Ivan Rasmussen· Total Rewards Manager, Silverline Media
Asked in Global & Mobility ·
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 · 403 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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Elif AlvarezCRP
Director, Total Rewards, Kestrel Aerospace
We draw the line at 90 days. Beyond that it is a short-term assignment: home salary and contract unchanged, furnished accommodation paid directly by the company, a reduced daily allowance for meals only (about 40% of the travel rate, since they have a kitchen), one trip home every eight weeks. No cost-of-living adjustment and no housing norm deduction.
Samir DelaneyCBS, CEP
Senior Compensation Analyst, Silverline Media
Accepted answer
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.
Director of Benefits, Bellwether Consulting
One thing the engineers will ask about within a week: families. Eight months is long enough that some will want a partner to visit or join. Decide now whether you pay for that. We allow either four home trips or two family visits, the employee chooses.
Compensation Consultant, Nordvik Energy
Do not forget a completion payment. A project bonus of around 8% of base for the period, paid on return, did more for goodwill on our commissioning teams than any allowance, and it keeps people there until the line is signed off.
