Shadow payroll refers to a method of payroll processing used when an employee works in a different country from their home country. It involves running parallel payroll calculations to ensure compliance with tax and social security obligations in both the host country and the home country. <br> <br>When an employee is on a shadow payroll, their salary is calculated and reported as if they were still working in their home country. The employer withholds taxes and social security contributions based on the home country\s regulations. At the same time, the employer also calculates and withholds taxes and social security contributions based on the host country\s regulations but does not actually pay the employee the amount calculated for the host country. <br> <br>Shadow payroll is used to fulfill tax obligations in both countries and ensure that the employee remains in compliance with tax laws. It allows the employee to continue contributing to their home country\s social