Smells faintly of tax fraud....I'm with MTI, depends on how they declare it. I wouldn't want to be in that situation nor work for a company that decides to put me in that situation, but I understand people take what they can.

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hmm. My feeling is that this may possibly be perfectly legal based on loopholes, but its really complex and I believe it to be unethical. The savings must really be there for them to spend all this time working out this plan, but she must be party to a very complex and I believe very fragile arrangement where if ANYTHING goes wrong, shes the one who's screwed.

Who does she complain to if by this shady agreement the company suddenly starts putting less reimbursement in her account? If its called a reimbursement, whats to stop them from truly auditing her actual living costs, and paying ONLY for them at some future point, while she is still a free employee for them and in a different country?

What is her medical coverage during this period? If shes not getting a salary, does she then become classified as a "temp", or a "volunteer"?

I think any contract must be reviewed with a fine tooth comb by her own lawyer, but I think id pass as this sounds good when you say it fast, but her personal arrangements and her employment would have become hopelessly entangled. Id stay away from it

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This is mainly an end-run around Swiss work-permit laws, I'd suspect. I'd frankly go for something like that if I could get away with it, making sure I keep enough money around for a plane ticket home if need be. (Though it's much easier for me to obtain a Swiss work permit than the average American, so it wouldn't be needed.)

No way in hell. She may well wind up in a cell next to Martha Stweart. (yeah, I know she's out) Company is trying some very fast footwork and nobody is gonna come out of this looking good. Part of this is tax evasion, pure and simple. Sounds like a host of other laws may be involved too. I would look for a new employer today. And I would save all the paperwork from the offer I could. She may even be required to report all this to the IRS. Actually, the cell might not be so nice. Might be next to one of those Charles Manson women. Martha could afford a very good lawyer.

Sounds to me like the employer is proposing to dodge Swiss requirements for visas and work permits necessary for her to reside and work long term in CH. Hence the requirement not to tell anyone there that she is working, and no Swiss bank account, etc. If I am correct, she would be in the country illegally and subject to deportation and possibly other civil and criminal penalties.

Run away brave Sir Robin, run away...

Those perks look like taxable income to me, though I don't know which government she will answer to in terms of her tax liability. If she took that deal for a job to be performed in the US, then I believe she would be guilty of tax evasion. That the work is to be performed in another country may change that analysis. I don't know.

Were I in her shoes, I would also want to know why the employer wants to do it this way. If it's all legit, then I see no ethical problem with it. The comments about Swiss work permit law look like they are on point.

The best advice I could give would be for her to spend some of her own money on at least two lawyers - an American tax lawyer and one or more Swiss lawyers familiar with their tax and employment laws.

As for the thread title, I don't see it as an ethical question. It's more of a legal question. That's usually the same thing, but not always. This arrangement looks ethical to me, unless it involves deceiving the government or some other third party. As between the parties, they are both free to enter into whatever arrangement they like. Their both grownups, so to speak.

BobK:
To be clear, tax evasion in .ch is a civil matter, not a criminal one. As to Dumberica, the amount has to be pretty high (like half a mil) before jail time becomes a possibility -- generally they cut a deal to pay it back with interest and that's that.

Also, first $90k of income abroad is not taxable. Reportable, yes, but not taxable. If they audit, the amount owed would likely be pretty small as long as $100k in fake reimbursements isn't exceeded.

The Swiss tax authorities are more likely to be a problem than the IRS.

The classic arrangement is salary plus expenses and/or an overseas bonus. Work outside the U.S.A. over a certain period of time exempts one from U.S. income tax. However, at that time you are considered a resident of that country and are liable to their tax structure. In most cases, the foreign government tax rate is much higher than that of the U.S.A. at our levels of income. Bottom line tax-wise is that there is no free ride. You have to pay taxes to someone.

Having no visible income then signing a tax form prepared by someone else stinks. I don't care how reputable this "corporation" is, they are asking her to do something deniable. She has no recourse if they get caught dirty and choose to say "Huh? We assumed she was filing taxes as required."

Sounds like the corporate entity is a volunteer organization. If I had to guess, I would say American Red Cross, her assignment being to International Red Cross which is headquartered in Switzerland.

I would not do it. Red Cross (if it is them) has a paid cadre and could do it cleanly and on the up-and-up if they simply hired her. BTW, I was a Red Cross disaster services volunteer and I think the management is terrible so maybe I have a bias and maybe it isn't Red Cross at all.

Unless she's committed other crimes, worst that would likely happen would be that she'd be deported and persona-non-grata'd. The Swiss are more practical than the American border service; keeping someone in jail for months and spending money on it when they could be simply deported would be impractical.

How about money laundering? Over pay for work done or not done to get more money in/out than would normally be done. Although since this is 'a well known company' I would wonder why they would expose them selves like this by hiring an unknown person who could blow it.

The alarms started sounding when it was said she cant talk to anyone about it.

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Unless she's required to give some of the goods back to them, that's actually very unlikely. Likely it's as above-board as something like that can be -- they want to hire her, but there's a work-permit problem. I suspect that the Swiss government is not a fan of the US right now, not with the US government bullying them around as far as bank secrecy laws.

Doesn't smell faintly of anything.

It is tax fraud.

They are providing significantly more money in "reimbursements" that cannot be supported by the expenses.

The difference, presumably, is her salary.

A classic case of attempting to get around paying the Social Security and Medicare on the wages.

Tax fraud...........both of them can go to jail if the IRS gets wind of it.

Brian, that would depend on her employment status; either as an independent contractor (1099) or employee (W2), which hasn't been disclosed in the exemplar.

If the prepared taxes are legitimate, there is no fraud as to tax reporting.

Assuming that the tax reporting in the returns is fraudulent, what's the downside for the employee? The employer cannot bring suit for breach of employment contract, since they cannot enforce a contract to commit fraud. In a way, one has to examine where is the actual "leverage" in this arrangement? Without more information (employee at will? nature of expenses covered? dispute resolution procedures) it remains hard to assess the virtues or downsides.

If she takes it I am familiar with someone in Nigeria that needs a checking account number so they can put 40 mil in and she can keep half as long as there is a minimum of 20 thousand balance when the 40 mil is deposited.

SS and Medicare liability depends on whether the initial employer was a US entity in the first place.

Weird question, if they're located in both countries, why not suggest that they deposit reportable wages in a US bank account, while reimbursing actual expenses in .ch? Given a good bank like HSBC, accessing a US account while abroad isn't even that difficult, and it can even be linked to a local bank account in .ch or another European country set up by the employee herself.

They're making this complicated than this needs to be. If she's just "temporarily traveling" in .ch while being paid in the US, then they can still end-run the work permit requirement while being kosher with the IRS and reporting actual income on W2.