Relocating Internationally: The Pay Questions to Settle First

Gross or net, and whose gross

A number quoted in another currency is not comparable to your current salary until three things have been settled, and converting it first is the mistake almost everybody makes. Conversion makes two numbers look comparable, which is a different thing from making them comparable. Three questions come before the exchange rate.

The first is whether the figure is gross or net, and under which country’s system. A salary quoted abroad may be gross of a payroll tax regime that takes a very different share than yours, or it may already be net of everything. In several countries an employment offer is customarily discussed net of tax.

That convention makes an offer look far smaller than a US gross figure describing an identical standard of living. Ask which of the two it is, in one sentence, before doing any arithmetic at all on the figure. Everything downstream is wrong if this is wrong, and the error is invisible because both numbers are salaries and both sound plausible.

How many times a year it is paid

A monthly figure multiplied by twelve is not always the annual salary, and this catches people constantly. Thirteenth and fourteenth month payments are entirely ordinary across much of Europe and Latin America. A quoted monthly figure can therefore understate the year by between eight and seventeen percent.

Ask how many payments a year the contract provides and whether any of them is discretionary rather than guaranteed. This is the single most common way an international offer gets undervalued by the person receiving it. It is also the easiest to check, because the answer is a number in the contract.

Where you are tax resident

The second thing to settle is residency, because it decides which country taxes what. Residency is usually determined by days present and by where your permanent home and center of interests sit, and it is not always where you think. It is entirely possible to be resident in one country, employed by an entity in a second, and paid from a third, with all three having a view.

United States citizens and permanent residents keep filing obligations regardless of where they live. There are mechanisms that may reduce or eliminate what is actually owed, and every one of them carries conditions and elections. Those are worth a professional conversation rather than a reading of a summary page, because the elections are hard to unwind once made.

What the state provides

The third thing is what your salary no longer has to buy. A country with high employer social contributions is frequently one where healthcare, pensions and family leave are substantially publicly provided. That changes the meaning of a lower gross figure entirely.

The comparison that works is not salary against salary. It is salary minus what you must buy, calculated on each side separately. Healthcare and childcare are the two lines that move this most, and for a family they can be worth more than the entire nominal gap between the two offers.

Currency and where it lands

Once those three are settled, currency becomes the fourth question rather than the first. Establish which currency you are paid in, which currency your obligations sit in, and who carries the movement between them. Those are three genuinely different questions and they frequently have three different answers.

Somebody with a mortgage in one currency and a salary in another is running a real exposure whether or not anybody has named it. Some packages fix an exchange rate for a defined period or split payment across two currencies. Both of those arrangements are negotiable and neither one is ever offered by default.

The parts nobody quotes

Several substantial costs sit entirely outside the salary discussion. Visa and permit costs and who pays them. Whether a partner is permitted to work, which in some countries depends entirely on visa class. School fees where local schooling is not a practical option for your children.

Add shipping and storage, and annual flights home. For a family move these routinely add up to more than the salary difference being debated. They are also the items most likely to be agreed when asked for individually with a figure attached, and most likely to be refused when raised as a general request for a better package.

What happens at the end

Ask what the arrangement is when the posting finishes. Specifically: who pays repatriation costs, whether a role at home is held for you, and how the international period is treated in future pay reviews. All three of those have definite answers and none of them is a difficult question to ask.

An international stint that ends with no route home is a common and expensive outcome. It is also entirely foreseeable at the point of accepting, which is the only point at which anything can be done about it. People who ask this question at the start are rarely the ones stranded at the end.

The employment contract itself is different

Employment protections vary enormously between countries and the differences are larger than most people expect. Notice periods in much of Europe run to months rather than the two weeks that is customary in the United States. Severance can be a statutory entitlement calculated from length of service rather than something negotiated at the point of departure.

That cuts both ways and both directions matter. Longer notice protects you if the role ends and it also binds you if you want to leave quickly for something better. Ask what notice applies on each side, what severance is statutory, and whether any probationary period suspends those protections. Those terms are frequently worth more than a few percentage points of salary and they never appear in the conversation about the number.

The order to do this in

Settle gross against net first, including the number of payments a year. Settle residency and who taxes what second. Build the salary-minus-what-you-must-buy figure on both sides third. Only then convert into a common currency to compare.

Converting first feels like the step that makes the numbers comparable, which is exactly why it happens first. Doing it last is the difference between comparing two salaries and comparing two lives. This is general information rather than tax advice, and an international tax professional is worth the fee on any move you are seriously considering.