Split payroll
pays one employee’s salary through two countries’ payrolls — part at home, part in the host country — usually during long assignments. It delivers local currency for living costs and can optimise tax and social-security outcomes, at the price of coordination complexity.
When split payroll helps — and when shadow payroll is enough
Split payroll suits assignments where the employee needs host-currency income, host tax must be withheld at source, or treaty positions make splitting efficient. If nothing needs paying locally — only reporting — a shadow payroll does the job with less machinery.
The coordination burden is real: two payrolls must reconcile one employment — total gross, benefits, social-security base under one A1 or local coverage, and one year-end picture per country. Design it with the tax adviser before the first run, not after.
FAQ
Does split payroll reduce tax?
Sometimes lawfully, by aligning where income is taxed with where work is performed under the treaty — never by hiding one part from either authority. Both countries see the full picture through employer reporting; splits structured as concealment fail audits and taint the whole assignment.
How is social security handled on split payroll?
One system covers the employment at a time under EU coordination or bilateral treaties: contributions are calculated on the combined salary and paid where the A1 or agreement dictates — not half in each. Splitting the payment does not split the coverage.