Global Employment Companies

What is a GEC?
A GEC is an entity normally incorporated and managed in a 'tax-friendly' jurisdiction which is politically and economically stable, such as Jersey, that provides employee services to other entities in return for a management fee. This fee is then used to pay compensation and benefits.
A GEC will generally recruit two distinct groups:

• A pool of senior executives who are ready and able to spend a significant period working in one country after another without the prospect of ever returning to their home country.
• Contract workers who are available for work, without much notice, on a series of short-term production or plant set-up projects anywhere in the world.

A GEC acts as the central hub for all internationally mobile employees and looks after all HR functions associated with international assignments. This has the following advantages:

• Cohesive policies and benefits - a GEC can implement and operate one global policy governing all assignments, rather than an ad hoc country by country approach. A global benefits policy can be implemented, perhaps offering benefits available only to mobile employees. For example, a GEC is a useful vehicle to house a global retirement plan, especially in industries such as mining and oil exploration where employees perpetually move throughout their career. A GEC is also useful for continuity, because it will make employees more aware of the universal policies which apply to them, regardless of where they may be.
• Corporate glue - a GEC can help to bind a global company together. It may house employees from numerous jurisdictions, yet they will all be treated consistently under one policy. These will assist in alleviating a 'HQ-vs-subsidiary' approach, allowing the company to truly have a global culture.
• Streamlined administration - locating administration in one location is inevitably more efficient, saving both costs and time.
• Compliance management, data collection and processing - details on each individual can be housed and updated centrally, minimising errors. Keeping track of time spent in different locations is often crucial when calculating an assignee's tax liability and is often poorly managed when done in the assignee's home country.
• Global pool - a GEC can house the global talent pool. This is useful for companies that have a large expatriate workforce as it aids HR with succession planning, enhances the individual’s career management and encourages the most effective use of international talent.
• Cost control - the parent company will be able to keep better control of managing assignments if the administration is kept in one central location, rather than being dealt with on a country by country basis.
• Alignment with corporate tax objectives - the parent company’s corporate tax department will be better able to manage corporation tax liabilities in relation to minimising "permanent establishment" exposure and will be able to implement and operate a global, cohesive transfer pricing policy.

IFG works together with professional advisers to help devise the most appropriate type of company and ownership structure for each client’s particular needs; we can establish the GEC, including applying for all necessary permits.

Once established we can manage it and provide administration functions such as salary payments, record keeping and accounting.

IFG does not provide taxation or legal advice. The information and expression of opinion expressed in this briefing note are not intended to be a comprehensive study or to provide taxation or legal advice. Specific advice concerning individual situations should be taken and IFG can provide introductions to advisers who specialise in this area.