At the end of the section we present an expat employment contract checklist that you can use to assess whether the contract you are offered contains all the relevant provisions and that all elements of expat contract negotiation have been covered.
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These figures do NOT include the lost business opportunity costs, the losses on human capital and morale, the family and personal distresses, and most importantly for the future of the talent pool, the dissonance that leads to radically increased attrition rates upon return.
The purpose of using the IAP in a preparation program is to ensure that all the key issues are addressed BEFORE embarking on the assignment.
The IAP replaces four to five hours of interviews with an on-line interview of the employee and spouse/partner, and analyzes the results to produce a prioritized working list of the key issues, as well as an analysis of the family's strengths and challenges in adapting to the specific location.
So an individual seconded from (say) the UK to the United States would have an amount of ‘hypothetical tax’ withheld from their earnings each month in line with what they would have paid on the non-expatriate parts of their salary package if they had remained in the UK.
It follows that the individual therefore suffers no personal tax burden as a result of the expatriate aspects of the assignment such as cost of living allowance, disturbance allowance and accommodation in the host country.
In order to calculate final liability to host country tax to be borne by the employer it is necessary to undertake a process known as ‘grossing up’.
We will not explain this in detail, however suffice to say that the company often needs to bear a far greater level of tax to that which the individual would have paid if they had simply stayed at home or been responsible for meeting their own tax obligations in the host country.