How a Global Employment Organization (GEO) works to manage employee mobility, the drivers for a GEO and observations on leading practices.

1. 2012 Human Capital Conference
23–26 October
Global employment
i ti h h
organizations: who, where,
what, why and how?

2. Circular 230 disclaimer
► Any US tax advice contained herein was not intended or written to be
used, and cannot be used, for the purpose of avoiding penalties that may
be imposed under the Internal Revenue Code or applicable state or local
tax law provisions.
Page 2 Global employment organizations: who, where,
what, why and how?

3. Disclaimer
► Ernst & Young refers to the global organization of member firms of
Ernst Y
E t & Young Global Li it d each of which i a separate l
Gl b l Limited, h f hi h is t legal entity.
l tit
Ernst & Young LLP is a client-serving member firm of Ernst & Young
Global Limited located in the US.
► This
Thi presentation i ( ) 2012 E t & Y
t ti is (c) Ernst Young LLP All rights reserved. N
LLP. i ht d No
part of this document may be reproduced, transmitted or otherwise
distributed in any form or by any means, electronic or mechanical,
including by photocopying, facsimile transmission, recording, rekeying,
photocopying transmission recording rekeying
or using any information storage and retrieval system, without written
permission from Ernst & Young LLP. Any reproduction, transmission or
d st but o o t s o o a y o t e ate a e e s p o b ted and s
distribution of this form or any of the material herein is prohibited a d is
in violation of US and international law. Ernst & Young LLP expressly
disclaims any liability in connection with use of this presentation or its
contents by any third party.
► The views expressed by panelists in this session are not necessarily
those of Ernst & Young LLP.
Page 3 Global employment organizations: who, where,
what, why and how?

4. Presenters
► Rachel D’Argenio
g ► Chris Debner
► Ernst & Young LLP ► Ernst & Young Ltd.
► rachel.dargenio@ey.com ► chris.debner@ch.ey.com
Page 4 Global employment organizations: who, where,
what, why and how?

5. Agenda
► Global employment organizations (GEOs)
► Current developments
► Leading practices
► Case studies
Page 5 Global employment organizations: who, where,
what, why and how?

6. Theme and key points
► Define the GEO
► Identify current market trends
► Evaluate the pros and cons of the structure
Page 6 Global employment organizations: who, where,
what, why and how?

7. Model without GEO
► This model shows the
typical pattern of a
multinational’s assignee
population and how
Hong
cross-border moves can
b d Kong
China
develop with complex Belgium
US
country combinations Panama
India
Canada
India
Chile Philippines
pp
Spain
US
Spain
Switzer-
land
Italy
Mexico
Page 7 Global employment organizations: who, where,
what, why and how?

8. Basic GEO model
In its most basic sense, a GEO
is
i a separate corporate entity
t t tit
that exists for the sole purpose
of providing employment-
related services to the Hong
Kong
organization’s international
China
Belgium
operations or projects. The US Panama
GEO is the recognized India
employer of th
l f these assignees
i Canada
and subsequently seconds or India
GEO
leases these employees to the
various international Chile Philippines
pp
operations or projects of the Spain
parent company. Spain
US
Switzer-
land
Italy
Mexico
Page 8 Global employment organizations: who, where,
what, why and how?

9. How a GEO works
► A GEO can act as an in-house
employment agency:
l t
► An individual is employed by the
GEO.
► Th GEO provides employment
The id l t Tax and Payments
social
contract, assignment letter and security
professionals
similar documents.
Local
GEO Employee
► The GEO pays salary and company
p y
Employs and provides
allowances. Benefits compensation services
providers
► The GEO provides benefits. Charges for services
► The GEO provides
administrative support.
► The GEO bills host company/
receiving entity.
► The GEO keeps markup for its
services as an employer.
Page 9 Global employment organizations: who, where,
what, why and how?

10. Current drivers for a GEO
► Risk management opportunities for challenging, non-
g pp g g,
traditional populations:
► Employer of regional teams
► Employer of rotational employees
► Employer of short-term business travelers
► Employer of executive management team
► Efficient corporate tax planning:
► Facilitating corporate deductibility
► Managing withholding tax charges
Page 10 Global employment organizations: who, where,
what, why and how?

11. Current drivers for a GEO
► Managing swift g
g g growth in the number of assignees:
g
► Maintaining tax compliance
► Improving processes
► Keeping the program attractive to the employees
► Mechanism for entry into new markets where local
presence d
does not exist:
t i t
► Fulfill reporting and withholding requirements
► Manage corporate tax risk for the company
► Develop framework to deploy resources into new countries where
there is no current local presence and no local entity is planned
Page 11 Global employment organizations: who, where,
what, why and how?

12. Current drivers for a GEO
► Increase in speed to deployment:
p p y
► Efficient and well-established processes and policies
► Cost-reduction opportunities:
pp
► Administrative cost reductions
► Social security tax cost reduction opportunities, especially in
Europe
E rope
► Policy and process exception management
Page 12 Global employment organizations: who, where,
what, why and how?

13. Current drivers for a GEO
► Population bifurcation opportunities:
p pp
► Set up special treatment for one population while protecting
integrity of regular international assignee program
► Manage new types of populations such as globalists, who may
have lost ties to home country
► Manage careers a d ta e t
a age ca ee s and talent
► Simplify assignee experience
Page 13 Global employment organizations: who, where,
what, why and how?

14. Observations on leading practices
► Evaluate the risk, cost and benefit before you design and
, y g
implement any solution; up-front planning and analysis will
clearly establish the benefits and costs for the company
while highlighting any potential pitfalls
► Address the project holistically:
► Think across all functions that touch mobility
► Evaluate all areas of tax and law that are impacted by mobility
Page 14 Global employment organizations: who, where,
what, why and how?

15. Observations on leading practices
► Find the perfect fit:
p
► Consideration of the location for the GEO establishment and the
number of GEOs is very important, as it will drive future savings
opportunities.
opportunities
► Consideration of the goals of the structure may result in a different
final design of structure.
► Detailed due diligence identifies potential pitfalls before
they become a reality. This allows for the following
benefits:
b fit
► Risks are isolated and minimized.
► It helps identify registrations up front so that the company can be
compliant from the onset.
► It helps develop an understanding of the compliance requirements
to t bli h
t establish necessary processes t b compliant.
to be li t
Page 15 Global employment organizations: who, where,
what, why and how?

16. Observations on leading practices
► Implementation and maintenance is key to success:
p y
► Make sure you have top management buy-in to support
implementation
► Have the right resources on the team so they operate and manage
the structure long term
► Establish c ea y de ed p ocesses a d p ocedu es to facilitate
stab s clearly defined processes and procedures ac tate
ongoing operation
► Review the structure periodically to check if it is still meeting
company objectives
Page 16 Global employment organizations: who, where,
what, why and how?

17. Conclusion
► Hold a workshop of key stakeholders
► Develop a business case
► Design for company needs of today and tomorrow
► Don’t rush into a design that isn’t well-developed
► Allow time for implementation, including documentation
and t i i
d training
Page 17 Global employment organizations: who, where,
what, why and how?

18. Questions
Page 18 Global employment organizations: who, where,
what, why and how?