Elif AlvarezCRP
Director, Total Rewards, Kestrel Aerospace
Ivan Rasmussen· Total Rewards Manager, Silverline Media
Asked in Global & Mobility ·
Eight months in Monterrey: per diem, allowance or a light assignment package?
I look after rewards for a German automotive supplier with about 9,500 employees. We are sending 12 engineers from Stuttgart to our plant in Monterrey for eight months to commission a new line. Our policy only covers business travel up to 90 days and long-term assignments over a year, and nothing in between.
The plant wants daily per diems at the travel rate, which over eight months comes to a large tax-free looking sum that our tax team is nervous about. The engineers want to keep their German contracts and social security.
What does a sensible package look like for this length, and where did you draw the line between travel and assignment?
5 helpful · 2 insightful · 1 agree · 4 replies · 404 views · 3 following
Accepted answer· by Samir Delaney
Your tax team is right to be nervous about full per diems for eight months. In our case the home authorities stopped treating them as travel expenses after a set period at one work location and Mexico looked at the people as resident for tax purposes once they passed 183 days. We took advice in both countries before the first group left. Practically, we pay accommodation and local transport in kind, a modest meal allowance, and we budget for host tax being due and the company covering the difference over what the person would have paid at home. Cost came out about 30% under the per diem approach.
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