QuickCounsel

Executive Mobility - Transferring Employees Between Countries

Overview

Many multinational companies wish to transfer executives and managers from affiliated companies to headquarters and vice versa for limited “tours of duty.” While many company groups might have human resource departments who are already skilled in handling these relocations, smaller companies might need the input of their in-house legal department in order to know what laws apply to these transfers.

Most countries have laws which permit the transfer of executives to work in local subsidiaries of a multinational company for a limited time.

Typical issues which come into play in obtaining the host jurisdiction’s permission to live and work within its borders involve:

A big issue in relocation, in addition to the obtaining of a work permit or visa, is the issue of taxation. Most countries have tax treaties to avoid double taxation on earned income; it is incumbent upon the transferring company to understand and communicate the tax consequences of relocation to the executive and there are consultants that can assist the company and employee with this often difficult analysis. The obligation of companies in some countries to pay “social charges” into a national retirement schemes can add to the cost of relocating employees. Agreements with a relocating employee, such as those provided in the Resources below, should reflect that schooling, housing, and cost of living differentials are all issues to be reviewed in planning an expatriate assignment. This QuickCounsel primarily focuses on the work authorization issue.

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Europe

Nationals of a country that is not a full member of the European Union ("EU"), the European Economic Area ("EEA") or the European Free Trade Association ("EFTA") must obtain a work visa or permit to work in the country in Europe where the job is located before taking up employment.

Nationals of a country that is a full member of one of those groups do have freedom of movement within those areas, including the right to work and reside within any other full member state.

There are 17 full EU members as of February 2009: Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Italy, Irish Republic, Luxembourg, Malta, Netherlands, Portugal, Spain, Sweden, and the UK. The ten member states that joined the EU on May 1, 2004 and the two that joined on January 1, 2007, have seven-year succession plans from date of entry until they are full members of the EU for purposes of freedom of movement. They are: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia (2004) and Bulgaria and Romania (2007).

Each EU member country has its own rules for extending work permits to foreign nationals who do not qualify for the above mentioned freedom of movement. Planning the assignment of an employee to a foreign subsidiary in the EU requires a careful consideration of the destination country’s regulations regarding work authorization. 

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Canada

Canada allows for the transfer of certain employees (executives, senior managers and specialized knowledge workers) to the Canadian branch, subsidiary or affiliate of an international company, without the involvement of Human Resource Skills Development Canada. In order to qualify for a work permit as an intra-company transferee, a business enterprise must be doing business or will be doing business in both Canada and the foreign country.

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Japan

Japan also has an intra-company transfer visa category with the following conditions: The applicant must have been employed at the main office, or branch office or other office abroad for at least one year immediately prior to the transfer to Japan while engaging in a job which falls under the "Engineer" or "Specialists in Humanities/International Services" categories. The applicant should receive no less salary than a Japanese national would receive for comparable work.

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Skilled Workers and Investors

Intra-company transfers are not the only means available for obtaining work permits for foreign national executives. For instance, many countries have special opportunities for skilled workers (Canada example), persons sent to open a new office in a country (Singapore example) or for investors (UK example).

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ACC Resources

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Other Resources

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