6 March 2014: Expatriate Housing/ Allowance Taxation Query

Compandben’s International Payroll Services –

A Topic for Feedback and Discussion –

Here is a copy of e-mail correspondence between John Tinsley and a Payroll Group, on the question of taxation of expatriate housing and other benefits internationally.

ENQUIRY FROM A PAYROLL GROUP

Subject: International Assignment
From: Payroll

When we as a company ask members to go overseas for an assignment and pay for their expenses and temporary housing and then pay for their apartment rent once they find one, why is it the member’s responsibility to pay the taxes on these items when our company has asked them to go overseas? I know they are fringe benefits but is this how other companies handle their overseas assignments, tax their members on this?
Thanks, Payroll

RESPONSE AND INFORMATION REQUEST FROM JOHN TINSLEY

Tax and Social Security departments around the world take the view that if companies give their staff housing they are giving those individuals a benefit and as such the benefit is taxable and subject to social security like any other. If you then reimburse the employee for the tax he has paid you are giving him/her another benefit and there will be tax to pay on that.

In many countries there are housing allowances and transport allowances for LOCAL staff too as well as expats – companies structure pay in ways to minimize the base pay which is subject to pension and overtime rates. Tax departments are there to rake the money in for their governments – they can’t be expected to enquire into and make decisions based on the particular motivation behind benefits.

John Tinsley
Director Compandben SA, Geneva, Switzerland
Payroll, HR, Accounting, Employment (PEO) Services – 160 countries
+41 22 733 4335 or +41 79 285 9713 (preferred)
Skype: john.tinsley01

Does anyone know of any country where the tax/social security administration does NOT tax expatriate housing/allowances ?

Contact Compandben or leave a comment below if you have any queries, ideas or other contributions to make to this discussion.

You can also visit Compandben Main Website – International Employment (PEO) Services

John Tinsley