strategic objectives. Importantly, for global expansion, PEOs also take on the work associated with immigration for employees who are being employed outside of their country of citizenship or residence. In some cases, PEOs can offer sponsorship of the employee. For small companies without international entities and infrastructure or experience with immigration and international HR process, this is a game changer. PEOs, not a Panacea Professional Employer Organizations are the solution in every case. There are a few issues with PEOs, I’ll discuss the three “Cs” below: Cost: While using a PEO can provide the best and most cost-efficient answer to business needs, there are substantial costs associated with engaging their services. PEO fees may be a percentage of payroll or a flat fee structure. But like any decision, understanding the cost is critical. Just like with international assignments, the “idea” and the “reality” may not align. It may sound like a good idea to have that employee in London or Shanghai, but is it worth the investment? Control: When partnering with a PEO, the client company shares certain employer responsibilities with the PEO, potentially leading to a perceived loss of control over HR functions. It’s important to understand what areas of control in employment-related decisions, you are losing. Likewise, there are co-employment risks. Because the PEO becomes the employer of record for certain purposes, which may introduce additional legal and contractual complexities. Additionally, while the PEO shares some employment-related risks, the client company still retains liability for certain aspects, such as employee performance, workplace safety, and hiring decisions, so make sure you understand those levers of control. Culture: PEOs typically serve a wide range of client companies and industries. Their standardized processes and procedures may not align with the culture and values of every organization. Additionally, PEOs usually operate on standardized HR systems and processes. This can limit the flexibility to tailor HR policies, procedures, and benefits programs to the specific needs of your organization. Selecting the Proper PEO When selecting a PEO, there are several important criteria to consider. These criteria will help you find the right PEO that aligns with your business needs and supports your talent acquisition and management goals. First, there are certain baseline qualities that must be met by any PEO, and most of the reputable players in the space bring these to the table: Compliance: Any PEO must offer compliance and legal expertise. After all, this is why they are there. They must ensure that the PEO has a strong understanding of labor laws, regulations, and compliance requirements. If they are helping you employ non-national employees, then immigration should not just be an afterthought but a core competence. Reputation: The PEO should have a solid reputation and track record. Check references, evaluate testimonials, and review any case studies related to your objectives to ensure performance, customer satisfaction, and reliability. Financial stability and compatibility: Make sure they have a solid financial standing. They must be able to meet their commitments. Can they scale with you if necessary? Also, review carefully the terms and conditions of the PEO’s contract, including the duration, termination clauses, and the ability to modify the agreement as your needs change. Inflexible or unreasonable terms are a red flag for financial compatibility and often an indicator of financial weakness. In addition to these and other baseline qualities, the selection of a PEO often comes down to three broad factors: Service Alignment: Do they offer the services you require, and is their service model going to meet your expectations? Assess the level of customer support and responsiveness provided by the PEO. You should have access to dedicated representatives or account managers who can address your concerns and provide timely assistance. Do they have the technology to integrate into your organization? Cultural Fit: Does the PEO have experience working within your industry and for companies with your culture? For from being a nebulous question, remember they are an extension of your People or HR organization and will have an outsize impact on how they employee feels about the company. Pricing structure: