GPHR Global Mobility 2 — Questions and Answers
Question 1: A company is sending an employee on a long-term assignment to Germany. Which tax equalization approach ensures the employee pays neither more nor less tax than they would have at home?
- Tax protection
- Tax equalization (Correct answer)
- Laissez-faire tax policy
- Host-country tax approach
Correct answer: Tax equalization
Tax equalization neutralizes the tax impact of the assignment, keeping the employee's tax burden the same as if they had stayed home.
Question 2: Which document is typically required by the host country to legally authorize a foreign national to perform work duties?
- Residence permit
- Work visa or work authorization permit (Correct answer)
- Tourist visa
- Apostille certificate
Correct answer: Work visa or work authorization permit
A work visa or work authorization permit is the legal document that grants foreign nationals permission to work in a host country.
Question 3: A 'balance sheet' approach to expatriate compensation is designed to:
- Minimize total compensation cost for the employer
- Maintain the expatriate's home-country purchasing power and lifestyle (Correct answer)
- Align the expatriate's pay with local market rates
- Maximize the expatriate's savings during the assignment
Correct answer: Maintain the expatriate's home-country purchasing power and lifestyle
The balance sheet approach equalizes purchasing power so expatriates can maintain their home-country standard of living abroad.
Question 4: Which of the following is a key characteristic of a 'localization' approach to global assignments?
- The employee retains full home-country benefits and compensation
- The employee is transitioned to host-country compensation and benefits packages (Correct answer)
- The employer provides cost-of-living allowances indefinitely
- The employee commutes weekly between home and host country
Correct answer: The employee is transitioned to host-country compensation and benefits packages
Localization moves the employee to local salary structures and benefit plans, reducing the cost of long-term or permanent international placements.
Question 5: A split payroll arrangement in global mobility means:
- The employee receives pay from two separate companies
- Part of the salary is paid in the home country and part in the host country (Correct answer)
- The employer splits the cost of the assignment with a third-party vendor
- The employee's compensation is divided between cash and equity
Correct answer: Part of the salary is paid in the home country and part in the host country
Split payroll divides an assignee's salary between home and host country currencies to meet local tax, social security, and living expense obligations.
Question 6: The primary purpose of a 'trailing spouse' program in global mobility is to:
- Provide the accompanying partner with employment in the host country
- Support the spouse's career, social integration, and well-being during the assignment (Correct answer)
- Ensure the spouse pays host-country taxes correctly
- Transfer the spouse's pension rights to the host country
Correct answer: Support the spouse's career, social integration, and well-being during the assignment
Trailing spouse programs address the career and personal challenges faced by accompanying partners, which is a leading cause of assignment failure.
Question 7: Under the US Foreign Earned Income Exclusion (FEIE), a US citizen abroad can exclude foreign earned income if they meet which test?
- The home-country tax test
- The bona fide residence or physical presence test (Correct answer)
- The tax equalization test
- The expatriate domicile test
Correct answer: The bona fide residence or physical presence test
The IRS requires US citizens to meet either the bona fide residence test or the 330-day physical presence test to qualify for the FEIE.
GPHR Global Mobility 2
A company is sending an employee on a long-term assignment to Germany.
Which tax equalization approach ensures the employee pays neither more nor less tax than they would have at home?