The recent rise in the use of short-term assignments by multinational corporations presents a new challenge in immigration compliance. Studies have shown a dramatic increase in the number of international assignments. Of that increase, the vast majority is due to the growing use of short-term assignments, usually those which last less than one year. Multinational corporations have emphasized short-term assignments for a variety of reasons, including the belief that they are more cost-effective than long-term assignments for tax purposes. While there may be a tax savings for individual employees or for companies in some situations, there may be other very serious immigration compliance implications that are frequently overlooked.
People often mistakenly believe that short-term assignments do not require work permits or other immigration permissions. As long as assignments last less than the typical duration of stay for a country and employees remain on the home payroll, it is assumed that simple business visas are sufficient, but this is simply not the case. It is a very dangerous method of operating, as the costs for lack of immigration compliance can be enormous for companies.
How do you determine what kind of visa is required for employees on short-term international assignments? Each situation is unique and requires research in order to ensure that the traveler is complying with immigration rules. Every country has different immigration laws and visa categories; however, there are some common visa categories with similar guidelines. A good place to start is by looking at the following chart, designed to provide some general guidelines that most countries follow. Please note that the specific circumstances of the visit must be evaluated to truly determine the most appropriate visa. We will examine some exceptions later on.
The length of stay for a business visitor is generally 30, 60 or 90 days. In some cases, it may be up to six months or more. Most companies immediately look at the length of stay to determine whether or not other immigration documents will be required. Unfortunately, many businesses stop here. They believe that if an employee is only going for one week to a destination, they will not need a work permit, but that is not taking into consideration many other important factors.Although some of this information may seem like common sense, determining the most appropriate visa for a short-term assignment is not always a black and white matter. There are a multitude of differences among countries, and it is important to look at the different aspects which may commonly affect whether or not a work permit is required. In order to determine whether travelers require a business or work visa, countries almost universally take into account the following: proposed length of stay, compensation issues, and activity to be performed.
Some companies are careful to take into account compensation issues, as well. The reasoning is that if the employee remains on the home payroll, they can travel as a business visitor. While this may be true in some cases, it is common for countries to take into account other compensation factors, such as whether or not the traveler will receive reimbursement for expenses, or whether his time will be billable. However, the most important trigger in determining whether a traveler may need more than just a business visa is often the activity to be performed.
As previously mentioned, there are many activities which are usually classified under “visitor” or business status, and others which typically require further approval from immigration officials. A visitor simply attending meetings and/or visiting clients usually may travel on a business visa, for example. Conversely, very few countries allow foreigners to visit restricted areas without further government approval. Nonetheless, there is a certain amount of variety between countries in classifying which commonly performed activities may require permission. In many countries, visitors may sign contracts on a business visa, but some cases require further permission. In Brazil, for instance, foreigners are permitted to sign contracts on behalf of a foreign company within Brazil on a visitor visa, but may not sign contracts on behalf of a Brazilian entity. (Overseas Consultoria) Conducting and internal audit is another activity often considered as business by companies. Some governments, like the Italian and South Korean (Jung Un, Kim, Chang & Lee), permit internal auditing under a business visa, provided that foreigners do not exceed the permitted stay or compensation rules. Other governments, like the French and Indian, require authorization for internal or external audits.
Some of the most problematic activities are of a technical nature. Sometimes, installations or repairs can be performed as a visitor, while other times, governments are extremely strict about requiring approval. Countries, like Russia, allow installation and repairs to be conducted on business visas, provided duration of stay and compensation rules are met. Canada, for instance, allow installations and repairs on business visa as part of an after-sales agreement or in certain specific situations. Other governments, like Singapore, require employment passes for any installations or repairs, including software installation. Sometimes the rules are very specific, like in the UK, where representatives of software companies are allowed to “install, debug, or enhance their products” as business visitors, while other activities will require work permits. Just as common are specifically vague laws that allow immigration officers more authority to determine whether a foreigner is going to work or simply conduct business.
Most laws are very clear regarding short-term assignments, however. Many factors can contribute to the correct immigration category being selected, and it is easy to overlook an aspect that can trigger the need for a work permit, even for the shortest of visits. As governments continue to become more vigilant regarding immigration rules and regulations, it is more important than ever for companies to have a clear compliance policy in regard to short-term assignments. Planning, research and knowledge are an employer’s best tools to prevent serious compliance issues.