A gross salary figure describes a different quantity in different countries. It may be paid over twelve months or fourteen, it may sit before or after mandatory social contributions that are far larger than anything deducted from a US paycheck, and it may be expected to cover healthcare and pension provision that elsewhere the state supplies. Converting two such figures into one currency compares the numbers accurately and the underlying quantities not at all.
The email that starts the problem
A recruiter in Amsterdam sends you a figure: €72,000. You open a currency converter, get roughly $78,000, and set it against the $95,000 you earn now. The Dutch job loses, obviously, and you write a polite reply. What you have just done is compare two numbers that describe genuinely different things, and the gap between them is large enough to have changed the answer.
This is not a subtle problem or an unusual one. It catches experienced people constantly, because both figures are called a gross annual salary, both are quoted with a straight face, and nothing in either offer letter warns you that the phrase means something different on each side. The conversion is the easy part, and it is the part everybody does first.
The first thing that differs: how many times a year it is paid
In much of Europe and across Latin America, a contract does not provide twelve monthly payments. It provides thirteen, or fourteen, with the extra payments falling in summer and at year end. Where that is the norm, a monthly figure quoted in conversation is understood locally as one of thirteen or fourteen, and multiplying it by twelve — which is what a foreigner reflexively does — understates the year by eight to seventeen percent.
The reverse mistake is just as common in the other direction. An annual figure that already includes the extra months looks generous against a US salary until you notice that the monthly cash flow it produces is lower than the annual figure implies, which matters a great deal if you are budgeting rent in a city you have just moved to. Ask a single question — how many payments does the contract provide, and are any of them discretionary — and the ambiguity disappears.
The second thing that differs: what comes out before you see it
Every country takes something out of gross pay before it reaches you, but the size of that something varies enormously and the line between employee and employer contributions is drawn in different places. A gross figure in a country with high mandatory social contributions can convert into take-home pay that is proportionally far lower than an American reading the same number would assume, and no amount of currency conversion reveals it.
This is why a great many international offers are discussed net rather than gross in the first place. In several countries it is entirely normal for candidates and recruiters to talk about the monthly amount that lands in the account, because that is the number that means something locally. If you are quoted a figure and you assume it is gross when the whole conversation has been about net, you will undervalue the offer badly — and if you assume the opposite, you will overvalue it just as badly. One sentence settles it, and it is worth asking before any arithmetic at all.
The third thing that differs: what the money still has to buy
This is the largest of the three and the one nobody puts in a spreadsheet. A US salary is expected to fund health insurance premiums, retirement saving beyond whatever the employer matches, and often childcare at market rates. In a country where healthcare is publicly funded, pension contributions are mandatory and partly employer-borne, and childcare is subsidized, the same nominal salary is not being asked to do the same work.
So the comparison that actually means something is not salary against salary. It is salary minus what you must buy, on each side, using your own circumstances rather than a national average. A single person in good health will find the gap smaller than a family with two young children will, and the two households comparing the same pair of offers can reasonably reach opposite conclusions. That is not a flaw in the method; it is the method working.
Why nobody normalizes any of this for you
You might reasonably expect some organization to publish a cleaned-up comparison, and several do publish something in that direction. The trouble is that the adjustments involve choices — which household, which tax assumptions, gross or net, whether to count employer contributions as pay — and every choice moves the ranking. A table that has made those choices silently is not more accurate than your own arithmetic; it has simply hidden its assumptions behind a tidier presentation.
Which is a reason to do the four questions yourself for the specific offer in front of you. It takes half an hour, it uses your household rather than a statistical one, and you end up understanding why the answer came out the way it did.
The four questions that settle it
Is this figure gross or net? Over how many payments a year? What is deducted before it reaches me, and roughly what proportion? And what does this salary still have to pay for that my current one does not, or no longer has to?
Every one of these is a factual question with a short answer, and a recruiter who cannot answer them will know somebody who can. None of it is impertinent — you are being asked to make a decision about your life on the basis of a number, and these are the questions that turn the number into information.
The comparison that works
Build two columns. In each, start from the annual figure with the right number of payments in it. Subtract mandatory contributions and income tax to get a genuine take-home. Then subtract, on each side, what you personally will have to buy that the other side provides — health cover, pension top-up, childcare, whatever applies to you. Only at that point convert to a common currency, and use purchasing power rather than the market rate unless you are physically moving money between countries.
The order matters. Converting first is what almost everyone does, because it feels like the step that makes two numbers comparable, and it is precisely the step that disguises the fact that they are not. Convert last, when both sides are finally measuring the same thing.
The one people get backwards
Here is the counterintuitive result that falls out of doing this properly: a materially lower gross salary quite often wins. Somebody moving from the US to a country with heavy social contributions looks at the deductions, recoils, and stops there — without ever subtracting the health premiums, the retirement saving and the childcare they will no longer be funding themselves.
It does not always come out that way, and for high earners it frequently does not. But the direction of the error is consistent, and it is worth knowing which way your instincts are pulling before you decline something on the strength of a currency converter and thirty seconds of arithmetic.
Common questions
Why can't I just convert the two salaries?
Because they describe different quantities. The number of annual payments differs, what is deducted before you see it differs, and what the salary still has to buy differs. Conversion compares the numbers accurately and the underlying things not at all.
How many payments should I check for?
Thirteen and fourteen month structures are ordinary in much of Europe and Latin America. Multiplying a monthly figure by twelve there understates the year by eight to seventeen percent.
Is a quoted figure gross or net?
It depends entirely on the country. In several, offers are customarily discussed net because that is the number that means something locally. Ask before doing any arithmetic — the assumption is worth thousands either way.
Why does a lower salary sometimes win?
Because it may not have to cover healthcare, pension saving or childcare at market rates. The comparison that works is salary minus what you must buy, on each side.
Why doesn't someone publish a normalized comparison?
Some do, but every adjustment involves choices — which household, gross or net, whether employer contributions count as pay — and each choice moves the ranking. A tidy table has hidden its assumptions, not removed them.
In what order should I do the comparison?
Annualize correctly, subtract contributions and tax, subtract what you personally must buy on each side, and convert to a common currency last. Converting first is the near-universal mistake.
Should I use the exchange rate or purchasing power?
Purchasing power, unless you are physically moving money between countries. The market rate answers a different question about transfer, not about what the salary buys.
Which way do people usually get this wrong?
They see large deductions in a high-contribution country and stop there, without subtracting the health premiums, retirement saving and childcare they would no longer be funding themselves.