What is the average salary for an expat
How is the salary paid for postings? Which components does an expatriate salary include. Should rent subsidies be guaranteed for the apartment abroad? Our guide to expatriate finances:
Over 90% of the companies pay their expatriates based on the salary level from their home country. Only some have special international wage regulations for posted workers. The wage payment is then linked to the wage structure from home.
Often, however, the salary depends on the local currency. Some company policies define the method of payment as follows:
- The entire salary is paid in the currency of the host country
- The entire salary is paid in the home currency
Since the salary is exposed to currency fluctuations every month, this approach only makes financial sense if the person posted is in a so-called single status assignment (the family moves with me and stays in my home country) and the project abroad is more of a short-term nature.
- Mixed approach - defined amount that is paid in the home currency as a house deposit and the remainder in the currency of the host country.
This is the most widely used system in Europe, which makes it possible to share the currency risk and ensure stable savings in the home country.
- Payment in reference currency (i.e. EUR or USD) in cases where the home unit is outside a euro zone or the USA.
All of the above types have advantages and disadvantages. The choice often depends on many different factors.
Compensation for living expenses (so-called COLA)
This part of the salary aims to level out price differences between the home and the host country. Some companies use this grant to offset exchange rate risk, which is why the payment may vary from month to month.
Since the cost of living varies greatly between countries, the employer could claim a negative flat-rate living allowance, i.e. the employee should not count on the subsidies.
Mobility Premium / Foreign Assignment Bonus
This portion of the bonus payment has a motivating aspect. It should be a real raise to go abroad as an incentive. Depending on your company guidelines, it can be combined with COLA or hardness compensation.
It was developed to compensate for various circumstances and thus difficulties with the new location. This is based on health risks, climate, cultural differences, language, availability of services, etc.
This allowance may vary depending on your home country.
This remuneration is either paid out in cash or can include sponsorship of, for example, hobby courses or language courses.
Most European companies support their international staff in this area by providing a rental subsidy. This in turn can vary depending on the job level in the company structure and family size or other criteria. Some companies give their expatriates a certain allowance to finance the rent, others only pay the difference between the rental costs in Germany and their home country.
Some other companies offer their employees free accommodation, especially if they are sent abroad for a short-term project assignment. This can either be a hotel room, an apartment or company-owned accommodation.
If the employee is posted abroad on a long-term basis (usually for more than 12 months), the family often comes along. Most companies cover the costs for the children's school, but not necessarily for the kindergarten or university. The education of the children in an international school can amount to up to 50% of the annual net salary.
When it comes to language courses, the costs are often borne by the employer. However, some companies only offer online courses or limit the grant to a certain number of hours.
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