Shadow payroll refers to a non-cash payroll established in the host country where an assignee is working. The shadow payroll is not the primary payroll from which the assignee is paid, as he or she usually continues to be paid from the home country payroll. By conducting a shadow payroll in the host country, the employer will be able to remit local taxes in the host country to the revenue authority .
The shadow payroll will assist the employer to meet local reporting obligations and produce the appropriate year end wage statements etc.