International Assignment Letters: Key Considerations for Employees Working Overseas

International mobility has become a strategic pillar for business growth. However, assigning a professional to a workplace abroad is not merely a logistical procedure; it is a complex legal act that requires precise contractual regulation to avoid employment, tax and Social Security conflicts.

In this context, the assignment letter (or international assignment agreement) is not just an informational document, but an essential tool to ensure legal certainty for both parties.

What is an international assignment letter?

An assignment letter is the document that regulates the applicable conditions when a company temporarily assigns an employee to another country.

Legally, it may be structured as an annex to the employment contract or as an independent agreement, but its main purpose is to adapt the employment relationship to the specific circumstances of the destination country while maintaining the link with the home company.

Its purpose is to record key aspects such as:

• The duration of the assignment.
• The destination country.
• Working conditions.
• Salary policy.
• Expense coverage.
• The applicable Social Security regime.
• Return conditions.

Although it is sometimes perceived as a simple internal document, it is actually highly important from an employment, tax and international compliance perspective.

 

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When should an assignment letter be used?

In practice, this type of document is advisable whenever there is a temporary international mobility arrangement linked to professional activity.

It is especially common in:

• Expatriations.
• International projects.
• Intra-company assignments.
• Market expansion.
• Temporary assignments.
• Extended international remote work.

The longer or more complex the assignment, the more important it becomes to properly regulate all applicable conditions.

Why are they so important for companies?

Many issues related to international mobility arise precisely due to the absence of clear agreements between the company and the employee. When conditions are not properly defined, conflicts may arise regarding:

• Salary and international compensation.
• Taxation.
• Expenses covered by the company.
• Social Security.
• Duration of the assignment.
• Return conditions.

The assignment letter helps demonstrate that the company has properly planned international mobility from a regulatory compliance perspective.

Assignment vs. relocation

Each international assignment has its own specific features, but certain elements should always be clearly regulated.

One of the most relevant aspects is the planned duration of the assignment, as it may directly affect immigration, tax and Social Security matters.

Assignments exceeding twelve months within a three-year period will, for all purposes, be legally treated as relocations.

This distinction is crucial, as relocation involves a permanent change of residence and grants the employee the right to choose the compensated termination of their contract — 20 days’ salary per year of service — if they do not accept the measure. Therefore, the letter should include mechanisms to monitor the duration and prevent a temporary assignment from becoming, by operation of law, an unplanned forced relocation.

Essential content for effective risk management

For an assignment letter to fulfil its role as a “legal shield”, it should include:

• Identification of the parties and workplaces: The host entity and the exact place where services will be provided must be specified.
• Applicable law and jurisdiction: Although the employee retains their minimum rights under Law 45/1999, it is essential to agree on the law governing the contract, while always respecting the mandatory rules of the destination country.
• Compensation package and benefits: The base salary, bonuses, allowances and housing support should be detailed. It is advisable for the company to cover travel and accommodation expenses.
• Immigration procedures: The company should be responsible for obtaining visas and work permits.

International taxation: one of the main risks

Tax planning should be reflected in the letter. In Spain, assigned employees may benefit from the exemption for work performed abroad provided for in Article 7.p of the Personal Income Tax Law, provided that requirements are met, such as the existence of a similar tax in the destination country and the beneficiary being a non-resident entity.

A well-structured letter facilitates the proof of these requirements in the event of a potential inspection by the Spanish Tax Agency.

Social Security and international contributions

One of the greatest risks in international mobility is the loss of social protection. The letter should specify the applicable Social Security regime.

For assignments within the EU/EEA, it is essential to process the A1 Certificate, which proves that the employee remains subject to Spanish legislation, maintaining their “organic link” with the home company and avoiding duplicate contributions.

Incorrect management may lead to coverage issues, duplicate contributions or sanctioning risks.

The right to return and unemployment protection

One of the most overlooked aspects in many international mobility policies is the employee’s return.

However, properly defining return conditions provides security and helps avoid future conflicts.

Aspects such as reinstatement, the maximum duration of the assignment or subsequent salary conditions should be clearly regulated from the outset.

What risks arise if the assignment is not properly formalised?

Managing assigned employees without adequate documentation can create significant risks for the company.

The most common include:

• International employment disputes.
• Tax issues.
• Immigration incidents.
• Administrative sanctions.
• Social Security risks.
• International employment compliance breaches.

In addition, in multinational companies, poor mobility management may also affect the employee experience and corporate reputation.

Adlanter, specialists in international mobility and employee assignments

At Adlanter, we help national and international companies manage international assignments safely, efficiently and in line with the applicable regulations.

If your company needs to manage employees assigned abroad or develop international mobility policies, we can help.