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International Assignment to Hong Kong: Long term secondment

I'm tasked with formulating the best preparation for one of our employees who will be assigned to Hong Kong (potentially two years) on a secondment basis (although if there is a better 'arrangement' then I'm all ears)!  The ROI has already been a considered factor and although costings for the assignment haven't been calculated (which is one of the main bits of my task) it's considered an essential move and in the business' interest (it's got lots of other positive elements that I won't go into detail here - both for the organisation and the employee).

I have contacted ECA and await their return call. 

My anxiety is around benefits, tax implications and the usual that I imagine will crop up with this.  HELP!

I have previously read the threads concerning a secondment in Australia which was terribly helpful but I imagine Hong Kong will have it's differentials.

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  • Hi Michelle

    ECA should be able to assist you with most of your questions, including tax simulations.

    Before talking with them it would be useful to familiarise yourself with the fundamentals, and an excellent summary is here. If the person is going to be there for 2  years then in all liklihood they will be classed as resident for tax purposes in HK

    Take your time in going through the KPMG document and it should help you you understand any guidance/answers that ECA can offer you.

    In any expatriation the most significant cost elements are usually :

    • Housing - VERY EXPENSIVE
    • Schooling
    • Ongoing expat allowances (hardship and cost of living vs UK)
    • Tax equalization so the person will not pay more more in tax than they would have paid in the UK. This amounts to the company paying any excess arsising from HK salary+benefits, compared to the tax they would have paid had they stayed in the UK. Also allow for having to pay additional tax on this payment of tax by the company (which is also a taxable benefit) - also called grossing-up

    Ensure that in addition to initial and ongoing support from ECA on hardship and cost of living movements, that you have a local tax accountant handling declarations and tax payments - errors are expensive.

    Hope this helps for starters

    Ray 

  • One other thing that you need to be mindful of is pension contribution. Make sure that their current scheme allows them to continue whilst they are working abroad. Also, look at cost of living allowances.