Payroll remittance is the process of taking money from employee paychecks—taxes, insurance, retirement contributions—and getting it to the right government agencies and third parties on time.
Sounds simple until you miss a deadline. Then you’re explaining to the tax authority why their money is late, paying penalties that make your CFO cry, and fielding questions from employees about why their benefits aren’t active. One missed remittance can spiral into audits, fines, and a reputation hit that takes years to fix.
Here’s why this matters more than most businesses realize: payroll remittance isn’t just moving money around. It’s the proof that you’re playing by the rules. Every payment shows governments you’re collecting their taxes correctly. Every on-time transfer tells employees their benefits are secure. Every accurate remittance keeps you off the radar of agencies that have the power to make your life miserable. Get it right, and nobody notices. Get it wrong, and everybody does.
What employers typically remit
Federal, state, and local income taxes
Most jurisdictions worldwide tax employees’ income. Therefore, the employer is responsible for deducting the correct income tax from their employees’ paychecks and remitting it to the relevant tax authorities, like the Canada Revenue Agency (CRA), the Internal Revenue Service (IRS) in the U.S., and His Majesty’s Revenue and Customs (HMRC) in the United Kingdom.
There are only a few countries that do not tax income at all. Many of these, like the Bahamas, rely on income from tourists instead of income taxes—others, like Oman, rely on revenue from the fossil fuel industry.
Note: Federal and state laws regarding income tax can be at odds. In the U.S., residents of Alaska and Nevada pay federal income tax but no state income tax.
Social security taxes
Payroll remittance typically involves deducting social security contributions from employees and supplementing them with the employer’s contributions.
Benefits remittances vary significantly by country. For example, in the U.S., health insurance deductions are voluntary. In the U.K., National Insurance contributions are almost always required to be withheld from employees’ paychecks.
These remittances support country-specific social insurance systems like Medicare, a health insurance program for citizens 65 years and older and disabled young people, in the U.S., or Germany’s public health insurance, Gesetzliche Krankenversicherung.
Unemployment taxes
Unemployment taxes are a key component of payroll remittance. In the U.S., employers (not employees) are required to pay federal and state unemployment taxes per the Federal Unemployment Tax Act (FUTA) and assorted state laws.
Countries differ in their approach to who pays for unemployment insurance. In Germany and Switzerland, employees and employers pay an equal amount of unemployment tax. The same is true for Spain, but employers pay a higher rate. In Denmark, only the employees pay.
Benefits contributions
Health insurance premiums, retirement deposits, and other employee benefits contributions are remitted during a payroll run. Like other remittances, benefits vary significantly depending on an employee’s residence.
As an example, if a U.S. employer offers a 401(k) match, they remit the combined contribution between them and their employee to the appropriate retirement fund.
Breaking down the payroll remittance process
There are four primary steps in the payroll remittance process:
- Withhold employees’ taxes. Employers calculate and withhold the appropriate amounts from each employee’s paycheck.
- Calculate employer contributions. Employers calculate their contributions, ranging from mandatory contributions, like unemployment tax, to voluntary ones like a 401(k) match.
- Submit the remittance and required forms. Once the total due from the employee and employer is calculated, the employer pays the relevant tax authorities or third parties by the designated deadline. Depending on the country, employers also submit tax forms throughout the year, such as Form 941, Employer’s Quarterly Federal Tax Return, in the U.S., and Form T4 slip, Statement of Remuneration Paid, in Canada.
- Maintain records. Most countries require payroll-related documents to be kept for a specified amount of time. In the U.S., the IRS requires record storage for four years. Among items to be saved are remittance payment confirmations.
Why getting remittance wrong costs more than money
Miss a payroll remittance deadline and watch how fast things spiral. Tax agencies don’t send friendly reminders—they send penalties. In Canada, you’re paying a 3% penalty if you’re even one day late. Three days late? Still 3%, but now with interest accumulating. Other countries are worse. This isn’t like missing a credit card payment, where you can sweet-talk your way out of fees. Government agencies have zero sense of humor about their money.
Keep ignoring those deadlines, and it gets ugly. We’re talking about liens on your business property. Frozen bank accounts. The kind of legal notices that make your lawyer’s hourly rate look like a bargain. Some jurisdictions will pursue criminal charges for willful non-payment. Imagine explaining that to investors or trying to hire senior talent when a quick search shows your tax problems.
But timing is only half the battle. Remit the wrong amount and you’ve created different problems. Underpay, and you’re back to penalties and interest. Overpay, and good luck getting that money back quickly. Make calculation errors, and employees start asking why their retirement contributions are wrong or their insurance got canceled. One miscalculation can trigger audits that examine everything, not just the mistake. This is why smart companies don’t DIY their payroll remittance—they get help from providers who do this every day and know exactly what needs to go where, when, and how much.
Considerations for global employers
Running payroll in one country is hard enough. Now multiply that by every country where you have employees. Different tax codes. Different deadlines. Different currencies. Different penalties for getting it wrong. Your payroll person in the U.S. needs to know that Brazil requires remittance twice a month, Singapore has specific CPF contribution rules, and Germany will fine you for being five minutes late. Miss a deadline because you forgot about a time zone difference? That’s an expensive lesson in geography.
This is why smart global employers don’t try to master every country’s remittance rules themselves. They partner with Employers of Record (EORs) or global payroll platforms that live and breathe this complexity. EORs handle everything—calculating the right amounts, hitting every deadline, filing in local systems, and dealing with currency conversions. They give you dashboards showing exactly where your money is going and when, so there are no surprises when tax season rolls around in seventeen different countries.
Pebl’s Employer of Record service takes the nightmare out of global payroll remittance. We handle the calculations, meet the deadlines, and keep you compliant in 185+ countries. Your team gets paid correctly. Governments get their money on time. You get to sleep at night. Contact us to see how we turn payroll remittance from your biggest headache into something you never have to think about.
This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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