Reduce both salaries to the same quantity before you convert anything. Annualize each correctly, because thirteen and fourteen month structures are ordinary outside the US. Take each down to what actually reaches you after mandatory contributions and tax. Subtract, on each side, what that salary still has to buy — healthcare, pension, childcare. Only then convert to a common currency, using purchasing power rather than the market rate unless you are physically moving the money.
The order is the whole method
Almost every cross-border salary comparison is done in exactly one step: open a converter, put in the foreign figure, compare the result to what you earn now. It takes four seconds and it produces an answer that feels authoritative, because currency conversion is genuinely precise and the number that comes out has decimal places in it.
The precision is real and it is being applied to the wrong thing. What you have converted is not a salary in any comparable sense — it is a figure whose meaning depends on how many times a year it is paid, what comes out of it before you see it, and what it is still expected to fund. Get those three settled first and the conversion at the end is trivial. Do the conversion first and everything after it is decorating a mistake.
So the four steps below go in a fixed order, and the ordering is not fussiness. Each one makes the two sides more alike, and the conversion is last precisely because it is the only one that is genuinely mechanical. The whole thing takes an evening, most of which is looking things up rather than thinking hard. What you get at the end is not just a better number but an understanding of which assumption the answer is resting on, which is the part that lets you sleep after you have decided.
Step one: annualize honestly
Establish how many payments a year each contract provides. In much of Europe and Latin America the answer is thirteen or fourteen rather than twelve, which means the instinctive calculation of monthly-times-twelve understates the year by eight to seventeen percent. Where a holiday supplement exists on top of that, add it separately, because it is a distinct item that arrives at a similar time and is easy to double-count or miss entirely.
While you are here, note which parts are contractual and which are discretionary. A thirteenth month written into a sector agreement is a different kind of money from a bonus that has paid out in three of the last five years. Treating the two as equivalent is how a package with far more certainty in it loses to one with a bigger headline number, and it happens constantly. Keep two running subtotals rather than one, exactly as you would comparing two domestic offers.
Step two: get to what actually reaches you
Subtract income tax and mandatory social contributions on each side, using the actual system rather than a rate you half remember. This is the step where the two sides usually stop resembling each other. The proportion taken varies enormously between countries, and the line dividing employee contributions from employer contributions is drawn in a different place in almost every system, so even the question of what counts as your money is answered differently. Most national revenue authorities publish a calculator that will do this properly in about five minutes.
It is also the step people most often skip on the assumption that it will roughly cancel out. It does not roughly cancel out. Between a low-deduction and a high-deduction system the difference can be twenty points of gross pay, which is larger than almost any salary gap you would be weighing, and it moves in the opposite direction to the thing you are about to subtract in step three.
Step three: subtract what each salary still has to buy
This is the step that decides most comparisons and the one that appears in almost no published table, because it depends on you rather than on the country. On each side, list what you personally will have to pay for out of that salary: health insurance premiums, retirement saving above whatever is provided, childcare, and anything else that is publicly funded in one place and privately funded in the other.
The reason this cannot be standardized is that it varies by household more than it varies by country. A single person in good health and a family with two children under five, looking at the identical pair of offers, will properly arrive at different answers, and both of them will be right. That is uncomfortable if you were hoping for a lookup table that settles it. It is also the reason the published comparisons feel unsatisfying when you try to apply one to your own life: they had to pick a household, and it was not yours.
It is also where step two frequently reverses. A country that took twenty points more of your gross may hand a large part of it straight back in the form of things you no longer have to buy, and the two effects have to be set against each other rather than considered separately.
Step four: convert, last
Now, and only now, put both figures into a single currency. Use purchasing power parity if you are going to live and spend where you work, and the market exchange rate for whatever share of your income has to leave the country. If both apply — you are moving abroad but sending money home, or servicing a loan in your old currency — split it in proportion rather than picking one rate for everything.
The two rates can differ by half for the same pair of countries, so this is not a rounding decision. Say which one you are using whenever you quote the result to anybody else. A great many disagreements about international salaries turn out to be two people using different rates and neither of them saying so, which is a frustrating way to spend an argument. Writing the rate and its date next to your figure takes four seconds and prevents all of it.
A worked run through all four
Take an offer of €4,800 a month against a current US salary of $110,000. The instinctive calculation gives €57,600, which converts to roughly $62,000, and on that basis the offer looks like a serious pay cut — the sort of number that ends the conversation before it starts. Almost everybody stops here, and it is entirely understandable, because a forty-thousand-dollar gap does not look like something four more steps are going to close. Run them anyway.
The contract provides fourteen payments, so the year is €67,200, not €57,600. Deductions on that are heavier than the American ones, so the take-home proportion is lower — call it a fifth less than you are used to keeping. Against that, the role comes with public healthcare, a mandatory pension with a substantial employer share, and subsidized childcare, which between them replace perhaps $18,000 a year you are currently paying from taxed income. And local prices run around eighty percent of what you pay now, so the parity-adjusted figure is meaningfully higher than the market conversion suggested.
None of that guarantees the offer wins. The point is that a comparison which started at “a $48,000 pay cut” ends up somewhere close to level, and every step that moved it was a fact you could have checked in an afternoon.
What the four steps still cannot settle
They will not tell you about career progression in a smaller market, whether your professional qualification is recognized, how portable the pension is if you leave in four years, or what happens to any of it if the relationship you moved for ends. Those are real and they are not arithmetic.
What the four steps do is stop the money question from being decided by an error. Once both offers are genuinely measuring the same thing, you can go and think about the parts that actually deserve the agonizing, rather than relitigating a currency conversion at two in the morning.
Common questions
Why is the order of the steps important?
Because each step makes the two sides more alike, and conversion is the only mechanical one. Converting first applies real precision to two things that were never comparable.
What does annualizing honestly mean?
Establishing how many payments a year each contract provides. Thirteen and fourteen month structures are ordinary outside the US, so monthly-times-twelve understates the year by eight to seventeen percent.
Why can't I skip the deductions step?
Because it does not cancel out. Between a low-deduction and a high-deduction system the difference can be twenty points of gross — larger than most salary gaps you would be weighing.
Why does step three depend on me?
Because what a salary still has to buy varies by household more than by country. A single person and a family with two young children can reach opposite answers on the same pair of offers, and both be right.
Which conversion rate should I use?
Purchasing power if you will live and spend where you work; the market rate for whatever share leaves the country. If both apply, split it in proportion rather than picking one.
How much difference does doing it properly make?
On a worked example, an offer that reads as a $48,000 pay cut on a straight conversion ends up close to level once annualization, deductions, what the salary no longer has to buy, and local prices are all accounted for.
What can the four steps not tell me?
Career progression in a smaller market, whether your qualification is recognized, pension portability if you leave early, and what happens if the reason you moved changes. Those are real and they are not arithmetic.
Is there a table that does this for me?
Not usefully. Every published normalization has made choices — which household, gross or net, whether employer contributions count — and each choice moves the ranking. A tidy table has hidden its assumptions rather than removed them.