Author: Norma Reynov, CONVINUS global mobility solutions
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For many companies, sending a manager abroad is a strategic instrument for transferring know-how internationally and strengthening local structures. At the same time, it is a complex project that needs to be set up properly in legal, tax and organizational terms. In the following, we use a specific example to show what such an assignment can look like in practice.
Initial situation
Ms. S., CFO of an internationally active Swiss company, is assigned to the Australian subsidiary in Sydney for three years. The existing Swiss employment contract remains in place and is supplemented by an international assignment agreement. Her family will accompany her; her husband is planning to find a new professional perspective locally. The school-age children do not yet speak English.
Work permit
A visa in the "Temporary Skill Shortage Visa (Subclass 482)" category is required for the assignment to Australia. One of the requirements for this is that the Australian subsidiary is registered as a sponsor. The husband and children receive dependent visas with the right of residence (and work). The visa process should be initiated at an early stage and coordinated with external specialists.
Labor law
Ms. S. remains formally employed by the Swiss parent company for the entire duration of her international assignment. Her international assignment is based on a supplementary agreement that specifies the regulations governing the international assignment. This contract refers to the company's expat policy and regulates details such as the duration of the assignment, salary, tax treatment (tax equalization), social security issues and additional benefits for the family.
The employment relationship is still subject to Swiss employment law, but the employment law provisions of Australian law must now also be taken into account. These are, among others, statutory regulations on protection against dismissal, working hours, minimum leave and prohibitions on discrimination.
As Ms. S. remains employed by the parent company in Switzerland, the international assignment agreement is also important in order to avoid potential employment law conflicts.
Tax implementation
Ms. S. becomes liable for tax in the country of assignment, Australia. Australia has the right of taxation as she works there and earns her income in the Australian context. The additional tax burden due to the assignment to Australia is offset within the framework of the so-called "tax equalization". This means that Ms. S. pays a hypothetical Swiss tax (hypotax) and the actual taxes on her earned income are borne by her employer. Ms. S. receives support from an Australian tax advisor for her Australian tax return.
Social Security
On the basis of the bilateral agreement between Switzerland and Australia, Ms. S will remain in the Swiss social security system (AHV/IV, ALV) for the duration of the international assignment. The corresponding confirmation is requested from the AHV compensation fund via the Swiss "ALPS" system. The Swiss social security branches not covered by bilateral agreement are informed separately by the employer about the international assignment and can be continued.
The Australian social security branch "superannuation" is not covered by the bilateral social security agreement. This means that the responsible HR department in Australia needs to exempt Ms. S from superannuation so that no social security contributions are owed here.
In addition, the company takes out international health and accident insurance cover for the family, as the benefits provided by Swiss insurance are not sufficient in international terms.
Payroll & Shadow Payroll
Salaries are paid out locally by the Australian subsidiary. At the same time, a shadow payroll is set up in Switzerland in order to correctly record and report Swiss social security contributions on all wages and other benefits. Close coordination between the Australian and Swiss payroll is, therefore, essential.
Practical aspects of international assignment
In addition to the employment law, tax and social security aspects, there are also a number of practical challenges that need to be overcome. One important point is the integration of the family in Sydney.
- Integration of the children:As Ms S.'s children do not yet speak English, school places are organized at an international school in Sydney to make the transition easier for the children. Language support is also being considered so that the children can be quickly integrated into the Australian school system.
- Husband:Ms. S.'s husband quits his job in Switzerland and plans to find a new career in Sydney.
- Relocation and housing situation:A relocation company is hired to organize the physical move. The family also receives support from a relocation service provider in Australia, who assists with the search for accommodation locally and with administrative formalities in connection with the move.
Additional benefits and regulations
In addition to the tax and insurance aspects, additional benefits are provided for Ms. S. and her family to support the assignment. These include, among other things:
- Home Leave:The family is entitled to an annual return trip to Switzerland to visit family and friends and maintain cultural ties.
- School fees:The costs for the children's international school are covered by the company, as this contributes to the successful integration of the family.
- Spouse Support:The husband receives support with job placement and the application process in Australia to facilitate his integration into the labor market.
Conclusion
The international assignment of Ms. S. to Sydney is much more than an administrative process. It is a strategic project with many stakeholders, legal interfaces, and individual needs. This case is a good example of how essential it is to plan ahead and closely interlink the expat policy, assignment contract and operational implementation. To ensure a successful international assignment, all key elements (from visas and taxes to school integration) must come together early in the process. Addressing these threads in a coordinated way helps minimize risks and lays the groundwork for success abroad. The collaboration between legal experts, HR, and support services isn't just a "nice to have". It is a critical success factor. This is especially true for long-term assignments, where professional planning and structure benefit both the expatriate and the company many times over.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
