Eric Nelson | Compensation Management 549
The opportunity to work outside the U.S. is rewarding in my view. It would take little to convince me to accept the opportunity. That said, there are a number of key considerations I would align on with my company on prior to accepting the offer. All the benefits discussed in Strategic Compensation (Martocchio, pp 314-320) are important when considering an expatriate position, though my personal top three are: housing and utilities allowance; education reimbursement for children; and tax considerations. I’ll briefly discuss the importance of each for myself.
The expense of housing and utilities is generally one of the largest, if not the largest, expense most families have. It can be a significant percentage of gross pay. According to U.S. Bureau of Labor Statics the average American spent 33% of their pre-tax income on housing (Oct. 2020). In addition to the significant expense, whether buying or renting, due to differing cultural norms, laws, etc., finding a home in different country can be complex and challenging. For me to move internationally, it would be crucial that my company not only ensure housing expense is not a financial burden, but also offer support in locating a home.
Similar to my reasoning on housing and utilities, both the expense and complexity of finding schools for my children when living abroad is crucial to get support on from my company. As an example, yearly tuition fees for the International School of Amsterdam range from 18,140 euros for pre-school to 26,000 euros for high school. (https://www.isa.nl/admissions-process)
The reason I place tax consideration so high is that oftentimes the need for your company’s assistance with tax events can continue well after repatriation. This can occur when you receive certain benefits such as stock-options and/or deferred compensation during your time as an expatriate. The actual tax event from the exercise of stock-options or distribution of deferred compensation can occur long after you return to the U.S. Due to the complexity of these tax events, confirming with my company that I will receive professional tax preparation support even after I am repatriated is important.
