As your company begins operating in a new country, you will discover the delights of international payroll and your required employer contributions. In the US, companies account for tax, Medicare, Social Security, and 401K withholdings. Many governments outside of the US are very pro-employee. Plus, they have generous employer contributions requirements that companies must abide by in order to hire in-country team members. We lay out the basic requirements below.
Employer Contributions Requirements in International Markets
Each country you operate in will have its set of guidelines for employer contributions. As a result, you will want to team up with an in-country expert. Or, use an outsourced payroll service, which we will explain below, to help you navigate these various requirements. It is also prudent to grasp a basic understanding of the employer contributions so you can budget accordingly while developing your global strategy.
For example, in Quebec, employers must withhold an employee’s:
- Income Tax
- Health Benefits
- QPP Contributions (Pension)
- QPIP Premiums (Parental Insurance Premiums)
In addition to these contributions, employers must report the amounts to Revenu Québec to remain compliant.
Employer contributions are similar in a country like Dubai, but there are different processes employers need to take to report these withholdings. For example, in Dubai, there is not a personal income tax for employees, but there is a tax that employers need to pay for operating locally in that country. Social security withholdings are accounted for within an employee’s pension contribution, which is a strict requirement for employers.
Employer Requirements Outside of Direct Contributions
Outside of direct contributions to an employee’s pension, health benefits, and taxes, employers are required to provide employees with benefits including paid time off for vacations, maternity leave, and personal days. In many countries, a 13th Month salary bonus or similar additional pay plans are mandatory.
As mentioned, managing employer contributions in international markets is complex. Consider using an international payroll service or International PEO. Velocity Global will help to cover all the bases and ensure you’re compliant. Feel free to reach out if you have any questions!