How to split an employee's remuneration across several countries, and the precautions to take.
French companies developing their international activities are increasingly facing a complex challenge: how do you pay an employee working abroad while keeping part of their remuneration in France? The answer is often a Split Payroll arrangement.
What is Split Payroll?
Split Payroll consists of splitting an employee's remuneration between two (or sometimes more) countries. In practice, part of the salary is paid by the French employer and another part by a subsidiary or company based in the host country. The employee therefore receives several payslips corresponding to the different entities responsible for their pay.
Why set up a Split Payroll?
It can help meet the host country's legal obligations, maintain certain French social rights where possible, facilitate payment of the employee's local expenses, organise remuneration across several currencies, and support the international mobility of executives and managers.
When is Split Payroll used?
Long-term expatriation — the employee works mainly in the host country but keeps part of their remuneration in France. Intra-group mobility — international groups often split remuneration across several companies within the same group. Opening a subsidiary — during a launch phase abroad, several entities often contribute to the employee's pay. Executive mobility — international executives regularly receive remuneration split across several companies.
The benefits of Split Payroll
When properly organised, it can ensure continuity of certain French payments, comply with host-country obligations, improve currency management, offer more flexibility to expatriate employees, and support the company's international development.
The risks of a poorly organised Split Payroll
Poor organisation can lead to social contribution errors, double taxation, missing declarations, payslip errors, reassessments during audits, and difficulties when the employee returns to France.
Social security and tax consequences
The applicable regime depends on the employee's status, the country concerned, European regulations, bilateral social security agreements and the length of the assignment. Split Payroll doesn't automatically change the employee's tax residence: several criteria must be examined — country of residence, place of work, international tax treaties, how remuneration is split, reporting obligations.
Checking payslips
When several payslips are produced in different countries, their consistency becomes essential: accuracy of remuneration, correct split of salary elements, social contributions, benefits in kind, tax withholding, reporting obligations.
Most common mistakes
Incorrect split of remuneration, contributions paid in the wrong country, poor coordination between group companies, lack of checks on local payslips, currency conversion errors, insufficient documentation. These errors can represent tens of thousands of euros.
Conclusion
Split Payroll is now an essential tool for supporting the international mobility of employees. Properly structured, it facilitates the international development of French companies while ensuring compliance with social and tax obligations. Conversely, poor organisation can lead to significant financial consequences.