Budgeting Basics for International Projects
The budget is a key element of project planning and serves as a blueprint for spending project’s funds. Sponsored projects generally have robust guidelines as to what can and cannot be funded by the sponsor. Such guidelines are much less clear for non-sponsored activities. Budgetary items may vary greatly depending on your project needs, nature of your activity, and country requirements. Thoughtful budgeting of your project during the planning stage can provide a realistic financial management tool to control the cost of your project and avoid unforeseen expenses during implementation. It is recommended to check Stanford’s DoResearch Budget Basics for general budgetary guidance of sponsored projects. Due to complexities of running activity abroad, please take into considerations the following additional costs that may be associated with projects conducted overseas:
Legal Counsel Fees
Stanford Office of the General Counsel (OGC) may need to consult with local foreign country legal counsel to address legal issues arising out of global activities and assist with regulatory compliance. Local legal counsel cost varies according to project need and country regulatory complexity.
Please contact OGC to discuss your planned project, estimate, and capture local legal counsel cost when developing project budget.
International Tax Advisory and Accounting Fees
Tax, accounting, and finance regulations differ from country to country. Large scale overseas programs would require consultation with local tax and / or accounting experts during planning phase. To remain compliant with local rules, third-party services can be needed for local tax, accounting, payroll and financial reporting. Hiring and coordinating with such third-party services is done by GBS.
Personnel and Compensation Considerations
In addition to base salary, possible tax equalization, and payroll set-up costs and fees, other cost considerations may include mandatory local social security expenses, medical and insurance, and paid holiday. Those costs vary greatly from country to country. If your project requires local hiring or a Stanford person stationed abroad for more than 183 days, please contact Global Business Services (GBS) and Global HR for additional guidance and cost considerations. Other key personnel considerations include:
Individuals must have the correct immigration status and permission to work in the country where they are physically conducting activities (which can include academic and research work). For non-local nationals, this usually involves a work permit sponsored by an employer in the host country.
Similar to the United States, most countries collect employee-owed taxes as well as employer-owed taxes (also known as “social costs” or “payroll taxes”). Laws regarding an employer’s responsibility to withhold and remit taxes owed by the employee vary, but the presence of a Stanford person in-country can trigger unforeseen obligations both for Stanford and the individual.
Many countries have employment laws that are more favorable to employees than U.S. regulations. Examples include mandated employment contract terms, paid time off, limitations on termination, and severance payments. It is important to understand in advance the scope of these regulations and how they many apply to the personnel working on the project.
Import and Export Considerations
If your project needs to send data, goods or transport equipment to a different country and/or import goods from a foreign location, duties, or customs fees may apply. Depending on the scale of such imports and exports, the costs might be significant. Please review the information projected on Stanford’s International Affairs site to determine the best resource to guide you in planning / budgeting for import / export related costs. Key considerations are:
Customs Duties and Restrictions
The U.S. and foreign countries may require payment of customs duties and may restrict the entry of certain items.
Carnets–also known as merchandise passports–simplify the temporary transfer of certain tangible goods between the U.S. and 80 countries and territories.
When transporting large amounts of cash or equivalents (such as travelers’ checks), you may be required to declare the funds and may even face restrictions or taxes.
Sanctioned Countries and Individuals
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) enforces wide-ranging sanctions or embargoes on countries, individuals, and organizations.
Country- and project-specific insurance, such as general liability, property, worker’s compensations, medical malpractice, etc., may be required by the regulations of another country and by Stanford policy. Contact Risk Management Department for more information and cost considerations.
In most foreign jurisdictions, Stanford is not registered as a tax-exempt organization. Depending on the nature of foreign activities and jurisdiction regulations, your program may be subject to income tax, sales tax, value added tax (VAT), or other types of taxes.
Foreign currency is usually necessary, especially for in-country spending, such as in-country travel cost, local purchase of goods or services, local payroll, etc. Depending on the volatility of the currency of the local country you are working in against the U.S. dollar, currency fluctuations could have a significant budgetary impact and would need to be considered and factored into the budget to avoid surprises.
International Contracts and Agreements
Well-designed contracts help you and your project partners and subcontractors begin a project with clear expectations of costs and your respective roles and responsibilities. If the contract involves services to be rendered overseas, or if one of the contracting entities is foreign, there are steps you can take to avoid surprises and protect Stanford's interests. Key considerations are further discussed in the Written Agreements for International Projects section.
Due to the complexity of global environment, it is recommended to plan some unexpected costs with a contingency budget and review environmental and political factors regularly to ensure a reasonable and feasible budget.