The Disconnect Between Payroll and Tax
The disconnect between payroll and tax/global mobility is one of the most overlooked risks in cross-border operations. Employees travel, projects extend, and payroll quietly processes salaries based on outdated assumptions. Meanwhile, tax assumes payroll knows everything they need to – until the year-end reconciliation tells a different story.
Common Payroll and Tax Issues in Cross-Border Operations
You might recognise the scenario. An employee is sent abroad for six months. Payroll processes their salary under the home scheme, tax assumes A1 certificates and exemptions are in place. A few extra weeks are added to the project, and no one thinks much of it. Until year-end, when the employee is taxed in two countries, and social security contributions have been miscalculated for months. Now, you’re left explaining to the employee why they owe taxes in two countries – and why payroll didn’t catch it.
Could Payroll Have Prevented It?
Could payroll have prevented it? Possibly. But the truth is payroll can’t fix what they don’t know. And tax can’t adjust what payroll doesn’t report. It’s not payroll’s fault – it’s the lack of communication that creates blind spots no one catches until it’s too late.
Hypothetical Payroll and Tax Communication Breakdown
Imagine this. A project manager is assigned to France for 180 days. Payroll assumes it’s safe under existing tax treaties and keeps them on the home scheme. But no one told tax that the employee extended their stay by two months to wrap up the project. By year-end, the employee has triggered French tax residency, owes taxes in both countries, and payroll is left trying to retroactively fix a problem that could have been avoided with a simple update.
Aligning Payroll and Tax
It’s a hypothetical situation – but not an uncommon one. At Crossbord, we’ve seen it play out more often than you might think. It’s not about blaming payroll or tax. It’s about aligning them. Our solution bridges the gap by tracking employee movements, ensuring payroll reflects tax obligations, and conducting proactive reconciliation before errors accumulate.
Key Questions to Ensure Payroll and Tax Compliance
When payroll and tax speak the same language, tax returns disappear, corrections are handled at the employer level, and employees aren’t left filing individual returns for mistakes they had no control over.
If that sounds like something you’d rather not deal with, maybe it’s time to ask payroll a few questions:
- Are all employee A1 certificates up to date and linked to payroll?
- Has payroll accounted for all project extensions since January?
- Are tax schemes like the Danish researcher tax scheme reflected in payroll for eligible employees?
- Has employee travel triggered permanent establishment anywhere – and does payroll reflect that risk?
- Are payroll and tax regularly cross-checking employee postings and durations?
Payroll isn’t the problem. Silence is. A quick conversation now can save months of corrections later.
So, have you talked with payroll since the start of the year?
Let’s make sure the answer is yes.
