Cost of Living Allowance (COLA)
A Cost-of Living Allowance (COLA) is a compensation tool that is used to address variances in local compensation plans and to offset the higher cost of living in a new work location.
As it relates to an international assignment, a COLA is a standard benefit for many international assignment policies. This allowance is an extra amount to help offset the cost of living and currency fluctuations while on assignment.
Working with data service providers that are industry leaders, InterLink aids in customizing the indexes to reflect Client policies. InterLink’s attention to detail approach including embracing our own data, results in avoiding double payments.
InterLink prepares the balance sheet reflecting policy parameters and detail as contained in letter of assignment and works in coordination with global payrolls for payroll instructions, on-going maintenance including hypothetical tax and material updates. The payroll reconciliation process is to ensure accurate enactment of payroll instructions and capture of outlying payroll items such as retirement contributions, employer contributions, meal plans, etc.
A Balance Sheet is a compensation approach designed to equalize the purchasing power of employees who are living abroad and in the home country. In addition, it is used to provide payroll instructions for payment of policy benefits such as a cost of living allowance, which are used to offset differences in costs of goods and services and currency fluctuations between assignment locations.
Global Compensation Accumulation Management
InterLink offers a variety of international compensation services to support your business needs throughout the assignment life cycle. We manage the end-to-end process from the assignment planning stages to deployment of global talent through the repatriation period. Our system tracks the status and progress of country-specific compensation accumulation via GlobalLink ® client portal for payroll reporting, tax management and compliance.
Risk and compliance management while having the ability to access your total spend data is essential.
Essential features of GlobalLink ® include a highly specialized system and has the security features to deal with sensitive and highly regulated personal data yet has the capability of facilitating compliant information flows between home and host countries. InterLink’s financial team reports on compensation that has been paid from another country. When an assignee is working in a foreign country, their wages may need to be reported in both the home and host countries via a shadow payroll. It is important to note that just because compensation is not paid from one location does not mean that the income is not taxable in that country.
Shadow payroll can be set up in the home country if the assignee’s pay is being delivered by the host location, which is required in some countries. Different countries have different payroll compliance laws authorizing specific wage reporting requirements to ensure taxes are being paid in an appropriate manner in that particular jurisdiction.