From the Hotline: International Assignment Agreement Guidance
Question: We are sending our employee on our first international assignment and would like guidance on what types of information should be included as part of the assignment agreement.
Answer: When employers are embarking on their first international assignment, we recommend working with legal and tax counsel or an organization specializing in international assignments. There are a number of complexities involved in these types of assignments, which can increase cost and risk for both the employer and employee, particularly around taxation.
Following are some items which are typically included in an assignment agreement:
- The length and location of the assignment and how any extensions will be handled.
- How passport and visa requirements will be addressed and paid for.
- What amount and how the employee will be paid, including how fluctuating exchange rates will be addressed.
- How taxation will be handled. This is often the single biggest consideration, and biggest cost, for employers and employees considering an international assignment.
- Depending on the length of the assignment, the terms should include whether the employer will allow for the transfer of personal goods from the U.S. to the host country.
- The amount, if any, of living allowance or differential that will be offered and what it is intended to cover. For example, this might include rent, transportation, increased food costs, school (if dependents are going), etc.
- Whether dependents may accompany the employee and what costs will be covered for them.
- How healthcare benefits will be handled. The employer should look into whether the existing medical plan includes international coverage or whether an additional plan will need to be purchased.
- How nonhealthcare benefits will be handled. This includes things like holiday observance, etc.
- The process for ending the assignment early, by either employer or employee choice.
- Repatriation procedures.